DELANEY NEW SCHOOL v. ASHEVILLE BD. OF ED., No. COA01-420.

• Docket Nº: No. COA01-420.
• Citation: 150 NC App. 338, 563 S.E.2d 92
• Case Date: May 21, 2002
• Court: Court of Appeal of North Carolina (US)

563 S.E.2d 92
150 NC App. 338

FRANCINE DELANY NEW SCHOOL FOR CHILDREN, INC., Plaintiff-Appellee,
v.
ASHEVILLE CITY BOARD OF EDUCATION, Defendant-Appellant

No. COA01-420.

Court of Appeals of North Carolina.

May 21, 2002.

563 S.E.2d 93

Goldsmith, Goldsmith & Dews, P.A., by C. Frank Goldsmith, Jr., Marion, for plaintiff-appellee

Schwartz & Shaw, P.L.L.C., by Richard A. Schwartz and Brian C. Shaw, Raleigh, for defendant-appellant.

Haywood, Denny & Miller, L.L.P., by Robert E. Levin, Durham, for Financial Reform for Excellence in Education, amicus curiae.

BRYANT, Judge.

This appeal arises out of the interpretation of statutes that provide public and charter schools with local funding.

I. Background

Plaintiff, Francine Delany New School for Children, Inc. [Delany School], is a charter school operating within the Asheville City Schools Administrative Unit. Defendant, Asheville City Board of Education [Board], operates public schools also within the Asheville City Schools Administrative Unit.

Charter schools are public schools. N.C.G.S. § 115C-238.29E(a) (2001). As such, they are eligible for state and local funding. Section 115C-238.29H(b) provides that "[i]f a student attends a charter school, the local school administrative unit in which the child resides shall transfer to the charter school an amount equal to the per pupil local current expense appropriation to the local school administrative unit for the fiscal year." N.C.G.S. § 115C-238.29H(b) (2001).

By statute, all North Carolina public schools must adhere to a uniform budget format. See N.C.G.S. § 115C-426(a) (2001). Under this format, funding for public schools comes from three sources: 1) the State Public School Fund; 2) the local current expense fund; and 3) the capital outlay fund. N.C.G.S. § 115C-426(c) (2001). At issue in this appeal are revenues from fines and forfeitures and from supplemental school taxes accruing to the local current expense fund.

The local current expense fund contains revenues from several sources accruing to the local school administrative unit [LSAU] for the public school system's current operating expenses. N.C.G.S. § 115C-426(e) (2001). The local current expense fund includes:

revenues accruing to the local school administrative unit by virtue of Article IX, Sec. 7 of the Constitution, moneys made available to the local school administrative unit by the board of county commissioners, supplemental taxes levied by or on behalf of the local school administrative unit pursuant to a local act or G.S. 115C-501 to 115C-511, State money disbursed directly to the local school administrative unit, and other moneys made available or accruing to the local school administrative unit for the current operating expenses of the public school system.

N.C.G.S. § 115C-426(e); see N.C. Const, art. IX, § 7.

The parties stipulated that these revenues include Buncombe County's annual appropriation to the local current expense fund of the Asheville City Schools. Delany School received an equal per pupil share of Buncombe County's annual appropriation to the Board's local current expense fund, but received no share of the revenues collected from the supplemental school tax or penal fines and forfeitures. Delany School requested that the Board include revenues from supplemental school taxes and penal fines and forfeitures as part of the funds transferred on a per pupil basis. The Board refused, despite the fact that revenues from supplemental taxes and from penal fines and forfeitures are included in the per pupil funding to non-charter public schools. Delany School received an average of $1075.38 per pupil from the Board during its first three years of operation. Had Delany School received revenues from supplemental taxes and penal fines and forfeitures, the per pupil allocation would have been an additional $1100.

563 S.E.2d 94

Delany School requested an Advisory Opinion from the North Carolina Attorney General's Office regarding whether local school boards authorized to levy supplemental school taxes must transfer a share of the levied tax to charter schools. The Attorney General's Office issued an Advisory Opinion on 23 September 1998, stating that in its opinion, the local school boards were required to transfer a share of the levied tax because the tax is part of the local current expense fund, which is indistinguishable from the local current expense appropriation to the local school administrative unit. Charter School's Entitlement to Supplemental Tax Funds, Op. Att'y Gen. 2-3 (1998). In response, attorneys for the North Carolina School Boards Association, the North Carolina Association of School Administrators and four other school law attorneys sent to the Attorney General's Office a letter disputing the Advisory Opinion

Delany School filed a complaint in the Superior Court of Buncombe County on 7 September 1999, seeking: 1) a judgment declaring as unlawful the Board's refusal to share funds received from the supplemental school tax; 2) a judgment declaring as unlawful the Board's refusal to share the funds received from the collection of penal fines and forfeitures; 3) an order enjoining the Board from refusing to include the above-mentioned funds in the Board's calculation of the per pupil local current expense appropriation; and 4) an order requiring the Board to remit to Delany School the difference between the per pupil local current expense appropriation actually transferred by the Board from the 1997 to the 1999 school years, and the amount which should have been transferred, i.e., the per pupil local current expense appropriation for those years calculated to include funds from the supplemental school tax and penal fines and forfeitures, plus interest. The Board answered, and both parties moved for summary judgment.

The trial court granted summary judgment in favor of Delany School and entered an Amended Judgment on 5 January 2001. In reaching summary judgment, the trial court stated that the terms "fund" and "appropriation" are used interchangeably in Chapter 115C. The trial court enjoined the Board from refusing to include the funds received from the supplemental school tax and from penal fines and forfeitures in the calculation of the per pupil local current expense appropriation. The trial court also ordered the Board to pay Delany School the difference between the per pupil local current expense appropriation actually transferred by the Board for the school years in question and the per pupil local current expense appropriation for those years calculated to include funds received by the Board from the supplemental school tax and penal fines and forfeitures, plus interest. The Board appealed.

The Board raises two assignments of error. First, that the trial court erred in concluding that the phrase "local current expense appropriation" in the Current Operations Appropriations and Capital Improvement Appropriations Act of 1998 [Charter School Funding Statute], N.C.G.S. § 115C-238.29H(b), is synonymous with the phrase "local current expense fund" in the School Budget and Fiscal Control Act, N.C.G.S. § 115C-426(e). Second, that the trial court erred in concluding that Delany School is entitled to a share of supplemental school taxes and penal fines and forfeitures received by the Board. We disagree with the Board and affirm the trial court.

II. Scope of Review

Upon motion, summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C.G.S. § 1A-1, Rule 56(c) (2001). An issue is material if "the facts alleged would constitute a legal defense, or would affect the result of the action, or if its resolution would prevent the party against whom it is resolved...