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North Carolina legislators say school boards should not have sued over state’s $730 million debt

State Rep. Nelson Dollar says local school boards should not have sued state agencies over a $730 million debt to schools.

Top lawmakers in the General Assembly say the N.C. School Boards Association (NCSBA) and 20 local boards of education should not have sued in their latest attempt to collect on a $730 million debt to schools, WRAL reported.

The response from legislators came shortly after school board leaders announced this week that they would sue to extend a 2008 Superior Court judgement that ordered state agencies to repay civil penalty funds that should have been diverted to K-12 technology.

The judge said agencies like the Department of Transportation, Department of Revenue and UNC kept that money for other purposes from 1996 to 2005, in violation of their constitutional obligation.

Officials with the NCSBA say they unsuccessfully attempted to negotiate repayment appropriated by lawmakers over the last decade.

From WRAL:

Rep. Nelson Dollar, R-Wake, the House’s senior budget writer, said he expects lawmakers will look for a way to begin paying back the judgment in next year’s legislative session. But he said filing another lawsuit wasn’t the best way to resolve the issue.

“I don’t believe that that was a very good use of their time and energy or a good use of the time and energy of the General Assembly,” Dollar said.

“We had no choice,” Bruce Mildwurf, a spokesman for the School Boards Association, said in an email, citing the expiration of the 2008 judgment next week.

Mildwurf said the association has worked with lawmakers for several years to address the debt, but legislation never passed.

Leanne Winner, the group’s director of governmental relations, sent a letter to House Speaker Tim Moore and Senate President Pro Tem Phil Berger in March, advising that the association would go back to court and asking for a settlement discussion. There was no response to the letter.

“As they well know, just sending one letter is not the way you really go about it,” Dollar said. “That’s usually an opening, and then you start coming to the members who work on education appropriations and these issues and sit down and have the dialogue on that, you know, as opposed to rushing off to court.”

Dollar said the School Boards Association didn’t approach him about money owed, and House Minority Leader Darren Jackson said the group didn’t mention it to him, either.

“I will say that, in 10 years, I’ve never spoken to the School Boards Association about this issue. So, it is not something that’s been on the front burner,” said Jackson, D-Wake.

Still, he said, the constitution is clear that money from fines and forfeitures goes to public schools, and the state owes the districts the money.

“It’s certainly a large enough number. It’s something that we should take seriously and talk about, and it would be, I think, a good idea to do that in the interim so that we can come back in January with a plan,” Jackson said.

The NCSBA and local boards’ complaint named top state officials as defendants in their official capacity, including Treasurer Dale Folwell, State Board of Education Chairman Bill Cobey, Superintendent Mark Johnson and UNC President Margaret Spellings.

According to their legal filing, only UNC has repaid a portion of its debt, putting in about $18 million of their $42 million tab.

Other agencies that owe the school boards money include:

  • Department of Revenue – $583.3 million
  • Department of Transportation – $104 million
  • Employment Security Commission – $20 million
  • Department of Health and Human Services – $53,955
  • Department of Environmental Quality – $20,781
  • Department of Commerce – $11,560

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