IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA14-633
Filed: 7 April 2015
Union County, No. 13 CVS 2063
UNION COUNTY BOARD OF EDUCATION, Plaintiff,
v.
UNION COUNTY BOARD OF COMMISSIONERS, Defendant.
Appeal by defendant from judgment entered 10 October 2013 by Judge W.
Erwin Spainhour in Union County Superior Court. Heard in the Court of Appeals 2
December 2014.
Schwartz & Shaw, P.L.L.C., by Richard Schwartz and Brian C. Shaw, for
plaintiff-appellee.
Wyrick Robbins Yates & Ponton LLP, by K. Edward Greene and Tobias S.
Hampson; and Perry, Bundy, Plyler, Long & Cox, LLP, by H. Ligon Bundy and
Christopher Cox, for defendant-appellant.
Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Jill R. Wilson and
Julia C. Ambrose; and the North Carolina School Boards Association, by
Allison B. Schafer and Christine T. Scheef, on behalf of the North Carolina
School Boards Association, amicus curiae.
Smith Moore Leatherwood LLP, by Elizabeth Brooks Scherer, Matthew Nis
Leerberg, and Thomas E. Terrell, Jr., on behalf of the North Carolina
Association of County Commissioners, amicus curiae.
McCULLOUGH, Judge.
The Union County Board of Commissioners (“defendant”) appeals from a
judgment ordering it to appropriate additional funds to the Union County Board of
UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
Education’s (“plaintiff”) local current expense and capital outlay funds for the 2013-
2014 fiscal year. For the following reasons, we grant a new trial.
I. Background
This case concerns funding provided by defendant to plaintiff for the 2013-2014
fiscal year. The School Budget and Fiscal Control Act (the “Act”), N.C. Gen. Stat. §
115C-422 et seq., governs such funding.
In general, the Act requires that “[e]ach local school administrative unit shall
operate under an annual balanced budget resolution[,]” N.C. Gen. Stat. § 115C-425(a)
(2013), which shall include at least the following funds: the State Public School Fund;
the local current expense fund; and the capital outlay fund. N.C. Gen. Stat. § 115C-
426(c) (2013). Pertinent to this case,
The local current expense fund shall include
appropriations sufficient, when added to appropriations
from the State Public School Fund, for the current
operating expense of the public school system in conformity
with the educational goals and policies of the State and the
local board of education, within the financial resources and
consistent with the fiscal policies of the board of county
commissioners. These appropriations shall be funded by
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 [N.C. Gen. Stat. §§] 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
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
system.
N.C. Gen. Stat. § 115C-426(e).
The capital outlay fund shall include appropriations for:
(1) The acquisition of real property for school purposes,
including but not limited to school sites, playgrounds,
athletic fields, administrative headquarters, and
garages.
(2) The acquisition, construction, reconstruction,
enlargement, renovation, or replacement of buildings
and other structures, including but not limited to
buildings for classrooms and laboratories, physical and
vocational educational purposes, libraries, auditoriums,
gymnasiums, administrative offices, storage, and
vehicle maintenance.
(3) The acquisition or replacement of furniture and
furnishings, instructional apparatus, data-processing
equipment, business machines, and similar items of
furnishings and equipment.
(4) The acquisition of school buses as additions to the
fleet.
(5) The acquisition of activity buses and other motor
vehicles.
(6) Such other objects of expenditure as may be
assigned to the capital outlay fund by the uniform
budget format.
....
Appropriations in the capital outlay fund shall be funded
by revenues made available for capital outlay purposes by
the State Board of Education and the board of county
commissioners, supplemental taxes levied by or on behalf
of the local school administrative unit pursuant to a local
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
act or [N.C. Gen. Stat. §§] 115C-501 to 115C-511, the
proceeds of the sale of capital assets, the proceeds of claims
against fire and casualty insurance policies, and other
sources.
N.C. Gen. Stat. § 115C-426(f).
Furthermore, plaintiff and defendant are encouraged under the Act “to conduct
periodic joint meetings during each fiscal year[]” “[i]n order to promote greater
mutual understanding of immediate and long-term budgetary issues and
constraints[.]” N.C. Gen. Stat. § 115C-426.2 (2013). “In particular, the boards are
encouraged to assess the school capital outlay needs, to develop and update a joint
five-year plan for meeting those needs, and to consider this plan in the preparation
and approval of each year's budget under [the Act].” Id. Concerning budgets, the Act
outlines a process and timeline for the preparation, proposal, approval, and
submission by plaintiff to defendant of each year’s budget; as well as defendant’s
action on plaintiff’s proposed budget. See N.C. Gen. Stat. §§ 115C-427 to -429.
In the present case, on 15 April 2013, plaintiff submitted its proposed budget
for the 2013-2014 fiscal year to defendant in accordance with the requirements of
N.C. Gen. Stat. § 115C-429(a).1 In the budget, plaintiff requested $86,180,152 in local
current expense funding and $8,357,859 in capital outlay funding. Upon review of
plaintiff’s proposed budget, on 17 June 2013, defendant adopted the county 2013-2014
1 “Fiscal year” is defined in the Act as “the annual period for the compilation of fiscal
operations. The fiscal year begins on July 1 and ends on June 30.” N.C. Gen. Stat. § 115C-423(4)
(2013).
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
budget ordinance. The budget ordinance included appropriations to plaintiff in the
amount of $82,260,408 for local current expense and $3,000,000 for capital outlay,
resulting in shortfalls of $3,919,744 for local current expense and $5,357,859 for
capital outlay.
In response to the county 2013-2014 budget ordinance, on 18 June 2013,
plaintiff adopted a resolution in which it determined “the amounts of money
appropriated by [defendant] for the 2013-2014 school year to [plaintiff’s] local current
expense fund and capital outlay fund [were] not sufficient . . . to support a system of
free public schools[.]” Thus, plaintiff directed its Chairman, superintendent, and
attorneys to take the appropriate steps under N.C. Gen. Stat. § 115C-431 to resolve
the budget dispute. In reaching the determination that the appropriations by
defendant were inadequate, plaintiff indicated that, in addition to considering the
amount of funds appropriated by defendant and defendant’s ability to provide
additional funding, it “considered the cumulative effect of the County of Union’s
inadequate appropriations for current expense and capital outlay in the preceding
fiscal years[.]”
In accordance with the procedures set forth in N.C. Gen. Stat. § 115C-431(a)
and (b), plaintiff and defendant participated in a joint meeting on 24 June 2013 in an
attempt to resolve the budget dispute. When the parties failed to reach an agreement
at the joint meeting, the parties participated in mediation sessions on 24 June,
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
28 June, and 31 July 2013. The mediation efforts concluded on 31 July 2013 with the
mediator declaring an impasse.
The following day, 1 August 2013, plaintiff initiated this action against
defendant pursuant to N.C. Gen. Stat. § 115C-431(c). In plaintiff’s complaint,
plaintiff sought “a determination of (i) the amount of money legally necessary from
all sources and (ii) the amount of money legally necessary from [defendant], in order
to maintain a system of free public schools as defined by State law and State Board
of Education policy.”
Defendant responded to plaintiff’s complaint by answer filed 12 August 2013,
the same day the case came on for trial in Union County Superior Court before the
Honorable W. Erwin Spainhour.
Following a lengthy trial, on 10 October 2013, the jury returned a verdict
finding that $326,498,487 in current expense funding and $89,184,005 in capital
outlay funding was legally necessary from all sources in order to maintain a system
of free public schools. The jury also found that an additional $4,973,134 in current
expense funding and an additional $86,184,005 in capital outlay funding, beyond the
amounts already appropriated by defendant, was legally necessary from defendant
in order to maintain a system of free public schools.
The trial court entered judgment on the jury verdict ordering defendant “to
appropriate to the local current expense fund of . . . [p]laintiff . . . the additional
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
amount of $4,973,134 for fiscal year 2013-2014, above that amount appropriated in
the Union County Budget Ordinance adopted on June 17, 2013[]” and “to appropriate
to the capital outlay fund of . . . [p]laintiff . . . the additional amount of $86,184,005
for fiscal year 2013-2014, above that amount appropriated in the Union County
Budget Ordinance adopted on June 17, 2013.” The trial court also authorized
defendant, in accordance with N.C. Gen. Stat. § 115C-431, “to levy such taxes on
property as it may choose to make up the difference, if any, when added to other
revenues available for these purposes.” Defendant filed notice of appeal from the
judgment on 17 October 2013.
II. Discussion
Defendant raises the following four issues on appeal: whether the trial court
erred by (1) allowing plaintiff to argue an improper legal standard in its opening
statements; (2) allowing plaintiff to present evidence of claimed needs outside the
scope of plaintiff’s proposed budget for the 2013-2014 fiscal year; (3) denying
defendant’s motions for a directed verdict; and (4) instructing the jury to apply a
broad rather than restrictive definition of the amount legally necessary to maintain
a system of free public schools in Union County.
1. Plaintiff’s Opening Statements
Defendant first argues the trial court erred by allowing plaintiff to argue an
improper legal standard in plaintiff’s opening statements. As both parties agree, we
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Opinion of the Court
review the trial court’s decisions regarding opening statements for an abuse of
discretion. See State v. Speller, 345 N.C. 600, 606, 481 S.E.2d 284, 287 (1997) (“The
control of opening statements rests in the discretion of the trial court.”).
During opening statements in this case, plaintiff stated the following while
explaining the issues to be decided by the jury:
The issue that you’re going to be asked to decide is
the amount of money needed from the Commissioners to
maintain the schools. It’s not the amount of money needed
to open the doors. That’s not the standard. The standard
is higher than that. We’re going to open the doors. Come
hell or high water, we’re going to open the doors when those
kids come. I’m going to get that off the table right now. So
that’s not an issue. But the standard is much higher than
that, and the expectations are much higher than that. So
the amount needed is now in your hands. It’s up to you to
determine. It’s entirely up to you.
The Courts have made clear that the amount needed
is not that which is absolutely necessary; it’s that which is
legally necessary, and reasonable and useful for the
purposes sought. In making your decision, you have an
opportunity to touch the future --
Upon hearing plaintiff’s explanation of “the amount needed,” defendant objected on
the basis that plaintiff incorrectly stated the legal standard. The trial court, however,
allowed plaintiff to continue without correction, stating, “[w]ell, it’s [sic] opening
statement. We’ll see where -- what the evidence will show.” Now on appeal,
defendant contends the trial court erred because plaintiff’s statement of the legal
standard was similar to that rejected by our Supreme Court in Beaufort Cnty. Bd. of
Educ. v. Beaufort Cnty. Bd. of Comm’rs, 363 N.C. 500, 681 S.E.2d 278 (2009).
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
At the time Beaufort was decided, in any action brought to resolve a budget
dispute pursuant to N.C. Gen. Stat. § 115C-431(c), “the trial court [was] charged to
‘find the facts as to the amount of money necessary to maintain a system of free public
schools, and the amount of money needed from the county to make up this total.’ ”
Id. at 503, 681 S.E.2d at 281 (quoting N.C. Gen. Stat. § 115C-431(c) (2007)).
In Beaufort, our Supreme Court addressed the constitutionality of the
statutory framework in N.C. Gen. Stat. § 115C-431(c) for resolving budget disputes
and reviewed whether the statutory framework was properly applied in the case. Id.
at 502, 681 S.E.2d at 280. In doing so, the Court considered “the meaning of the terms
‘necessary’ and ‘needed,’ as used in [N.C. Gen. Stat. § 115C-]431(c), in light of Article
IX, Section 2(2) of the State Constitution.” Id. at 505, 681 S.E.2d at 283. Upon
recognizing the terms were “susceptible to reasonable interpretations of varying
strictness,” and that, “[i]f a fact-finder were to interpret ‘necessary’ or ‘needed’ in
[N.C. Gen. Stat. § 115C-]431(c) expansively, there [was] a danger that the resulting
verdict could intrude on a county commission's funding discretion under Article IX,
Section 2(2) . . . [,]” the Court adopted a restrictive interpretation of the terms
“necessary” and “needed.” Id. at 505-06, 681 S.E.2d at 283. The Court explained
that, “[s]o construed, [N.C. Gen. Stat. § 115C-]431(c)'s requirement that county
commissions provide the minimum level of funding required by state law does not
abrogate their discretionary authority to contribute more.” Id.
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
Our Supreme Court then addressed whether the Beaufort trial court erred
when it “instructed the jury that the word ‘needed’ in [N.C. Gen. Stat. § 115C-]431(c)
means that which is reasonable and useful and proper or conducive to the end
sought.” Id. at 507, 681 S.E.2d at 283 (quotation marks omitted). Having determined
a restrictive interpretation of the terms “necessary” and “needed” was necessary to
preserve the discretionary authority of county commissions, the Court held the
instruction to the jury in Beaufort “conveyed an impermissible, expansive definition”
and was in error. Id. Thus, the Court remanded the case for a new trial noting the
following:
At that trial, the trial court should instruct the jury that
[N.C. Gen. Stat. § 115C-]431(c) requires the County
Commission to provide that appropriation legally necessary
to support a system of free public schools, as defined by
Chapter 115C and the policies of the State Board. The trial
court should also instruct the jury, in arriving at its verdict,
to consider the educational goals and policies of the state,
the budgetary request of the local board of education, the
financial resources of the county, and the fiscal policies of
the board of county commissioners. See [N.C. Gen. Stat.] §
115C–426(e) (2007). Anything beyond this measure of
damages impermissibly infringes upon the discretionary
authority of the County Commission under Article IX,
Section 2(2) of the State Constitution and may not be
awarded by a jury.
Id. at 507, 681 S.E.2d at 283-84 (emphasis added).2
2 Subsequent to the Beaufort decision and during the pendency of the current budget dispute,
prior to the filing of this case, the General Assembly amended N.C. Gen. Stat. § 115C-431(c) to reflect
the Court’s holding in Beaufort. Thus, N.C. Gen. Stat. § 115C-431(c) now charges the fact finder to
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
As noted above, in this case, plaintiff stated to the jury during its opening
statements that the standard to be applied in determining the amount of funding “is
not that which is absolutely necessary; it’s that which is legally necessary, and
reasonable and useful for the purposes sought.” Although, the standard
communicated by plaintiff to the jury is similar to the one rejected in Beaufort,
plaintiff contends its use of the “reasonable and useful” language was not inconsistent
with Beaufort because the language was joined to the correct standard, “legally
necessary,” by the conjunction “and” and therefore did not supersede what was
“legally necessary.” While plaintiff’s argument is technically correct, we find
plaintiff’s statement of the standard to the jury misleading and, therefore, hold the
trial court erred in allowing plaintiff to communicate a standard that included
language mirroring that rejected in Beaufort. Nevertheless, we hold the error was
harmless.
In charging the jury in Beaufort, the trial court instructed the jury to apply a
broad definition of “needed” and “necessary” to determine the amount of funding to
be awarded. In the present case, however, the overly broad language rejected in
Beaufort was only communicated to the jury in plaintiff’s opening statements.
Following weeks of evidence, the trial court instructed the jury that it must apply the
determine the amount of money “legally necessary” as opposed to the amount of money “needed” and
“necessary.” 2013 N.C. Sess. Laws 2013-141, sec. 1, eff. June 19, 2013.
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
law it provides in the jury instructions and stated the proper legal standard as
follows:
The issue to be decided by you, the jury, is as follows:
“What amount of money is legally necessary from all
sources and what amount of money is legally necessary
from the board of county commissioners in order to
maintain a system of free public schools as defined by state
law and State Board of Education policy?”
(Emphasis added.) The trial court then repeatedly emphasized the proper legal
standard throughout its instructions to the jury without reference to the language
rejected in Beaufort. Moreover, the trial court provided the jury with verdict sheets
incorporating the correct legal standard. As a result of the trial court’s instructions
and the verdict sheets, we hold defendant was not prejudiced by plaintiff’s improper
statements during its opening statements to the jury.
2. Evidence
Defendant next argues the trial court erred by allowing plaintiff to present
evidence of claimed needs outside the scope of plaintiff’s proposed budget for the 2013-
2014 fiscal year.
Generally, we review the trial court’s decisions regarding the admissibility of
evidence for abuse of discretion, see State v. Shuford, 337 N.C. 641, 649, 447 S.E.2d
742, 747 (1994), and “[e]videntiary errors are [considered] harmless unless . . . a
different result would have been reached at trial.” State v. Ferguson, 145 N.C. App.
302, 307, 549 S.E.2d 889, 893, disc. review denied, 354 N.C. 223, 554 S.E.2d 650
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
(2001). Yet, a trial court’s rulings on relevancy are not technically discretionary and
therefore are not afforded as much deference. See Dunn v. Custer, 162 N.C. App. 259,
266, 591 S.E.2d 11, 17 (2004).
On the day the case came on for trial, 12 August 2013, defendant filed a motion
in limine in which defendant sought to exclude the following:
4. Any suggestion, information, documents,
statements, or evidence of capital outlay needs
that . . . [p]laintiff did not request . . . [d]efendant to fund
in its 2013-2014 [fiscal year] budget, or information,
documents, statement, or evidence of the future capital
outlay needs of . . . [p]laintiff upon the grounds
that . . . [p]laintiff is required by [N.C. Gen. Stat. §] 115C-
521(b) to present its request for capital needs for each fiscal
year with its annual budget, and [d]efendant has no duty
to fund any item of [p]laintiff’s capital needs
until . . . [p]laintiff has made a request for such needs.
5. Any suggestion, information, documents,
statements, or evidence that [d]efendant has failed to
provide adequate funding for current expense and/or
capital outlay in years preceding the 2013-2014 fiscal year,
upon the grounds that the issue before the Court concerns
whether . . . [d]efendant has adequately
funded . . . [p]laintiff's proposed 2013-2014 budget request,
in order for . . . [p]laintiff to “support a system of free public
schools.” Plaintiff has the annual right and duty under
[N.C. Gen. Stat. §] 115C-431 to institute a proceeding each
year for additional funding if it determines that
[d]efendant has not adequately provided sufficient local
funds to support a system of free public schools for that
fiscal year. Once [p]laintiff has accepted the money
appropriated by [d]efendant for a fiscal year and has
adopted its own budget, it has acknowledged that it has
been adequately funded for that fiscal year, and may not
later contend that it was inadequately funded for that year.
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
During arguments on the motion, defendant explained to the trial court that
plaintiff indicated it had capital outlay needs beyond those in the proposed budget
and that it would seek additional capital outlay funding beyond the $5,357,859
portion of the proposed budget for capital outlay that defendant did not fund in the
county budget ordinance. Defendant indicated “that’s what [the] motion is directed
at; is [plaintiff’s] contention that they are entitled to present evidence and seek more
than they requested in their . . . [proposed budget].” Defendant then asserted plaintiff
was bound by the proposed budget for the 2013-2014 fiscal year.
In response, plaintiff looked to the language of N.C. Gen. Stat. § 115C-431(c)
and argued the statute was specific and clear that “the issue to be submitted to the
jury is that the jury finds the amount needed to maintain a system of free public
schools[.]” Plaintiff then argued they should be able to present any evidence of the
actual needs of the school system without regard to its proposed budget for the 2013-
2014 fiscal year because there was nothing in N.C. Gen. Stat. § 115C-431(c)
restricting the jury’s consideration to the proposed budget. Plaintiff stated N.C. Gen.
Stat. § 115C-431 does not even mention the proposed budget as a consideration for
the jury.
Upon considering the arguments, the trial court denied defendant’s motion,
reasoning that N.C. Gen. Stat. § 155C-431(c) was very specific and any evidence
relating to the amount of money legally necessary from all sources and the amount of
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UNION COUNTY BOARD OF EDUCATION V. UNION COUNTY BOARD OF COMMISSIONERS
Opinion of the Court
money legally necessary from defendant to support the school system, regardless of
whether plaintiff requested funding for it in the proposed budget, should be
considered by the jury. Thereafter, over defendant’s objections at trial, the trial court
allowed plaintiff to present evidence outside the scope of its proposed budget for the
2013-2014 fiscal year.
In order to determine whether the trial court erred in allowing evidence outside
the scope of plaintiff’s proposed budget for the 2013-2014 fiscal year, we must
determine the scope of the proceedings; specifically whether the proceedings are
limited to the proposed budget. Upon review, we hold the budget dispute proceedings
are limited to a consideration of the proposed budget for the fiscal year at issue and,
therefore, the trial court erred in this case by allowing evidence outside the scope of
plaintiff’s proposed budget for the 2013-2014 fiscal year into evidence at trial.
In reaching this conclusion, we interpret N.C. Gen. Stat. § 115C-431(c) in the
context of the Act. As this Court explained in Baumann-Chacon v. Baumann,
[t]he principal goal of statutory construction is to
accomplish the legislative intent. The best indicia of that
intent are the language of the statute . . . , the spirit of the
act and what the act seeks to accomplish. Individual
expressions must be construed as part of the composite
whole and be accorded only that meaning which other
modifying provisions and the clear intent and purpose of
the act will permit. The Court may also consider the policy
objectives prompting passage of the statute and should
avoid a construction which defeats or impairs the purpose
of the statute.
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Opinion of the Court
212 N.C. App. 137, 140, 710 S.E.2d 431, 434 (2011) (quotation marks and citations
omitted); see also Shelton v. Morehead Mem’l Hosp., 318 N.C. 76, 81-82, 347 S.E.2d
824, 828 (1986) (“Legislative intent controls the meaning of a statute; and in
ascertaining this intent, a court must consider the act as a whole, weighing the
language of the statute, its spirit, and that which the statute seeks to accomplish.”).
As stated in N.C. Gen. Stat. § 115C-424, “[i]t [was] the intent of the General
Assembly by enactment of [the Act] to prescribe for the public schools a uniform
system of budgeting and fiscal control.” N.C. Gen. Stat. § 115C-424 (2013). In order
to accomplish this goal, the Act provides a step-by-step budget process. In Beaufort,
our Supreme Court summarized the process as follows:
The local school board first creates a budget setting out its
estimate of the cost of providing education within its locale
for the upcoming year and submits that budget to the
county commission. See [N.C. Gen. Stat.] § 115C–429(a)
(2007). The county commission then determines the
amount of funds to be appropriated to the school board. See
[N.C. Gen. Stat.] § 115C–429(b) (2007). If there is a dispute
between the school board and the county commission, the
two boards meet with a mediator in an effort to negotiate a
compromise. See [N.C. Gen. Stat.] § 115C–431(a). If there
is still no agreement, representatives from the two boards
enter a formal mediation. See [N.C. Gen. Stat.] § 115C–
431(b). If no agreement can be reached at the mediation,
the school board may file an action in superior court. See
[N.C. Gen. Stat.] § 115C–431(c).
363 N.C. at 503, 681 S.E.2d at 281.
N.C. Gen. Stat. § 115C-431(c), which governs a schools board’s suit against a
county commission, provides the following:
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Opinion of the Court
(c) Within five days after an announcement of no
agreement by the mediator, the local board of education
may file an action in the superior court division of the
General Court of Justice. Either board has the right to
have the issues of fact tried by a jury. When a jury trial is
demanded, the cause shall be set for the first succeeding
term of the superior court in the county, and shall take
precedence over all other business of the court. However,
if the judge presiding certifies to the Chief Justice of the
Supreme Court, either before or during the term, that
because of the accumulation of other business, the public
interest will be best served by not trying the cause at the
term next succeeding the filing of the action, the Chief
Justice shall immediately call a special term of the superior
court for the county, to convene as soon as possible, and
assign a judge of the superior court or an emergency judge
to hold the court, and the cause shall be tried at this special
term. The judge shall find, or if the issue is submitted to
the jury, the jury shall find the facts as to the following in
order to maintain a system of free public schools as defined
by State law and State Board of Education policy: (i) the
amount of money legally necessary from all sources and (ii)
the amount of money legally necessary from the board of
county commissioners. In making the finding, the judge or
the jury shall consider the educational goals and policies of
the State and the local board of education, the budgetary
request of the local board of education, the financial
resources of the county and the local board of education,
and the fiscal policies of the board of county commissioners
and the local board of education.
All findings of fact in the superior court, whether found by
the judge or a jury, shall be conclusive. When the facts
have been found, the court shall give judgment ordering
the board of county commissioners to appropriate a sum
certain to the local school administrative unit, and to levy
such taxes on property as may be necessary to make up this
sum when added to other revenues available for the
purpose.
N.C. Gen. Stat. § 115C-431(c).
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Plaintiff, just as it argued at trial, looks to this language and argues N.C. Gen.
Stat. § 115C-431(c) is specific as to the issues to be decided by the jury and because
there is no language restricting the jury’s determination to those amounts sought in
its proposed budget, all evidence related to its funding needs was properly admitted.
Plaintiff further argues the General Assembly could have easily limited the
proceedings to a consideration of those amounts in the proposed budget had it
intended to so.
Although N.C. Gen. Stat. § 115C-431(c) does not explicitly state that the
proceedings are limited to plaintiff’s proposed budget, sub-section (c) does include
plaintiff’s proposed budget as one of the mandatory considerations for the fact finder
in determining the amounts legally necessary to maintain a system of free public
schools. See N.C. Gen. Stat. § 115C-431(c) (“In making the finding, the judge or the
jury shall consider . . . the budgetary request of the local board of education . . . .”).
Moreover, it is evident from the remainder of N.C. Gen. Stat. § 115C-431 that the
proposed budget is the principal focus of the entire dispute resolution process. Prior
to the filing of a lawsuit under N.C. Gen. Stat. § 115C-431(c), N.C. Gen. Stat. §§ 115C-
431(a) and (b) require plaintiff and defendant to attempt to settle the budget dispute
at a joint meeting and, if necessary, through additional mediation efforts. N.C. Gen.
Stat. § 115C-431(a), which sets forth guidelines for the joint meeting, states that “[a]t
the joint meeting, the entire school budget shall be considered carefully and
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judiciously, and the two boards shall make a good-faith attempt to resolve the
differences that have arisen between them.” N.C. Gen. Stat. § 115C-431(a) (emphasis
added).
Based on the language of the N.C. Gen. Stat. § 115C-431, we hold the amounts
requested in plaintiff’s proposed budget are what are at issue in a budget dispute
under N.C. Gen. Stat. § 115C-431. This result seems common sense, as a budget
dispute only arises when defendant does not fully fund plaintiff’s proposed budget.
We find further support for this conclusion when N.C. Gen. Stat. § 115C-431 is
viewed in the context of the entire budget process, considering the respective roles of
plaintiff and defendant.
N.C. Gen. Stat. § 115C-521(b), which is outside the Act but related to the
budget process, provides the following:
It shall be the duty of the boards of education of the several
local school administrative school units of the State to
make provisions for the public school term by providing
adequate school buildings equipped with suitable school
furniture and apparatus. The needs and the cost of those
buildings, equipment, and apparatus, shall be presented
each year when the school budget is submitted to the
respective tax-levying authorities. The boards of
commissioners shall be given a reasonable time to provide
the funds which they, upon investigation, shall find to be
necessary for providing their respective units with
buildings suitably equipped, and it shall be the duty of the
several boards of county commissioners to provide funds for
the same.
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N.C. Gen. Stat. § 115C-521(b) (2013) (emphasis added). Thus, as defendant argues,
it is plaintiff’s role to determine the capital outlay needs of the school system each
year and to include those costs in their proposed budget each year. Defendant then
reviews plaintiff’s proposed budget and makes appropriations.
While plaintiff acknowledges that its role is to determine the amount of
funding necessary, it argues the proposed budget is just an estimate and it is the fact
finder who determines the amount legally necessary. Plaintiff argues limiting the
evidence to the proposed budget in this case would have the effect of authorizing
legally insufficient funding because the fact finder found funding beyond the amount
requested in plaintiff’s proposed budget was legally necessary. Plaintiff further
contends that defendant was well aware of the school system’s outstanding capital
needs from prior years that were unfunded and therefore defendant had reasonable
time to make funding decisions. We are not persuaded by plaintiff’s arguments.
N.C. Gen. Stat. § 115C-521(b) makes clear that plaintiff must assess the capital
needs of the school system and present those needs to defendant “each year.” Each
year is then treated individually in the budget process. By implication, if plaintiff
does not initiate the dispute resolution process in N.C. Gen. Stat. § 115C-431, it has
accepted that the appropriations by defendant were sufficient for that year.
Unfunded requests from prior year’s proposed budgets are not automatically carried
forward and considered in subsequent years. If plaintiff wants those previously
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unfunded amounts considered, it must include them in the proposed budget for the
2013-2014 fiscal year.
Moreover, plaintiff’s argument that limiting the evidence to those amounts
requested in its proposed budget would authorize legally insufficient funding
presumes that plaintiff requested an amount of funds below the amount legally
necessary to maintain a system of free public schools. We do not accept this
presumption. While plaintiff’s proposed budget may be an estimate, it is not a blind
guess and we do not accept plaintiff’s suggestion that it underestimated the capital
outlay needs of the school system by over $80,000,000.
The purpose of the budget dispute resolution process outlined in N.C. Gen.
Stat. § 115C-431 is to provide an expedited process to resolve budget disputes
between a board of education and a board of county commissioners when the board of
education’s proposed budget is not fully funded. We hold N.C. Gen. Stat. § 115C-
431(c) was never intended to open the door to allow the fact finder to consider
evidence outside the scope of the proposed budget and award funding beyond that
requested by the board of education, whose duty it is to request sufficient funding to
maintain a system of free public schools.
3. Directed Verdict
At the conclusion of plaintiff’s evidence, and again at the close of all the
evidence, defendant moved for a directed verdict on the ground that plaintiff failed to
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Opinion of the Court
present sufficient evidence for the jury to decide the amount of money legally
necessary to maintain a system of free public schools. The trial court denied both
motions.
In this third issue on appeal, defendant now contends the trial court erred in
denying its motions for a directed verdict.
“The standard of review of directed verdict is whether the evidence, taken in
the light most favorable to the non-moving party, is sufficient as a matter of law to
be submitted to the jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 322, 411 S.E.2d
133, 138 (1991) (citing Kelly v. Int’l Harvester Co., 278 N.C. 153, 179 S.E.2d 396
(1971)).
In determining the sufficiency of the evidence to withstand
a motion for a directed verdict, all of the evidence which
supports the non-movant’s claim must be taken as true and
considered in the light most favorable to the non-movant,
giving the non-movant the benefit of every reasonable
inference which may legitimately be drawn therefrom and
resolving contradictions, conflicts, and inconsistencies in
the non-movant’s favor.
Turner v. Duke Univ., 325 N.C. 152, 158, 381 S.E.2d 706, 710 (1989).
“[U]nder [N.C. Gen. Stat.] § 115C–431(c), a school board must present evidence
of (1) the amount of money it needs to maintain its school system, and (2) the amount
it needs from the county in order to have the necessary amount.” Duplin Cnty. Bd.
of Educ. v. Duplin Cnty. Bd. of Cnty. Comm’rs, 201 N.C. App. 113, 122, 686 S.E.2d
169, 174 (2009). As the Court made clear in Beaufort, the amount of money “needed”
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or “necessary” is that amount “legally necessary” to support a system of free public
schools. 363 N.C. at 507, 681 S.E.2d at 283.
In the present case, defendant argues “[plaintiff] failed to meet its basic burden
of proof to show what amount was legally necessary to maintain a system of free
public schools, and, thus, in turn failed to show how [defendant’s] funding fell short
of the legally necessary level.” Defendant asserts plaintiff “simply failed to present
evidence on the annual cost of providing a county-wide system of education both as
to capital and current expenditures.”
Upon a review of the evidence, we disagree. Specifically, plaintiff presented
evidence tending to show current expense funding was needed to meet state
mandates and policies and capital outlay funding was needed to maintain and repair
school facilities. However, having determined above that much of plaintiff’s evidence
was outside the scope of plaintiff’s proposed budget for the 2013-2014 fiscal year and
should not have been admitted into evidence at trial, we remand for a new trial; it is
too difficult to distinguish what evidence in the weeks long trial was within the scope
of plaintiff’s proposed budget.
4. Jury Instructions
In the final issue on appeal, defendant contends the trial court erred in issuing
a broad rather than restrictive definition of the amount of money legally necessary to
maintain a system of free public schools. Specifically, defendant argues the trial court
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Opinion of the Court
erred by failing to issue requested instructions limiting the jury’s consideration to the
proposed budget for the 2013-2014 fiscal year and by instructing the jury that
students performing below grade level were not obtaining a sound basic education.
Because similar jury instructions are likely to be issued on retrial, we address
defendant’s arguments.
On appeal, this Court considers a jury charge
contextually and in its entirety. The charge will be held to
be sufficient if it presents the law of the case in such
manner as to leave no reasonable cause to believe the jury
was misled or misinformed. The party asserting error
bears the burden of showing that the jury was misled or
that the verdict was affected by an omitted instruction.
Under such a standard of review, it is not enough for the
appealing party to show that error occurred in the jury
instructions; rather, it must be demonstrated that such
error was likely, in light of the entire charge, to mislead the
jury.
Hammel v. USF Dugan, Inc., 178 N.C. App. 344, 347, 631 S.E.2d 174, 177 (2006)
(citations and quotation marks omitted).
Defendant first argues the trial court erred by not instructing the jury to limit
its consideration to those amounts plaintiff requested in its proposed budget for the
2013-2014 fiscal year. We disagree.
A review of the trial court’s instructions to the jury reveals that the
instructions closely followed the language of N.C. Gen. Stat. § 115C-431 and were not
overly broad. In fact, the trial court included language directing the jury to consider
“the budgetary request of [plaintiff,]” among other factors provided in N.C. Gen. Stat.
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§ 115C-431(c). We hold these instructions were sufficient to present the law to the
jury, and had the trial court properly limited the evidence to the scope of plaintiff’s
proposed budget, plaintiff’s requested instruction would have been unnecessary.
Defendant also argues the trial court misled the jury when it misinterpreted
the elements of a sound basic education set forth in Leandro v. State of North
Carolina, 346 N.C. 336, 488 S.E.2d 249 (1997), and Hoke Cnty. Bd. of Educ. v. State
of North Carolina, 358 N.C. 605, 599 S.E.2d 365 (2004). Specifically, defendant takes
issue with the following instructions:
The North Carolina Constitution provides every
child the constitutional right to a sound basic
education . . . .
A student who is performing below grade level . . . is
not obtaining a sound basic education in the subject matter
being tested. A student who is performing at grade level or
above . . . is obtaining a sound basic education . . . .
Defendant argues these instructions misled the jury to believe that “students were
only being provided a sound basic education if they were performing at grade level,
suggesting if any student was not so performing, [Union County] was not providing
a sound basic education and, thus, failing to provide a system of free public schools.”
Upon review, we agree that this portion of the trial court’s instructions likely
misled the jury and was error. School funding cannot guarantee student
performance; but only the opportunity for students to receive a sound basic education.
That is why in Leandro, our Supreme Court expressly rejected the notion that our
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constitution provides every child the right to a sound basic education, noting
“[s]ubstantial problems have been experienced in those states in which the courts
have held that the state constitution guaranteed the right to a sound basic
education[]” and “the framers of our Constitution did not intend to set such an
impractical or unattainable goal.” 346 N.C. at 350-51, 488 S.E.2d at 257. Instead,
the Court held “Article IX, Section 2(1) of the North Carolina Constitution requires
that all children have the opportunity for a sound basic education . . . .” Id at 351,
488 S.E.2d at 257 (emphasis added).
III. Conclusion
Having determined the budget dispute resolution process outlined in N.C. Gen.
Stat. § 115C-431 concerns plaintiff’s proposed budget for the 2013-2014 fiscal year,
we hold the trial court erred in allowing evidence outside the scope of the proposed
budget for the 2013-2014 fiscal year into evidence and remand for a new trial.
NEW TRIAL.
Judges CALABRIA and STROUD concur.
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