School Funding Cases in North Carolina

in North Carolina Litigation

Historical Background

In 1987, the North Carolina Supreme Court, in Britt v. North Carolina State Board of Education, 361 S.E.2d 71, denied review of an appellate court decision dismissing plaintiffs’ case, which had claimed that the state’s education finance system violated the state constitution because it caused disparities in school programs and facilities. Ten years later, however, the state’s supreme court distinguished the Britt “equity” decision, in Leandro v. State, 488 S.E.2d 249 (1997), and remanded plaintiffs’ “adequacy” claims for trial. The court declared that the right to education in the state constitution “requires that all children have the opportunity for a sound basic education,” echoing the same constitutional standard articulated by New York’s highest court in CFE v. State in 1995.

Trial Court Decisions

The Leandro trial court decided to hear rural plaintiffs (Hoke County) and urban plaintiffs separately and began with the Hoke County plaintiffs. Beginning in October 2000, the trial court issued a series of opinions, in Hoke County v. State, 95 CVS 1158; the court linked the state’s learning standards to “sound basic education” and required funding for pre-K for all at-risk four-year-olds.

North Carolina’s State Board of Education has developed learning standards – and a curriculum and assessments aligned with those standards – based on the skills that students will need in order to be informed citizens and be gainfully employed in contemporary society. The court held that performance “at or above grade level” according to the state standards is the minimum performance standard for demonstrating that students are receiving a sound basic education. The defendant State had argued that performance one level below grade level in elementary and middle school and passing an eighth-grade level examination in high school should be adequate to demonstrate that students were receiving a sound basic education.

At-Risk Question

The court conducted additional evidentiary hearings in 2001 and, in early 2002, had the parties brief and argue the question whether “the failure of at-risk children to obtain a sound basic education” is due to insufficient state funding or lack of implementation of successful, cost-effective programs. Plaintiffs argued, inter alia, that recruitment of sufficient numbers of quality teachers is critical to children’s educational success, while the State continued to contend that students are already receiving the opportunity for a sound basic education.

Final Order and Appeal

In April 2002, the court issued its fourth and final order, which held that at-risk students can learn with effective instruction delivered by “a certified, well-trained, competent teacher with high expectations” and that the State is responsible for ensuring that there is a qualified teacher in each classroom. (More on the court’s conclusions).

The State appealed the decision, which went directly to the state supreme court. On July 30, 2004 the North Carolina Supreme Court issued a decision agreeing with the trial court’s holdings that the state was ultimately responsible “to meet the needs of ‘at-risk’ students in order for such students to avail themselves of their right to the opportunity to obtain a sound basic education,” and that the State must provide services to such children “prior to their enrolling in the public schools.” Nevertheless, the court held that the trial court’s order mandating pre-kindergarten classes for all “at-risk” prospective enrollees was not supported by a sufficient record. “At this juncture” of the case, the court concluded that such a “narrow” remedial order was “premature” and deferred to the expertise of the legislative and executive branches in matters of education policy to determine what types of services should be provided to at-risk students to prepare them for school.

Recent Events

The 2006-2007 budget included a 9.6% increase in K-12 education spending. The budget included more money for low-wealth districts and a salary increase for teachers and administrators, and funded a state-wide expansion of a pilot program for disadvantaged students. An additional $17.9 million in lottery proceeds were also earmarked to expand the More at Four pre-kindergarten program.In the aftermath of the economic downturn, however, the FY 2009-2010 budget included significant cuts to and elimination of many programs important to compliance with the court’s requirements that every child be provided a competent teacher, a competent principal and adequate resources.
On May 10, 2011, plaintiffs in Hoke filed a request for a hearing on the state’s reduction of pre-kindergarten services for at-risk children, elimination of End of Course testing, and defendants’ general compliance with North Carolina’s constitutional requirements. The motion was filed in reaction to the bienniel budget adopted by the North Carolina House of Representatives, which cuts education spending and, among other things, reduces the at-risk student services allotment by 12 percent in the next two fiscal years, and curtails pre-kindergarten services for at-risk children, including cutting 20 percent of funding from More at Four and Smart Start, two state-run pre-K programs.

On July 18, 2011, Wake County Superior Court Judge Howard Manning held that the state of North Carolina cannot enforce the portion of the 2011 Budget Bill that limits admission of at-risk four-year-olds to the state’s prekindergarten program, formerly known as More-At-Four and now known as the North Carolina Pre-Kindergarten Program. See Hoke County Board of Education v. North CarolinaJudge Manning held that the “high quality prekindergarten program many not be dismantled, nor may the prekindergarten services provided to at-risk 4 year olds throughout North Carolina be reduced, diminished in quality or eligibility for the prekindergarten program be restricted by the erection of artificial or actual barriers enacted into law.” The Court specifically invalided the 20% cap restriction and further held that: “the State of North Carolina shall provide the quality services of the NCPK to any eligible at-risk four year old that applies.”

On August 10, 2011, Democratic Governor Beverly Perdue issued Executive Order 100 directing the Department of Health and Human Services to work with North Carolina’s education agencies to comply with the court order.  In addition, the governor prohibited any state programs from imposing a co-pay requirement that may prevent eligible at-risk four-year-olds from joining the program.

The State’s motion to clarify Judge Howard Manning’s July 18 order that the State of North Carolina cannot deny “at-risk” students access to its prekindergarten program, was denied by the judge on September 2, 2011. Hoke County Board of Education v. North Carolina, September 2, 2011. Judge Manning further held that the state of North Carolina must provide each child an equal opportunity to obtain a sound basic education and must provide “at-risk” prospective four-year-olds “sufficient” prekindergarten services. The State has now appealed Judge Manning’s ruling.

On August 21, 2012, finding that Superior Court Judge Howard Manning was within legal bounds when he invalidated the legislative changes, an appeals court held that the state must admit any eligible at-risk child who applies to its pre-kindergarten program. In response to the state’s claim that the trial court lacked jurisdiction to mandate services on a statewide basis, the unanimous three-judge panel clarified that the order applied only to enrollment in existing pre-k programs, but it held that the trial court had jurisdiction to require admission to all existing programs in the state, and not just to programs in Hoke county where the trial took place. In 2013, the North Carolina Supreme Court ruled that the issue was now moot since the legislature had substantially amended the statutes that the lower courts had found to be unconstitutional.

In a strongly worded motion filed on April 29, 2014, plaintiffs in the long-pending North Carolina adequacy case alleged that the state defendants abandoned many of the remedial commitments they had made to the court over the past 10 years. Hoke County Bd of Edu v. State. The plaintiffs requested a hearing in August 2014 to argue that the state should be compelled to present “(i) a specific written plan, with timetables, setting forth how they will fulfill their Constitutional obligation to provide all children in North Carolina the opportunity for a sound basic education and (ii) evidence regarding their ability to fulfill such a plan…” Over-all, the plaintiffs conclude that “The Defendants actions since 2008 have made it impossible for the State to provide all children in North Carolina with a meaningful opportunity for a sound basic education.

On April 24, 2015, the Superior Court ordered the submission of “a definite plan of action” from the State of North Carolina as to how the State intended to correct the educational deficiencies.  Subsequently, on July 1, 2015, the State submitted a plan to respond to the Court’s order. Plaintiffs criticized that the submission as not providing a specific and workable plan with clearly defined actions, timetables for implementation, measurable objectives, an assessment of the resources and a mechanism to obtain those resources.  A hearing was scheduled for April 2016.

Finding that an “opportunity scholarship” program enacted by the legislature in 2013 would reduce funding for public education by about $12 million, a civil superior court judge in Wake County, North Carolina recently issued a preliminary injunction enjoining the state from implementing the challenged legislation. Hart v. State of North Carolina.  Under the challenged program, up to 2400 students would be eligible for scholarships of up to $4200 to attend private schools. Judge Robert H. Hobgood found that the private schools that receive these scholarship funds are not required to be accredited, to employ credentialed teachers, to be subject to any curriculum requirements or to demonstrate any level of student achievement. The Court  determined that the plaintiffs were likely to succeed on the merits because Article IX, sec. 6 of the State Constitution specifies that assets and revenue “for the purpose of public education” “shall be faithfully appropriated and used exclusively for the establishing and maintain a uniform system of free public schools.” In violation of this provision, the “opportunity scholarship” program would likely be funded with money that have been “set apart” for the public school system.

Last updated: August 2016

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