N.C. Supreme Court Democrats order forced money transfer for Leandro spending

Associate Justice Robin Hudson in session of the N.C. Supreme Court in 2021. Photo by Maya Reagan, Carolina Journal

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  • In a 4-3 party-line vote, with Democrats in the majority, the N.C. Supreme Court is endorsing a court-ordered plan to transfer hundreds of millions of dollars out of the state treasury. The money would address the Leandro education funding lawsuit.
  • Dissenting Republican Supreme Court justices accused the majority of usurping the General Assembly's power over state government spending.

The N.C. Supreme Court is ordering state government officials to transfer what is likely to be hundreds of millions of dollars out of the state’s treasury to fund a court-ordered education plan. In a 4-3 party-line vote, the court’s Democratic justices overruled Republican colleagues and rejected Republican lawmakers’ arguments in the long-running Leandro case.

GOP lawmakers had argued that a forced money transfer would violate the state constitution’s separation of powers.

At least one official targeted for the forced money transfer, state Treasurer Dale Folwell, is raising concerns about the ruling.

In a 227-page opinion, the Supreme Court is sending the case back to a trial judge. Democratic justices want the trial judge to determine the total amount of court-ordered spending. The total is likely to be no more than the $785 million tied to an earlier trial court order in April.

“A quarter-century ago, this Court recognized that the North Carolina Constitution vests in all children of this state the right to the opportunity to receive a sound basic education and that it is the constitutional duty of the State to uphold that right,” wrote Justice Robin Hudson, referencing the state Supreme Court’s original 1997 Leandro decision.

The state’s highest court addressed the case again in 2004, ruling that state government had failed to meet its obligations.

“[T]oday, as in 2004, far too many North Carolina schoolchildren, especially those historically marginalized, are not afforded their constitutional right to the opportunity to a sound basic education,” Hudson wrote. “As foreshadowed in Leandro II, the State has proven — for an entire generation — either unable or unwilling to fulfill its constitutional duty.”

“Now, this Court must determine whether that duty is a binding obligation or an unenforceable suggestion,” she added. “We hold the former: the State may not indefinitely violate the constitutional rights of North Carolina schoolchildren without consequence. Our Constitution is the supreme law of the land; it is not optional. In exercising its powers under the Appropriations Clause, the General Assembly mustalso comply with its duties under the Education Provisions.”

“Accordingly, in response to decades of inaction by other branches of state government, the judiciary must act,” Hudson wrote.

“For twenty-five years, the judiciary has deferred to the executive and legislative branches to implement a comprehensive solution to this ongoing constitutional violation,” she wrote. “Today, that deference expires.”

Hudson outlined the next steps in the case.

“We remand the case to the trial court for the narrow purpose of recalculating the amount of funds to be transferred in light of the State’s 2022 Budget,” she wrote. “Once those calculations have been made, we instruct the trial court to order those State officials to transfer those funds to the specified State agencies.”

The case will continue, even after money is transferred. “[W]e instruct the trial court to retain jurisdiction over the parties to monitor State compliance with this order,” Hudson wrote. “In so doing, we uphold our own obligation to safeguard the constitutional rights of North Carolina’s schoolchildren while still allowing for our coequal branches to correct course in the years to come.”

Justice Phil Berger Jr. wrote for dissenting Republicans. “We see in this opinion the arbitrary usurpation of purely legislative power by four justices,” Berger wrote. “The majority affirms the trial court order which strips the General Assembly of its constitutional power to make education policy and provide for its funding.”

Berger contrasted this ruling to cases in which a bad consequence — a “wolf” — comes to the court clad “in sheep’s clothing.”

“Indeed, this wolf comes as a wolf,” Berger wrote.

“Fundamentally, and contrary to what plaintiffs, executive branch defendants, and the majority would have the public believe, this case is not about North Carolina’s failure to afford its children with the opportunity to receive a sound basic education,” he wrote. “The essence of this case is power—who has the power to craft educational policy and who has the authority to fund that policy.”

Folwell, as treasurer, is listed in the original court order calling for the money transfer.

“This is a case that’s been around for a quarter of a century,” Folwell told Carolina Journal. “It is still a crime for the controller to write any check out of the anything out of the treasury without the authorization of the General Assembly.  That was true yesterday, it’s still true today, and it will be true tomorrow. As the keeper of the public purse, I don’t pick and choose which laws to apply or who to apply them to, particularly in something as important as public education.”

John Locke Foundation President Donald Bryson criticized the ruling.

“Today’s opinion reflects the continued partisan assault from this court, which has been rightly dubbed ‘The Usurper Four,'” Bryson said. “This cowardly timed ruling dishonors the constitutional separation of powers, and Justice Hudson’s move to issue a lame-duck decision for which there is no democratic oversight is telling. Shamefully missing from this decision are a respect for democratic oversight and clear constitutional authority.”

The latest stage in the 28-year-old Leandro case stems from a court order issued last fall.

On Nov. 10, 2021, Judge David Lee ordered the state to spend an additional $1.75 billion to implement two years of recommendations from a court-ordered Leandro comprehensive remedial plan. In addition to ordering more spending, the judge took the controversial step of ordering the money transferred out of the state treasury and moved to state agencies. Lee’s order bypassed the General Assembly and focused instead on the state budget director, controller, and treasurer.

The second part of Lee’s order prompted the latest Leandro dispute. That dispute returned the case to the N.C. Supreme Court.

Controller Linda Combs went to the N.C. Court of Appeals and secured a rare “writ of prohibition” against Lee’s Nov. 10 order. Combs argued that she could not take part in any transfer of funds without authorization from the General Assembly. To do so would violate her oath of office and expose her to criminal charges.

Leandro plaintiffs and the N.C. Justice Department attorneys urged the state Supreme Court to step in and resolve the dispute over the forced money transfer. The high court agreed in March to take the case. First, the court ordered a new review from the trial judge.

Eight days after Lee’s Nov. 10 order, Cooper had signed a new state budget with broad bipartisan support. The state Supreme Court urged the Leandro judge to determine how that new budget would affect the $1.75 billion price tag he had assessed to taxpayers on Nov. 10.

On the same day that the full Supreme Court returned the case to the trial court, Chief Justice Paul Newby replaced Lee. The chief justice installed Special Superior Court Judge Michael Robinson to oversee Leandro proceedings moving forward.

With the case back in front of a trial judge, Republican legislative leaders formally stepped into the debate. Like Combs, they opposed the forced money transfer. They also argued that the state budget act completely mooted Lee’s Nov. 10 order. Once the legislative and executive branches agreed to the education provisions in the budget, Lee lost any authority to order any other education-related spending, lawmakers said.

On April 26 Robinson made two major changes to Lee’s five-month-old order. First, the new judge whittled the size of the order down from $1.75 billion to $785 million. That number was close to the figure recommended by Leandro plaintiffs and N.C. Justice Department lawyers.

Robinson also threw out Lee’s forced money transfer. Ruling that no court had overturned the Appeals Court’s “writ of prohibition” against Lee’s order, Robinson determined that he was obligated to follow the appellate judges’ reasoning.

Plaintiffs and lawyers representing the state’s executive branch endorsed Lee’s plan, including the forced money transfer. Legislative leaders objected to any court order that substitutes judicial decisions for education choices made by state government’s policymaking branches.

The Supreme Court’s latest order blocks the Appeals Court order as the case proceeds.