Budget Dispute Mediation: Local School Boards and County Commissions

In 1997, N.C.G.S. 115C-431 was amended to provide for an optional, pre-litigation, mediation step if a local board of education believed that the funding allocated to them by the board of county commissioners is insufficient to carry out their legal obligations. This consideration usually arises in June, as both boards are making decisions about their respective budgets.

For an overview of the mediation process, see the Fact Sheet below.

Summary of the constitutional and statutory framework governing local funding of public schools by Kara Millonzi [April 22, 2010].

For consultation on this form of mediation, including how to seek potential mediators, contact John Stephens (919) 962-5910.

2013 NC General Assembly Action:

S.L. 2013-141 (HB 765). This statutory directive largely codifies the North Carolina’s Supreme Court’s holding in Beaufort County Board of Education v. Beaufort County Board of Commissioners, 363 N.C. 500 (2009). For details – click here.

Court decisions about post-mediation litigation:

April 2015 - Union County - Court of Appeals reversed the October 2013 trial court judgment and clarified portions oft G.S. 115C-431,

a) School of Government analysis by Kara Millonzi

b) Court of Appeals opinion

October 2013 – Union County – Superior Court jury trial decision in favor of increased funding for the school district. October 16, 2013 – the county commission has appealed the verdict.

N.C. Supreme Court - Beaufort County, August 28, 2009 (No. 106PA08):http://caselaw.findlaw.com/court/nc-supreme-court/200908

Analysis by Kara Millonzi, School of Government expert on law of local government finance: http://canons.sog.unc.edu/?p=650  [September 7, 2009]

N.C. Court of Appeals – Duplin County, November 17, 2009 (No. COA09-397): http://caselaw.findlaw.com/nc-court-of-appeals/1503281.html

NC Supreme Court denies discretionary review, April 14, 2010. Duplin County Bd. of Educ. v. Duplin County Bd. of County Com'rs, --- S.E.2d ----, 2010 WL 1643456 (N.C. 2010).

Superior Court, Judge Donald Bridges – Burke County, September 2009.

RESOURCES

1. Fact Sheet – overview of the law

2. Uses of budget mediation, 1997-2010

 3. Articles about the law and its uses in particular counties

By law, the BCC and BOE must separately adopt their budgets prior to July 1 for the fiscal year of July 1 to June 30. The BOE prepares its budget based on expected revenues from two primary sources: the state legislature and the BCC. Traditionally, the BCC has provided funds for the capital needs of the BOE. Depending on the BOE’s request, and the BCC’s funding decision, funds from the BCC may be used for either current expenses or capital expenses or both.

FACT SHEET

Mediation of school board-county commission budget disputes

Purpose: To create an opportunity to settle differences and to avoid litigation

Key provisions of N.C. General Statute 115C-431

1) A seven-day time period following the commissioners adoption of their budget:

a) For the board of education to determine that the amount appropriated to the local current expense fund, or the capital outlay fund, or both is not sufficient to support a system of free public schools, and

b) For the chairman of the board of education and the chairman of the board of county commissioners to arrange a joint meeting of the two boards

2) A mediator is selected by agreement of the two boards, or appointed by the senior resident superior court judge

3) A two-step dispute resolution process:

a) A public, joint meeting of the two boards moderated by the mediator and, if there is no a resolution, either board may request

b) Mediation sessions attended by the chairs of both boards, attorneys for both boards, finance officers of board boards, the county manager, and the school superintendent (known as “working groups”).

4) The mediation sessions of the working groups are private.  Evidence of statements made and conduct occurring in mediation are not subject to discovery and are inadmissible in any court action. However, no evidence otherwise discoverable is inadmissible merely because it is presented or discussed in a mediation.

5) The mediator may not disclose any information about the mediation and may not make any recommendations or statements of findings or conclusions.

6) Mediation proceeds until a resolution is reached, until the mediator determines that an impasse exists, or until August 1. Mediation may continue beyond August 1 if the two sides agree. If mediation goes beyond August 1, the board of county commissioners will appropriate and begin payment of an amount equal to the previous fiscal year's appropriation to the schools.

7) The two boards share equally the mediator's compensation and expenses.

8) If mediation fails to produce a resolution, the board of education may bring a lawsuit in Superior Court

• 1997: Pamlico County, Wake County
• 1998: Burke County, Moore County, Union County
• 1999: Dare County
• 2000: Guilford County, Northampton County
• 2001: Cumberland County, Northampton County, Pamlico County
• 2002: None
• 2003: Union County
• 2004: Cabarrus County, Iredell County, Moore County
• 2005: Bladen County, Burke County, Halifax County, Scotland County, Wayne County
• 2006: Beaufort County**, Madison County, Pender County* (*mediation was scheduled under the statute, but a settlement was reached prior to the parties meeting in mediation)
• 2007: Graham County, Pamlico County, Union County
• 2008: Duplin County, Person County
• 2009: Burke County, Halifax County
• 2010: Halifax County (with Weldon City School Board)
• 2011: Northampton County
• 2012: Graham County
• 2013: Rowan County, Union County
• 2014: Cabarrus County, Nash County
• 2015: Pender County
• 2016-2020: None

** Beaufort County, 2006: Mediation was unsuccessful and legal action followed, including a NC Court of Appeals decision in February, 2008.¹ and a NC Supreme Court decision, August 28, 2009 (see above).

School Law Bulletin articles

on county commission-school board budget mediation

From 1998-2006, four articles have appeared in The School of Government’s School Law Bulletin that pertain to N.C. General Statute 115C-431, the law since 1997 governing pre-litigation mediation of local school board appeals of a county commission’s allocation for public schools.

The Coplin and Stephens (2005) and Stephens and Michel (1998) articles include lessons learned and recommendations for parties considering mediation, using mediation, and guidance for mediators. Updated June 2, 2006

Spring 2006 (Publication date: 2005)

Stephanie Coplin and John B. Stephens. School Budget Mediation: Three Cases from 2004 (School Law Bulletin, Vol. 36, No. 2, Spring 2005)

2001
Jill Wilson: A School Funding Dispute: Guilford County  (School Law Bulletin, Vol. 32, No. 2, Spring 2001)
Note: Ms. Wilson represented the Guilford County Board of Education in the budget dispute process of 2000.

1998
School Law Bulletin, Vol. 29, No. 2, Spring 1998
School Funding Disputes

C. Thomas Powell: Development of the Law pp. 20–28.

John B. Stephens & Matthew J. Michel: Mediate, Don’t Litigate pp. 29–42.

Beaufort County Bd. of Educ. v. Beaufort County Bd. of Com'rs
656 S.E.2d 296
N.C.App.,2008.
February 05, 2008 (Approx. 17 pages)
 
656 S.E.2d 296, 229 Ed. Law Rep. 269