Local Education Funding Dispute Resolution Process Is Effective and Economical, but Litigation Could Be Eliminated (May 2017)

In North Carolina, local education agencies and local boards of education are fiscally dependent on county commissioners for local appropriations to support capital and operations for public K-12 education. When local boards of education and boards of county commissioners cannot reach agreement on a budget, state law sets out a procedure for achieving resolution that is structured into two phases: pre-litigation and litigation. This process is used infrequently and seldom reaches the litigation phase; when the process has been used, the outcomes have not historically favored either party and may serve to improve future budgeting efforts. However, litigation is costly and time-consuming. North Carolina and Tennessee are the only states with elected school boards that are fiscally dependent on county commissioners, but Tennessee uses a default funding mechanism to avoid litigation. If it wants to eliminate litigation from North Carolina’s local education funding dispute process, the General Assembly should revise state law for settling disputes to preserve the benefits of the pre-litigation phase while replacing the litigation process with a default funding mechanism. The General Assembly should also direct the Local Government Commission and School of Government at the University of North Carolina at Chapel Hill to convene a working group to develop and recommend statutory parameters for fund balances maintained by local boards of education.

Final Report

Executive Summary




Relevant Legislation:

  • Session Law 2018-83 repeals the statutory authority for a local board of education to file a legal action challenging the sufficiency of funds appropriated by a board of county commissioners; provides a formula for determining the amount of funds to be appropriated in the event a budget dispute cannot be resolved by mediation; and establishes a working group to address fund balances maintained by local boards of education.