Richmond schools case offers clue about possible Leandro resolution

North Carolina’s highest court has yet to issue a decision more than a year after hearing the latest arguments in the long-running Leandro school funding case.

The state Supreme Court’s opinion could affect $677 million in short-term education funding and billions of dollars in additional spending in the years ahead.

As observers wait for a Leandro ruling, North Carolina’s second-highest court issued a recent decision that’s worthy of a second look. It highlights a critical piece of the Leandro debate.

The case Richmond County Board of Education v. Folwell involves much smaller stakes. A local school board seeks $272,000 from state government. Courts have ruled that state government should pay the bill.

A trial judge issued an order favoring Richmond schools more than a decade ago. Yet there’s been no payment. State lawmakers have taken no action.

An April 2 decision from the North Carolina Court of Appeals reminded all parties that Richmond County schools might never see the money.

Chief Judge Chris Dillon’s majority opinion explained that the dispute between Richmond County schools and the state treasurer’s office had made three previous trips to the Appeals Court.

In the first instance, appellate judges rejected the state’s argument to have the case tossed out. Later, the Appeals Court agreed with a trial judge that the state owed money to the schools.

“In the third appeal, however, we reversed the trial court’s order, concluding that it is not in the power of the judiciary to order satisfaction of the judgment against the State; that is, the judgment could be satisfied only if our General Assembly appropriated the money to satisfy the judgment,” Dillon wrote.

Though the school board never collected any money, its lawyers returned to court last year to renew the demand for payment.

“We agree with Defendants that any judgment that Plaintiff may obtain in this matter may not ever be collectible,” Dillon warned.

The chief judge cited a 1976 precedent case, Smith v. State.

“In the event [that the] plaintiff is successful in establishing his claim against the State, he cannot, of course, obtain execution to enforce the judgment,” the Smith court wrote. “The validity of his claim, however, will have been judicially ascertained. The judiciary will have performed its function to the limit of its constitutional powers. Satisfaction will depend on the manner in which the General Assembly discharged its constitutional duties.”

In other words, a trial judge can determine — and appellate courts can confirm — that the state owes the money. Yet to get “satisfaction,” a final payment in the case, the General Assembly must act.

The Smith precedent had guided the Appeals Court’s ruling in the third Richmond County appeal, Dillon explained.

“[W]hen the courts enter a judgment against the State, and no funds already are available to satisfy that judgment, the judicial branch has no power to order State officials to draw money from the State treasury to satisfy it,” he wrote.

Dillon and fellow Appeals Court Judge Allegra Collins agreed this month that Richmond County schools could continue to pursue $272,000 from state government.

“If Plaintiff is successful in this action in ‘renewing’ its prior judgment, Plaintiff still may never collect, depending on whether our General Assembly appropriates money to pay any said new judgment. Nonetheless, Plaintiff is entitled to renew its judgment and hope,” Dillon wrote.

With much larger stakes, the Leandro case also involves the question of whether judges can force state government to spend money without action from the General Assembly.

In November 2022, a state Supreme Court with a 4-3 Democratic majority said yes. The high court’s Democrats ruled that the state constitution’s guarantee of educational access trumped the legislature’s power of the purse.

Over Republican justices’ objections, the Democratic majority agreed a judge could bypass the legislature. He could order a money transfer from the treasury to cover Leandro-related spending.

Four days later, North Carolina flipped two seats on the state Supreme Court from Democrats to Republicans. With a new 5-2 conservative majority, the Supreme Court agreed to revisit Leandro. Justices heard oral arguments in February 2024.

It’s not clear whether the court’s next Leandro ruling will address constitutional limits on the judiciary’s power to force money transfers from the treasury. Justices could decide instead that the case’s trial judge lacked “subject matter jurisdiction” to issue any spending order.

But Dillon’s recent Richmond schools opinion reminds us about an important fact. North Carolina courts have traditionally left decisions about spending taxpayers’ money to elected representatives in the state House and Senate.

Mitch Kokai is senior political analyst for the John Locke Foundation.