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Court of Appeals denies $1.7 billion transfer in Leandro case

The North Carolina Court of Appeals denied Tuesday Judge David Lee’s order for the state to transfer about $1.7 billion to fund a comprehensive plan to get the state in compliance with its constitutional obligation to public education.

A three-judge panel ruled 2-1 that while Lee is right to say the funds are needed, it is not within his power to order money be appropriated.

“As we explained in Richmond County, ‘[t]he State must honor that judgment. But it is now up to the legislative and executive branches, in the discharge of their constitutional duties, to do so. The Separation of Powers Clause prevents the courts from stepping into the shoes of the other branches of government and assuming their constitutional duties. We have pronounced our judgment. If the other branches of government still ignore it, the remedy lies not with the courts, but at the ballot box,'” the decision stated.

The two judges who voted with the majority are Republicans. The lone Democrat on the panel, John Arrowood, dissented, saying that the only proper question before the court was whether to issue a temporary stay.

Arrowood said that since Lee’s order wasn’t going into effect until 30 days from its issuance on Nov. 10, there was no urgent reason to act beyond a temporary stay.

“The Rules of Appellate Procedure are in place to allow parties to fully and fairly present their arguments to the Court and for the Court to fully and fairly consider those arguments. In my opinion, in the absence of any real time pressure or immediate prejudice to the parties, giving a party in essence one day to respond, following a holiday weekend, and then deciding the matter on the merits the day the response is filed violates these principles,” he said in his dissent.

The Court of Appeals decision is in response to an appeal from State Controller Linda Combs on November 24th for intervention.

Lee’s order directed the state budget director, controller, and treasurer to transfer from the unappropriated balance in the General Fund more than $1.5 billion to the state Department of Public Instruction, $189.8 million to the Department of Health and Human Services, and $41.3 million to the University of North Carolina System.

Combs argued that Lee didn’t have the power to force her to help facilitate this transfer and that his order would put her in the position of choosing between her duties to the state and being in contempt of court.

The parties in the Leandro case had until yesterday to respond to Combs’ filing, which both the state Attorney General and the Plaintiffs did. The Attorney General, representing the state as a defendant in the Leandro case, supported a temporary stay of Lee’s order but otherwise disagreed with Comb’s argument. The plaintiff’s filing argued against both a stay and Combs’ overall arguments.

In his dissent, Arrowood criticized the process by which the Court of Appeals came to its decision.

“…shortening the time for a response was a mechanism to permit the majority to hastily decide this matter on the merits, with only one day for a response, without a full briefing schedule, no public calendaring of the case, and no opportunity for arguments and on the last day this panel is constituted. This is a classic case of deciding a matter on the merits using a shadow docket of the courts,” he wrote.

Read the entire Court of Appeals decision here or see it below.

Melanie Dubis, an attorney for the plaintiffs in the Leandro case, commented via email yesterday on the Court of Appeals decision.

“As Judge Arrowood notes, this was done in less than 24 hours on a ‘shadow docket’ with no public calendaring,” she said. “After 25 years of being denied their constitutional right to a sound basic education, Plaintiffs have now been denied a meaningful opportunity to be heard by the Court of Appeals. We are evaluating next steps.”

Senate President Pro Tempore Phil Berger, R-Rockingham, put out a press release yesterday, praising the decision.

“The people of North Carolina through their elected legislators, … decide how to spend tax dollars. Rather than accepting responsibility for lagging achievement and outright failure, the Leandro parties insist that the pathway to student improvement is always the simple application of more money,” he said in the statement.

He continued, saying that Lee — a registered Democrat — along with “education special interests and Democratic Gov. Roy Cooper’s administration hatched this unconstitutional scheme to funnel $1.7 billion in extra money to a failed education bureaucracy; this Court has rightly called them on it.”

 WRAL reported in early November that much of the funding for a report developed by independent consultants WestEd was paid for by the state’s executive branch. That report formed the basis for the comprehensive plan which Lee has ordered implemented.

The Leandro case started in 1994 when families from five low-wealth counties sued the state, claiming North Carolina was not providing their students with the same educational opportunities as students in higher-income districts. The plaintiffs and defendants in the case are on the same page with wanting lawmakers to fund a comprehensive plan. Lawmakers aren’t a party to the case.

For a full history of the case, go here.

Alex Granados

Alex Granados was the senior reporter for EducationNC from December 2014-March 2023.