Judge orders NC to move $1.7B to education agencies

The funds are part of the more than $5.6 billion-over-eight-years plan to overhaul and increase education funding in the state.

Posted Updated

Emily Walkenhorst
, WRAL education reporter
RALEIGH, N.C. — Superior Court Judge David Lee on Wednesday ordered state finance executives to move $1.7 billion in unused funds to education agencies, bypassing the North Carolina General Assembly.

Lee stayed his order for 30 days, allowing lawmakers and Gov. Roy Cooper's administration to take actions consistent with the order.

The funds are part of the more than $5.6 billion-over-eight-years plan to overhaul and increase education funding in North Carolina. That plan stems from the so-called Leandro lawsuit – named for an original plaintiff – first filed against the state in 1994 by families and school boards in Cumberland, Halifax, Hoke, Robeson and Vance counties. They alleged their school districts couldn’t afford to provide the education they said their children were promised by the North Carolina constitution.

Lee's order mirrors an order proposed last week by families and school boards in the five counties, as well as Charlotte-Mecklenberg Schools. Attorney General Josh Stein responded to the proposal this week by agreeing that the state can fund items without legislative approval.

Lee acknowledged that retired Judge Howard Manning, who previously oversaw the Leandro case, and the state Supreme Court had given deference to the state, including lawmakers, in coming up with a plan. But he expressed frustration with the lack of progress made in the 27-year-old case.

“This case is about children who are from high poverty, low-performing districts and areas of our state that aren’t given fair opportunity to get a sound, basic education,” Lee said in court Wednesday. “Unfortunately, from the numbers I have seen, the sheer number of those [at-risk] students has increased dramatically and continues to do so. In that sense, it's a runaway train."

North Carolina is, by law, charged with funding education, while counties are charged with funding school facilities.

The General Assebly has declined to fully fund the $1.7 billion required this year and next year under the plan, which Lee approved in June.

It's the only plan submitted to the court as a proposal to remedy court findings from 2004 and earlier that the state wasn't adequately funding education as required by the state constitution.

Legislative leaders called Wednesday's ruling "a circus" that flouts the state constitution and overturns decades of legal precedent that gives the General Assembly sole control over how the state spends money.

"This case has devolved into an attempt by politically allied lawyers and the Governor to enact the Governor's preferred budget plan via court order, cutting out the legislature from its proper and constitutional role," Senate President Pro tem Phil Berger and House Speaker Tim Moore said in a joint statement. "Thankfully, executive branch officials swear an oath to the Constitution, not to an unelected county-level trial judge. A judge does not have the legal or constitutional authority to order a withdrawal from the state's General Fund."

Berger, R-Rockingham, and Moore, R-Cleveland, have maintained the legislature is not a party in the case, while Lee has said he believes it is.

The named defendants are the State of North Carolina and the State Board of Education. The State Board of Education and executive branch officials have been involved in the case. Legislative leaders have held meetings in years past with Manning but have never participated in court.

Berger spokesman Pat Ryan told WRAL News that leaders are still deciding how to act on the order that they oppose.

“It’s not clear that we could appeal because we’re not a party in the case,” Ryan said.

Lee has ordered State Treasurer Dale Folwell, state Budget Director Charlie Perusse and State Controller Linda Combs to transfer $1.7 billion in unappropriated money from the state's general fund into the pockets of three state entities:

  • $1.5 billion to the North Carolina Department of Public Instruction
  • $189.8 million to the North Carolina Department of Health and Human Services
  • $41.3 million to the University of North Carolina System

Advocates for the “Leandro plan” and attorneys said after the hearing they considered Lee’s order to be a victory, but one that could be short-lived.

The state can appeal the order, they noted. And the order funds only two of the remaining seven years of the plan and doesn't trickle into subsequent years, when some expenditures are intended to remain permanent.

Several noted the years that have already passed since the 2004 state Supreme Court order affirming that the state must provide a “sound basic education.”

“Seventeen years have gone by,” Charlotte-Mecklenberg NAACP President Corine Mack said. “Imagine the Black, brown and indigenous children – children who are at risk, children who have been hurt because they didn’t put the money where it needs to go.”

What the state Constitution says

Republican lawmakers have derided Lee’s desire to force the plan to be funded. They argue the North Carolina sonstitution provides only the General Assembly with the authority to determine how money should be spent.

Article V, Section 7, of the constitution declares, “No money shall be drawn from the State treasury but in consequence of appropriations made by law.”

But Lee said Tuesday that lawmakers’ authority is derived from their role as elected representatives of North Carolinians. Lee considers the state constitution to be the “supreme law of the land,” approved by voters. That effectively makes it law, he argued.

“The constitution reflects the direct will of the people,” Lee said.

Voters approved the state’s current constitution – the fourth edition – in 1970.

The promise to provide education is contained in Article I, which lists 37 rights of North Carolinians. The 15th is access to education. It reads, simply, “The people have a right to the privilege of education, and it is the duty of the State to guard and maintain that right.”

The term “sound basic education” – often used in court and conversations around the Leandro case – comes from North Carolina Supreme Court justices. In a 1997 decision in the case, they used the term to describe the quality of education the justices believed the constitution had promised. That meant, according to the justices, students should have fundamental skills and knowledge that allow them to function in society, make informed decisions and compete for jobs or post-secondary education.

The governor noted the Supreme Court rulings in a Wednesday evening tweet that called adequate education funding "not a new or confusing concept."

"Legislators can't simply erase this right because they don't like it," he said. "We have an effective, court-approved roadmap for making education better in North Carolina, and it's time to get it done."

Former judge: Court can't make lawmakers pay

Manning, who presided over the Leandro lawsuit for two decades, expressed his dismay this week that Lee planned to attempt to force lawmakers to comply with court rulings.

Manning himself had ordered the state to remedy its shortcomings on education funding. He held periodic progress hearings after the 2004 state Supreme Court ruling. In 2015, his last year presiding over the case before retiring for health reasons, he found that the state was still not complying with court orders.

On Tuesday, Manning sent a memo to lawmakers, Cooper, Stein and state Superintendent of Public Instruction Catherine Truitt in which he cited other court decisions that found the judicial branch’s authority has limits when it comes to the executive and legislative branches of government.

Still, Manning said he believes the state continues to fall short in meeting its obligations under the constitution and subsequent court orders. He had ordered the state to focus on having high-quality educators as a means of complying.

“Leandro requires that the children, not the educational establishment, have the Constitutional right to the equal opportunity to obtain a sound, basic education,” he said in the memo. “This has not and is not happening now as the little children are not being taught to read and write because of a failure in classroom instruction as required by Leandro.”

He lamented the amount of money being spent on salaries and benefits for employees. About 80% of state, federal and local education spending – $14 billion – goes toward salaries and benefits. That doesn’t include capital spending, which was $2 billion in fiscal 2020.

What the $1.7 billion is for

The Leandro plan’s main goals are to ensure high-quality teachers are in every classroom, high-quality principals are in every school and more North Carolina children have access to pre-kindergarten. Within the plan are numerous suggestions for adding or changing laws and policies, such as removing the cap on funding to educate children with disabilities.

Lee’s order concerns only the second and third years of the plan, when funding increases are smaller than in later years. These years also don’t yet include pay raises for school employees that will be determined by a study of competitive pay across states.

Cooper’s proposed budget for this year and next includes the funding required in the plan. Big-ticket items in that proposal include the following:

  • $586 million for teacher and instructional staff pay raises
  • $150 million toward the final two years of a teacher enhancement program
  • $120 million to begin hiring enough student support personnel – counselors, nurses and psychologists – to meet national recommendations
  • $110 million toward increased special education funding that would coincide with a removal of the cap on how much funding schools can receive for special education services
  • $105 million in increased funding for disadvantaged and “at risk” students
  • $71.9 million for more NC Pre-K slots
  • $60 million in additional funding for low-wealth counties
  • $50 million to have one teacher assistant for every 27 students in kindergarten through third grade

The House proposal includes about $615 million of the plan:

  • $400 million toward teacher and instructional staff pay raises
  • $150 million for teacher enhancement

The Senate proposal to fund the plan tops $235 million:

  • $150 million for teacher enhancement
  • $48 million toward teacher and instructional staff raises

All three proposals include some other funding. Both the House and the Senate include provisions to decrease funding for child care subsidies and subsidy improvements by $11.3 million.

The eight-year Leandro plan implements suggestions developed by an outside consultant and two other contractors and published in December 2019. It outlines seven goals, under which all line items are categorized:

  • Developing, recruiting and retaining teachers
  • Developing, recruiting and retaining principals
  • “Adequate, equitable and predictable” funding and resources to schools
  • Student performance and accountability that meets a “sound, basic education”
  • Creating an assistance and turnaround system for low-performing schools
  • Improving and expanding early childhood education and pre-kindergarten
  • Aligning high school and postsecondary and career expectations and opportunities

The 2019 report was paid for with money from the state and private foundations, including the A.J. Fletcher Foundation. The foundation was started by the founder of Capitol Broadcasting Co., which owns WRAL. Capitol Broadcasting executives sit on the foundation’s board.

CORRECTION: A previous version of this classified line items in three proposed budgets as going toward pay raises for principals and assistant principals. Those line items refer to pay raises for teachers and instructional staff.
CLARIFICATION: A previous version of this article said state finance executives had 30 days to act. The ordered is stayed for 30 days, allowing other branches of government to take action consistent with the order.


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