dissenting.
Today’s decision amplifies the disarray of approaches applied by lower courts when confronted with the defense of Eleventh Amendment immunity by state-created entities. Little would be served by setting forth the diverse reasoning of this Court or other courts. These cases are already of historical record.1 My disagreement with the majority opinion is that it is not faithful to Supreme Court precedent or to this Court’s rulings covering the same issue.
Local Control
On June 5,1995, we remanded this case to make a complete record as to “ ‘local autonomy and control and most importantly, whether the funds to pay any award will be derived from the state treasury.’ ” Hadley v. North Arkansas Community Technical College, No. 94-3703, 1995 WL 329591, at * 1 (8th Cir. June 5, 1995) (per curiam) (quoting Greenwood v. Ross, 778 F.2d 448, 453 (8th Cir.1985) (quoting Laje v. R.E. Thomason Gen. Hosp., 665 F.2d 724, 727 (5th Cir.1982)); see Sherman v. Curators of Univ. of Mo., 16 F.3d 860, 863 (8th Cir.1994)). Subsequent to our remand, the Supreme Court issued its ruling in Hess v. Port Auth. Trans-Hudson Corp., — U.S. -, 115 S.Ct. 394, 130 L.Ed.2d 245 (1994). As the Court therein observed, the issue of ultimate control cannot be the determining factor in Eleventh Amendment cases, “for the State may destroy or reshape any unit it creates.” — U.S. at -, 115 S.Ct. at 404. The majority concedes that NACTC possesses a high level of local autonomy, but erroneously discounts this factor because the state legislature calls *1443NACTC a “state agency” and “provides ultimate state control.” Maj.Op. at 1442.
I read the record much differently. In my judgment, the record reveals that NACTC resembles a local school district, albeit subject to state guidance, whose Local Board possesses broad authority to direct the college educational program and apply the college’s resources to that end. The Local Board has broad power over the direction of NACTC’s educational program. Specifically, the Local Board is empowered, inter alia, to: (1) select its officers; (2) develop, with the advice of the State Board, the educational program; (3) appoint, with the advice of the State Board, a president and fix the compensation and terms of office of the president who shall be the executive officer of the college’s Local Board; (4) appoint, upon nomination of the president, members of the administrative and teaching staffs and fix their compensation and terms of employment; (5) enter into contracts; (6) accept grants or contributions of money to be used for any of its purposes; (7) acquire, own, lease, use, operate and dispose of property; (8) exercise the right of eminent domain; (9) make rules and regulations to govern the college’s administration and operation; and (10) exercise all other necessary powers to operate the college. Ark.Code Ann. § 6-61-521 (1987).
Thus, viewed in light of the authority of the Local Board, the State Board’s role is more appropriately characterized as that of an advisor, rather than that of a regulator. As the district court acknowledged, for example, NACTC is significantly more autonomous than Arkansas’s universities. Dist.Ct. Op. at 19. NACTC has the power to tax, to acquire, use, and own property in the college’s name, and to govern itself locally.
Stated differently, I find merit in Hadley’s contentions that the State Board’s supervision of NACTC is not appreciably different from that it exercises over local school boards. Although the state approves NACTC decisions with respect to educational policy, many if not most of them are initiated at the local level. For example, while the consolidation of North Arkansas Community College and Twin Lakes Technical College was subject to state approval, NACTC’s Local Board, and not the General Assembly or the State Board, initiated that decision. The same is true of the college’s curricular decisions. Thus, although state law governs several administrative aspects of the college’s operations, substantive judgments concerning NACTC’s educational policy are made locally. In sum, a thorough analysis of NACTC’s local control supports the conclusion that NACTC may not invoke the Eleventh Amendment’s protection.
NACTC’s Financial Relationship with the State of Arkansas
The Supreme Court observed in Hess, however, that control cannot be dispositive since it does not “hone in on the impetus for the Eleventh Amendment: the prevention of federal court judgments that must be paid out of a state’s treasury.” — U.S. at -, 115 S.Ct. at 404. Rather, the “core concern” in Eleventh Amendment analysis is whether a judgment against NACTC must be satisfied from the state treasury. Id. at -, 115 S.Ct. at 406.
The means by which NACTC acquires funding is established by Arkansas constitutional and statutory law. Amendment Fifty-two to the Arkansas Constitution empowers the General Assembly to establish districts to furnish community college instruction and technical training.2 Ark. Const, amend. 52. Specifically, Amendment Fifty-two provides that “[t]he General Assembly shall prescribe the method of financing such community college and technical institutes, and may authorize the levy of a tax upon the taxable property in such districts for the acquisition, construction, reconstruction, repair, expan*1444sion, operation, and maintenance of facilities therefor.” Id., § 1. The Amendment also provides, however, that no such district shall be created and no tax levied without the approval of a majority of the qualified voters in the proposed district. Id., § 2. Thus, the creation of a community college district is a joint venture between the state of Arkansas and the local community.
The Arkansas General Assembly has fulfilled its constitutional mandate by legislating that “[f]unds for the general operation of an adequate comprehensive educational program shall be provided by the state.” Ark. Code Ann. § 6-61-601(a) (1987). In the event the college wishes to spend larger sums of money, it may raise additional “general operation” monies by levying millage. § 6-61-602(a). Local millage is subject to approval by the local electorate, § 6-61-601(b), is limited to ten mills on the taxable real and personal property in the district, § 6-61-517(b), and is a continuing levy to be collected by county authorities in the manner provided by law, § 6-61-517.
NACTC has far greater discretion in its management of monies received from non-state sources. Bequests, gifts, and donations are exempted from state accounting and budgetary procedures, § 19^-803, as are monies received from millage levied by the local district, § 19-4-803(b)(l-2). NACTC may not use millage revenues, however, for purposes other than those stated on the ballot. Dist.Ct.Op. at 20-21.3
As I read the majority opinion, it adopts an “impact” rule, which apparently reasons that, since the school’s general operations are funded primarily by the state, any judgment paid by NACTC “would produce a higher operating budget shortfall that must, by state law, be satisfied by an appropriation from the state treasury.” 4 Maj.Op. at 1441.
I respectfully must disagree with this reasoning. On the record presented here, it is clear that NACTC has independent discretionary power to raise funds for educational purposes and payment of money judgments. As the Court in Hess stated: “If the expenditures of the enterprise exceed receipts, is the State in fact obligated to bear and pay the resulting indebtedness of the enterprise? When the answer is W — both legally and practically — then the Eleventh Amendment’s core concern is not implicated.” - U.S. at -, 115 S.Ct. at 406.
The record in this ease reveals that the state is not required, legally or practically, to indemnify NACTC for debts incurred as a result of locally generated bond revenues. Arkansas law states quite the opposite: “The bonds shall be revenue bonds secured solely by the revenues pledged thereto, and in no event shall they be considered a debt for which the faith and credit of the State of Arkansas or any of its revenues are pledged.” Ark.Code Ann. § 6-61-1009 (Mi-chie Supp.1993). Thus, it is clear the Eleventh Amendment’s dominant concern is not implicated.
Moreover, although the district court found that local tax funds amount to an insignificant percentage of NACTC’s overall *1445budget, Hadley is correct in asserting that NACTC might authorize an additional levy of up to ten mills, ear-marking it for provision of general operating funds. Dist.Ct.Op. at 11-12. Thus, it is not the case that an award of backpay or nominal damages, assuming Hadley were to prevail, “would necessarily implicate the state fisc.” Sherman, 16 F.3d at 864. I find this factor significant. The power to levy taxes is not, as NACTC suggests, merely incidental, but rather suggests the college is not exclusively dependent upon the state.
Alternatively, Hadley suggests that NACTC has other sources of discretionary funding, such as tuition, federal grants, private donations, and “other” monies, from which a judgment against him could be paid. NACTC correctly replies that, like funds from local millage, these funds may only be used for specific, limited purposes. Tuition monies, for example, are dedicated to the payment of “educational” expenses. Dist.Ct. Op. at 12. But the fact that these monies are dedicated solely to “educational” expenses does not necessitate the conclusion that an award of back-pay to an instructor is not such an expense. Hadley suggests, quite persuasively, that the payment of an instructor’s salary constitutes “the quintessential educational expense,” Supp.Br. for Appellee at 10, and asserts that the reduction of these expenses to the form of a judgment does not render them non-educational, id. I agree. Although the district court concluded otherwise, I find no expressed rationale supporting that conclusion. The monies involved here, if damages were to be awarded, constitute back salary for an instructor. These are clearly educational expenses. Although NACTC receives the majority of its funding from the state, a judgment in Hadley’s favor need not implicate the state treasury. The college may levy additional millage or apply tuition monies designated “educational” to satisfy the award.
In addition, the majority opinion is not faithful to the unanimous Court’s rationale in Mt. Healthy City Bd. of Educ. v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977). In Mt. Healthy, the Supreme Court passed on the Eleventh Amendment defense proffered by a local school board in the State of Ohio. In holding that the board was akin to a political subdivision to which the Eleventh Amendment does not extend, the Court stated:
[The board] is subject to some guidance from the State Board of Education, and receives a significant amount of money from the State. But local school boards have extensive powers to issue bonds, and to levy taxes within certain restrictions of state law. On balance, the record before us indicates that a local school board such as petitioner is more like a county or city than it is like an arm of the State. We therefore hold that it was not entitled to assert any Eleventh Amendment immunity from suit in the federal courts.
429 U.S. at 280-81, 97 S.Ct. at 572-73 (Rehnquist, J.) (citations omitted).
A searching inquiry of the record reveals that NACTC enjoys independence, financially and otherwise, such that, notwithstanding its state’s funding, it should be treated as an entity much like any other political subdivision or local school board. Moreover, upon analysis of the overall record, any judgment against NACTC will not be paid from the state treasury.
In summary, the majority’s holding allows NACTC to enjoy the benefits of local tuition monies and local property assessments without sharing in the costs and responsibilities that attend the power to generate such funds. NACTC must take the bitter with the sweet. As we observed in Sherman:
[A governmental entity] cannot create its own eleventh amendment immunity by structuring its resources so as to pay all breach of contract damages out of state funds. Thus, the question on remand is not whether the [entity] chooses to pay contract damages out of state funds, but whether a judgment against the [entity] can be paid from non-state funds under [its] discretionary control.
16 F.3d at 864-65 (emphasis added).
The majority seeks to avoid our holding in Sherman by indicating that it is dicta. This is puzzling to me since the portion quoted in the text is the precise holding of the ease. If the test of Sherman is to be applied, then the majority is clearly in error. There is no evidence in the present case that any judgement here must necessarily be paid from *1446state funds. The state may be obligated to fund the college, but that is not the criterion that determines whether a federal court judgment obligates the state treasury.
I respectfully dissent.
ORDER
April 19, 1996
The suggestion for rehearing en banc is denied. Judge McMillian and Judge Murphy would grant the suggestion.
The petition for rehearing by the panel is also denied. Judge Lay would grant the petition.
McMILLIAN, Circuit Judge,with whom MURPHY, Circuit Judge, joins, dissenting from the denial of the petition for rehearing with suggestion for rehearing en banc.
The majority opinion of the panel acknowledges that the core concern in Eleventh Amendment immunity cases is whether a judgment must be satisfied from the state treasury. 76 F.3d 1437, 1439 (citing Hess v. Port Autk Trans-Hudson Corp., — U.S. -, 115 S.Ct. 394, 130 L.Ed.2d 245 (1994)). Yet the opinion completely ignores that the North Arkansas Community Technical College (NACTC) is given legislative authorization to issue revenue bonds to raise “general operation” monies, Ark. Code Ann. § 6-61-602(a) (1987), and that the Arkansas legislature explicitly disavows any state liability to pay such bonds, § 6-61-1009 (Supp.1993) (“The bonds shall be revenue bonds secured solely by the revenues pledged thereto, and in no event shall they be considered a debt for which the faith and credit of the State of Arkansas or any of its revenues are pledged.” Ark. Code Ann. § 6-61-1009 (Supp.1993).
The majority holding that NACTC enjoys Eleventh Amendment immunity thus defies Supreme Court precedent,1 the law of this circuit,2 and the law of Arkansas. The decision promises to expand uncertainty for litigants and district courts as to future Eleventh Amendment cases in this circuit. I fail to understand how this court can refuse to hear this case en banc. Hopefully, the Supreme Court of the United States will give us further direction.
. Arkansas statutory law thus defines community college:
an educational institution established or to be established by one (1) or more counties or cities of this state offering a comprehensive program designed to serve the postsecondary educational needs of its district and the state including specifically, but without limitation, occupational programs of varying types and levels of difficulty, the first two (2) years of a baccalaureate degree, community service offerings, and student guidance and counseling services ....
Ark.Code Ann. § 6-61-501(1) (Supp.1993).
. NACTC has submitted the issue of funding to the local electorate on two occasions. In 1973, area voters passed a ballot ("the 1973 ballot”) authorizing the creation of the community college district and the levy of a tax on the assessed value of taxable property therein. The 1973 ballot authorized a tax not to exceed five mills on the dollar "for the issuance of bonds to provide all or part of the funds for the purchase of land and for the construction and furnishing of buildings and facilities for such college." Dist.Ct.Op. at 11 (quoting the 1973 ballot). In 1977, area voters passed a second ballot ("the 1977 ballot") which extended the bonding authority of the district and reauthorized the tax. By its terms, the 1977 ballot authorized the issuance of bonds “for the purpose of liquidating the District's presently outstanding bonded indebtedness (incurred to finance construction and furnishing of buildings and facilities for the College) and the purpose of providing all or part of the funds for the construction and furnishing of additional buildings and facilities for the college.” Id. (quoting the 1977 ballot).
. The majority’s reliance upon Dover Elevator Co. v. Arkansas State University, 64 F.3d 442 (8th Cir.1995), is misplaced. In Dover, the University had no discretionary power independently to raise revenue, as NACTC has. The record in Dover revealed that Arkansas State University could not “ ‘spend one penny without appropriation to do so from the general assembly.’ ” Id. at 447 (quoting undisputed testimony in the record); see also id. ("because any award against ASU must be appropriated by the state assembly from money under state control, ... the district court did not err in finding that ASU shares in the state's Eleventh Amendment immunity” (emphasis added)).
. See Mt. Healthy City Bd. of Educ. v. Doyle, 429 U.S. 274, 280-81, 97 S.Ct. 568, 572-73, 50 L.Ed.2d 471 (1977).
. See Sherman v. Curators of Univ. of Mo., 16 F.3d 860, 863-64 (8th Cir.1994).