Court Opinion

ID: 2726691
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:08:06.762828+00
Date Added: 2024-06-11T12:39:55.557446
License: Public Domain

NO. COA13-893-2

                     NORTH CAROLINA COURT OF APPEALS

                         Filed: 2 September 2014

THOMAS JEFFERSON CLASSICAL ACADEMY
CHARTER SCHOOL, PIEDMONT COMMUNITY
CHARTER SCHOOL AND LINCOLN CHARTER
SCHOOL,
     Plaintiffs,

    v.                                   Cleveland County
                                         No. 12 CVS 41
CLEVELAND COUNTY BOARD OF
EDUCATION, D/B/A CLEVELAND COUNTY
SCHOOLS,
     Defendant.

    Appeal by defendant from Judgment entered on or about 13

February 2013 and Order and Judgment entered 2 April 2013 by

Judge   Jesse   B.   Caldwell    III,   in    Superior   Court,   Cleveland

County.      Heard in the Court of       Appeals 23 January 2014 and

Opinion filed 3 June 2014. Petition for Rehearing allowed 10

July 2014.

    Robinson Bradshaw & Hinson, P.A., by Richard A. Vinroot and
    Matthew F. Tilley, for plaintiffs-appellees.

    Tharrington Smith, L.L.P.,           by    Deborah   R.   Stagner,   for
    defendant-appellant.

    Allison B. Schafer and Christine T. Scheef for N.C. School
    Boards Association, amicus curiae.

    STROUD, Judge.
                                       -2-
        The Cleveland County Board of Education, d/b/a Cleveland

County Schools (“CCS” or “defendant”), appeals from the judgment

entered by the trial court on or about 13 February 2013, wherein

it concluded that certain funds that CCS had placed in Fund 8

should have been placed into the local current expense fund and

distributed on a pro rata basis to the plaintiff charter schools.

CCS also appeals from an order awarding plaintiffs attorneys’

fees.

        On 3 June 2014, we filed an opinion holding that the 2010

amendments applied to the present case as clarifying amendments.

Plaintiffs filed a petition for rehearing, which we allowed.

Upon reexamination, we clarify the definition of “restricted”

funds as used in our prior case law and applicable to the school

year in question without relying on the subsequent amendments.

We remand for the trial court to apply the correct definition of

“restricted” funds and to make appropriate findings of fact. We

reverse the trial court’s order awarding attorneys’ fees.

                              I.     Background

        On   9   January   2012,   Thomas    Jefferson   Classical    Academy

Charter School, Piedmont Community Charter School, and Lincoln

Charter      School   (“plaintiffs”)    filed   a   complaint   in   superior

court, Cleveland County, alleging that CCS had failed to pay
                                       -3-
them the proper per-pupil amount required by statute. Plaintiffs

specifically contended that CCS wrongfully moved approximately

$4.9 million from the local current expense fund, which must be

shared with the charter schools, to a “special revenue fund,”

which is not shared.        Plaintiffs alleged that they were owed

approximately $102,480. Plaintiffs sought a declaratory judgment

that CCS must allocate the funds as plaintiffs contended the

statute      required,   recovery     in   the    amount     of   $102,480,     and

attorneys’ fees under N.C. Gen. Stat. § 6-19.1. CCS answered,

denying that their transfer of the funds to the special revenue

fund violated any of the applicable statutes and that plaintiffs

were owed anything.

       The case was tried by the superior court sitting without a

jury.    The   parties   each   presented        evidence    to   support    their

claims. Plaintiffs primarily relied on the testimony of David

Lee,    financial    director   for    CCS.   Mr.    Lee    prepared    an   audit

report of CCS’ finances, which used various state budget codes

for different revenue sources. Many of the funding sources that

CSS had placed in the special revenue fund were classified by

Mr.    Lee   as   “unrestricted.”     Defendant      presented     a   number   of

witnesses      who   administered     various     programs    within    the     CCS

system who testified about their funding sources and the use of
                                              -4-
those funds. After two days of testimony, the trial court took

the matter under advisement.

       The trial court entered its judgment on 21 February 2013,

wherein        it   found          that       defendant          had        misappropriated

approximately $2,781,281 that should have been placed in the

current expense fund rather than the special revenue fund. It

found that Mr. Lee had admitted that $2,109,377 of the funds,

called “Column A,” were “unrestricted.” It further found, based

on Mr. Lee’s testimony and that of the other CCS administrators,

that $671,904 of the funds, listed under “Column B” and “Column

C”   were   “(a)    part      of     moneys    made    available        to       CCS    for    its

current     operating        expenses,       (b)    used    by    CCS       to    operate      its

general K-12 programs and activities, and (c) not restricted to

purposes       outside       CCS’s      general      educational        programs.”              It

concluded that defendant owed plaintiffs $57,836 collectively

and entered judgment against CCS in that amount.                                       Defendant

filed    written     notice        of    appeal      from    the       21    February         2013

judgment on 18 March 2013.

       Plaintiffs then filed a petition for attorneys’ fees under

N.C.    Gen.    Stat.    §    6-19.1(a).       The    trial      court,          by   order   and

judgment entered 2 April 2013, granted plaintiffs’ petition and

awarded     them    $47,195.90          in   attorneys’       fees.         Defendant     filed
                                       -5-
written notice of appeal from the 2 April 2013 judgment and

order on 30 April 2013.

                        II.     “Restricted” Funds

       Defendant argues that the trial court erred in finding that

various   revenue    sources    were   not    “restricted”       and   concluding

that    these   funds    were    therefore      subject     to     a   per-pupil

distribution to the plaintiff charter schools. We clarify the

definition of “restricted” funds, hold that the trial court did

not make sufficient findings of fact to support its judgment,

and remand for further proceedings.

A.     Standard of Review

           When the trial court sits without a jury,
           the standard of review on appeal is whether
           there was competent evidence to support the
           trial court’s findings of fact and whether
           its conclusions of law were proper in light
           of such facts. . . . Evidence must support
           the findings, the findings must support the
           conclusions of law, and the conclusions of
           law must support the ensuing judgment.

Jackson v. Culbreth, 199 N.C. App. 531, 537, 681 S.E.2d 813, 817

(2009) (citations, quotation marks, and brackets omitted).

B.     Charter School Funding and the Uniform Budget Statute

       The allocation of funds between local school administrative

units and charter schools is governed by N.C. Gen. Stat. § 115C-

238.29H    (2009).      That    statute      requires     the     local   school
                                       -6-
administrative unit to “transfer to the charter school an amount

equal to the per pupil local current expense appropriation to

the local school administrative unit for the fiscal year.” N.C.

Gen. Stat. § 115C-238.29H(b).             This Court has interpreted the

phrase “local current expense appropriation” to be “synonymous

with   the   phrase    ‘local   current      expense   fund’   in   the   School

Budget and Fiscal Control Act, N.C.G.S. § 115C–426(e).” Francine

Delany New School for Children, Inc. v. Asheville City Bd. of

Educ., 150 N.C. App. 338, 347, 563 S.E.2d 92, 98 (2002), disc.

rev.   denied,   356    N.C.    670,   577   S.E.2d    117   (2003).   We   have

further held that charter schools “are entitled to an amount

equal to the per pupil amount of all money contained in the

local current expense fund.” Sugar Creek Charter School, Inc. v.

Charlotte-Mecklenburg Bd. of Educ., 188 N.C. App. 454, 460, 655

S.E.2d 850, 854 (Sugar Creek I), disc. rev. denied, ___ N.C.

___, 667 S.E.2d 460 (2008).            It is immaterial that the school

board has earmarked particular funds for a specific purpose if

the funds have been deposited in the local current expense fund.

Sugar Creek Charter School, Inc. v. Charlotte-Mecklenburg Bd. of

Educ., 195 N.C. App. 348, 360-61, 673 S.E.2d 667, 676 (Sugar

Creek II) (holding, inter alia, that the trial court did not err

in concluding that funds designated for students affected by
                                  -7-
Hurricane   Katrina   were   subject    to   per-pupil   distribution   to

charter schools because they were placed in the current local

expense fund, as opposed to a separate fund), disc. rev. denied,

363 N.C. 663, 687 S.E.2d 296 (2009).

     The local current expense fund is defined             by N.C. Gen.

Stat. § 115C-426(e) (2009)1:

            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 G.S. 115C-501 to 115C-511,
            State money disbursed directly to the local
            school administrative unit, and other moneys

1
  This statute has since been amended twice, but neither of these
amendments applies to the 2009-2010 school year. N.C. Sess. Laws
2010-31, § 7.17(c)(stating that the amendments apply beginning
with the 2010-2011 school year); N.C. Sess. Laws 2013-355, §
2(a), § 8 (amending § 115C-426 and stating that the amendments
become effective when the act becomes law but do not affect
pending litigation); Charter Day School, Inc. v. New Hanover
County Bd. of Educ., ___ N.C. App. ___, ___ n.4, 754 S.E.2d 229,
235 n.4 (2014) (noting that the amendments do not apply
“retroactively”).
                                    -8-
             made available or accruing to the local
             school administrative unit for the current
             operating expenses of the public school
             system.

       N.C. Gen. Stat. § 115C-426(c) also permits the creation of

“other funds . . . to account for trust funds, federal grants

restricted as to use, and special programs.”          Thus, we have held

that “the provisions of Chapter 115C . . . do not require that

all monies provided to the local administrative unit be placed

into   the   ‘local    current   expense   fund’    (Fund   Two).”   Thomas

Jefferson Classical Academy v. Rutherford County Bd. of Educ.,

215 N.C. App. 530, 543, 715 S.E.2d 625, 633 (2011), disc. rev.

denied and app. dismissed, ___ N.C. ___, 724 S.E.2d 531 (2012).

“Restricted funds” kept in a fund separate from the local current

expense   fund   are   exempt    from   per-pupil   distribution     to   the

charter schools. Id. at ___, 715 S.E.2d at 630 (“[I]f funds are

placed in the ‘local current expense fund’ and not held in a

‘special fund,’ they must be considered as being part of the

‘local current expense fund’ used to determine the pro rata share

due to the charter schools.”). The local school board has the

authority to place such restricted funds in a separate fund. Id.

at ___, 715 S.E.2d at 634 (“Sugar Creek I and II clearly indicate

that it is incumbent upon the local administrative unit to place

restricted funds into a separate fund.”); Sugar Creek I, 188 N.C.
                                           -9-
App. at 460-61, 655 S.E.2d at 855. However, we have never defined

what “restricted funds” are or who has the authority to make that

determination.

         Thus, there are two fundamental questions we must address

here:       (1)   does    the     local    school   board       have   discretionary

authority to allocate funds into the local current expense fund

or   a    separate    fund   as     it    sees   fit?;    and    if    not,    (2)    did

defendant      here      properly    classify       the    funds       at     issue    as

restricted?

         N.C. Gen. Stat. § 115C-426(e) states that the local current

expense fund

             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 G.S. 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
             system.

         “It is well established that the word ‘shall’ is generally

imperative or mandatory.” Chandler ex rel. Harris v. Atlantic

Scrap & Processing, ___ N.C. App. ___, ___, 720 S.E.2d 745, 750
                                      -10-
(2011)     (citation   and     quotation      marks   omitted),     aff’d   and

remanded, ___ N.C. ___, 749 S.E.2d 278 (2013). Consistent with

this Court’s decisions in Sugar Creek I, Sugar Creek II, and

Thomas Jefferson, as well as the plain language of N.C. Gen.

Stat.     §   115C-426(e),     we    conclude    that    the     local   school

administrative unit may deposit any “restricted” funds into a

fund     separate   from     the    current    expense   fund.     See   Thomas

Jefferson, 215 N.C. App. at 544, 715 S.E.2d at 634; Sugar Creek

I, 188 N.C. App. at 460, 655 S.E.2d at 855.                By contrast, any

funds covered by N.C. Gen. Stat. § 115C-426(e) must be deposited

into the local current expense fund.             We further conclude that

the determination of which funds may be placed in a separate

fund is a question of law and not solely in the discretion of

the local school board, given the mandatory language found in

the budget statute. See Chandler, ___ N.C. App. at ___, 720

S.E.2d at 750 (holding that the Industrial Commission has no

discretion in determining an interest award when the relevant

statute employed the word “shall”).

       Because the issue of whether funds are “restricted” or not

is an issue of law, we further hold that the determination of

whether funds that accrued to the local school administrative

unit were “restricted” is a conclusion of law rather than a
                                        -11-
finding of fact. “A ‘conclusion of law’ is a statement of the

law arising on the specific facts of a case which determines the

issues between the parties.” Puckett v. Norandal USA, Inc., 211

N.C. App. 565, 570, 710 S.E.2d 356, 359 (2011) (citation and

quotation    marks     omitted).        Relevant    findings    of   fact    would

concern the origin, purpose, and ultimate use of the funds, not

their designation as “restricted.”

C.   Defining “restricted” funds

     “Restricted” is not a term found in any of the relevant

statutes.    Rather,    it   is    a    gloss   this   Court   has   put    on    the

statutory definitions found in N.C. Gen. Stat. § 115C-426. It

was the Court’s shorthand for those monies that can be placed in

a separate fund, i.e. those from “trust funds, federal grants

restricted    as   to   use,      and   special    programs”    which      must   be

accounted for separately. N.C. Gen. Stat. § 115C-426(c). We have

already held that a donor of “restricted funds” does not need to

require that they be placed in a separate fund for the local

school administrative unit to do so. Thomas Jefferson, 215 N.C.

App. at 543, 715 S.E.2d at 634. Thus, the question is not what

accounting method was required by the donor, but whether the

funds have a limited use and specific purpose, such as to fund a

special program. See Sugar Creek I, 188 N.C. App. at 460, 655
                                   -12-
S.E.2d at 855.      Moreover, “federal grants restricted as to use[]

and special programs” clearly have operating expenses and most

will serve some portion of the K-12 population, but that fact

does not make the funds “unrestricted.”

    The guidance from the Department of Public Instruction that

we reviewed in Thomas Jefferson indicated that Fund 8 was a new,

separate fund “to separately maintain funds that are restricted

in purpose and not intended for the general K–12 population in

the LEA.” Thomas Jefferson, 215 N.C. App. at 537, 715 S.E.2d at

630. This definition nicely captures the Legislature’s intent in

allowing local school administrative units to separate special

funds from the local current expense fund.

    The   use    of   funds   to   operate    a   program   for   the   K-12

population   does     not   make   the    funds   unrestricted.   Instead,

unrestricted funds are those that could be used for all of the

K-12 population without restriction.          To label any funds which

serve even a portion of the K-12 population as “unrestricted”

would contravene the legislature’s intent to allow local school

administrative units to place monies from grants “restricted as

to use” or funds for “special programs” into a separate fund.

Nearly any funds (except those for Pre-K programs) given as a

grant to a local school administrative unit will be used to
                                        -13-
operate some program for some of the K-12 population. Based on

the prior cases and the language of the applicable statutes, we

define     “restricted”       funds   as    those    funds       which    have      been

designated by the donor for some specific program or purpose,

rather than for the general K-12 population of the local school

system.

     The    local     school    administrative       unit     should     place      such

restricted funds into a fund separate and apart from the local

current expense fund, and if it fails to do so, the funds may

lose their “restricted” status. See id. at ___, 715 S.E.2d at

634 (holding that “it is incumbent upon the local administrative

unit to place restricted funds into a separate fund.”); Sugar

Creek II, 195 N.C. App. at 361, 673 S.E.2d at 676 (“If donations

or other moneys are intended for special programs, they should

be held in a special fund.”).

D.   Application

     The    trial     court’s    judgment      included     no   findings      on    the

origins    or   nature   of     the   funds    for   each     source     of   funding.

Instead, the trial court assessed the programs in bulk as either

“restricted”     or    “unrestricted.”        It   did   so   apparently       on    the

basis that Mr. Lee testified that these particular funds were

“unrestricted.”        First, we note that it is unclear what Mr.
                                         -14-
Lee’s understanding of the definition of “restricted” was, as

this was never explicitly stated, but he seems to have based his

characterization of the funds on the state budget codes he used

for each funding source. As both Mr. Lee and Mr. Merritt, the

expert witness called by plaintiffs, acknowledged, the budget

codes    do    not   dictate       how   the    funds        are   spent   and   funds

classified as “unrestricted” may still have a specific purpose.

Given our definition of “restricted” funds, we believe that the

trial court’s current findings of fact are inadequate for us to

review   its    conclusion     that      various   funds       were   “unrestricted”

when it failed to make findings on the origins, purposes, and

uses of the challenged funds. The fact that Mr. Lee may have

classified funds of a certain origin as “unrestricted” is not

dispositive of the issue.

     Although we agree with the dissent that the definition of

"restricted funds" may be complex in its application, we believe

that the complexity is unavoidable, considering the prior case

law and statutory language which we must follow.                       All students

served by both the public school systems and charter schools

throughout the state must be treated equally and the law must be

applied uniformly in all of the school systems.                        If the local

school   boards      and   trial    courts      have    no    clear   definition    of
                                   -15-
“restricted funds,” even if all are acting in good faith and

seeking to comply with the governing statutes, different school

boards    and   trial   courts   may    determine    their    own   differing

definitions and thus allocate funds differently.                In fact, in

this case, various witnesses seemed to have different ideas of

the definition of “restricted funds.” We also agree that the

complexity      of   identifying       “restricted   funds”     may    foster

additional litigation, but the absence of a definition of the

term probably fosters even more litigation.              Fortunately, our

legislature has recently amended N.C. Gen. Stat. § 115C-426 and

this amendment should clarify the identification of the funds

which the General Assembly intends to be included in the local

current expense fund.         Unfortunately, this amendment does not

apply to this case.

    Given the extensive record and the facts in evidence as to

each program, we believe that there is sufficient evidence in

the record for the trial court to make specific findings about

the funds at issue here. Therefore, we remand this case for the

trial court to enter a revised judgment with specific findings

about the origins, purpose,        and uses of the various funding

sources    at   issue   and   appropriate     conclusions     applying    the

definition of “restricted” funds outlined above.
                                         -16-
                            III. Attorneys’ Fees

       Defendant    next       argues    that    the   trial      court     erred    in

awarding plaintiffs attorneys’ fees under N.C. Gen. Stat. § 6-

19.1 because a local school board is not a state agency.                             We

agree.

       N.C. Gen. Stat. § 6-19.1 (2011) allows the trial court to

award attorney’s fees to a party prevailing over a state agency

in a civil action. This Court has held that the definition of

“agency”    for    the    purposes      of   §   6-19.1    is    the   same   as    the

definition of an “agency” under the Administrative Procedures

Act (APA). Izydore v. City of Durham (Durham Bd. of Adjustment),

___ N.C. App. ___, ___, 746 S.E.2d 324, 326, disc. rev. denied,

___ N.C. ___, 749 S.E.2d 851 (2013). The APA defines an “agency”

as

            an agency or an officer in the executive
            branch of the government of this State and
            includes   the   Council   of   State,   the
            Governor’s Office, a board, a commission, a
            department, a division, a council, and any
            other unit of government in the executive
            branch. A local unit of government is not an
            agency.

N.C.     Gen.     Stat.    §     150B-2(1a)       (2011)        (emphasis     added).

Accordingly, we have held that local governmental units, like

municipalities and counties, are not subject to the attorney’s

fees provisions of N.C. Gen. Stat. § 6-19.1. Izydore, ___ N.C.
                                       -17-
App. at ___, 746 S.E.2d at 326 (holding that “local governmental

units—such as respondents—are not ‘agencies’ for purposes of §

6–19.1.”). Local school boards and local school administrative

units    are    local    governmental       units,    and,    as    such,    are    not

“agencies” for the purpose of the APA. See N.C. Gen. Stat. §

115C-5(5)-(6) (defining “local school board” as                      “a city board

of education, county board of education, or a city-county board

of education” and a “local school administrative unit” as “a

subdivision of the public school system which is governed by a

local board of education. It may be a city school administrative

unit,    a    county    school    administrative      unit,    or    a   city-county

school       administrative      unit.”);    Coomer    v.    Lee    County    Bd.    of

Educ., ___ N.C. App. ___, ___, 723 S.E.2d 802, 803 (observing

that “local boards of education are generally excluded from the

requirements of the APA.”), disc. rev dismissed, 366 N.C. 238,

731 S.E.2d 427, disc. rev. denied, 366 N.C. 238, 731 S.E.2d 428

(2012).

      Plaintiffs contend that the local school boards are subject

to § 6-19.1        because we have held that they “are deemed agents

of the State for purposes of providing public education.” Kiddie

Korner Day Schools, Inc. v. Charlotte-Mecklenburg Bd. of Educ.,

55   N.C.      App.    134,   140,   285    S.E.2d    110,    114    (1981),       app.
                                       -18-
dismissed and disc. rev. denied, 305 N.C. 300, 291 S.E.2d 150

(1982). Yet, our Supreme Court has noted that “[a]n agent of the

State and a state agency are fundamentally different . . . .”

Meyer v. Walls, 347 N.C. 97, 107, 489 S.E.2d 880, 885 (1997);

see also Green v. Kearney, 203 N.C. App. 260, 272, 690 S.E.2d

755, 764 (2010) (noting the distinction between a state agent

and a state agency). In that same opinion, the Supreme Court

quoted a prior opinion for the proposition that “[i]n no sense

may    we   consider   the   [Local]    Board    of   Education     in    the   same

category as the State Board of Education . . . .” Meyer, 347

N.C. at 106, 489 S.E.2d at 885 (citation and quotation marks

omitted).      Thus, local school boards are not state agencies for

purposes of the APA and N.C. Gen. Stat. § 6-19.1 simply because

they    may    be   considered       agents     of    the   State    in    certain

circumstances.

       We hold that the trial court erred in awarding plaintiff

attorney’s fees under N.C. Gen. Stat. § 6-19.1 because defendant

is not an agency for purposes of that statute. Therefore, we

reverse the trial court’s order allowing plaintiff’s petition

for attorneys’ fees.

                               IV.     Conclusion
                              -19-
    For the foregoing reasons, we remand for the trial court to

enter a revised judgment with appropriate findings of fact and

conclusions of law as to the funds at issue. We further reverse

the trial court’s order awarding plaintiffs attorneys’ fees.

    REMANDED in part; REVERSED in part.

    Judge DILLON concurs.

    Judge HUNTER, JR., Robert N. concurs in part and dissents
    in part by separate opinion.
                                NO. COA13-893-2

                      NORTH CAROLINA COURT OF APPEALS

                          Filed: 2 September 2014

THOMAS JEFFERSON CLASSICAL ACADEMY
CHARTER SCHOOL, PIEDMONT COMMUNITY
CHARTER SCHOOL AND LINCOLN CHARTER
SCHOOL,
     Plaintiffs,

     v.                                     Cleveland County
                                            No. 12 CVS 41
CLEVELAND COUNTY BOARD OF
EDUCATION, D/B/A CLEVELAND COUNTY
SCHOOLS,
     Defendant.

HUNTER, JR., Robert N., Judge, concurring in part, dissenting in
part.

     I dissent from Section II of the majority opinion.                    The

majority’s   definition    of    “restricted”     funds    adds   unnecessary

complexity   to   this   Court’s    body    of   cases    addressing    school

funding    disputes    between    charter    schools      and   local   school

boards.2   The majority’s definition is overly broad and may allow

local school boards to sequester funds as “restricted” which

should be apportioned to charter schools under N.C. Gen. Stat.

2
  As an initial matter, I agree with the majority that the
holding in this case is limited to a small subset of funding
disputes between charter schools and local education authorities
due to the General Assembly’s changes to N.C. Gen. Stat. § 115C-
426 (2009). 2013 N.C. Sess. Laws 965, 978–80.
                                        -2-
§§   115C-238.29H(b), 115C-426(c) (2009).                For these reasons, I

respectfully dissent.3

     The   majority      defines      “restricted”     funds    as     “those   funds

which    have    been   designated      by    the    donor    for    some   specific

program or purpose, rather than for the general K-12 population

of the local school system” and notes the requirement of Thomas

Jefferson I that these funds be placed into a separate fund from

the local current expense fund.                Thomas Jefferson I, ___ N.C.

App. at ___, 715 S.E.2d at 634.                The majority then remands to

the trial court for further findings of fact concerning the

“origins, purpose, and uses of the various funding sources at

issue”    that    it    must   then    apply    to    this     newly    constructed

definition of “restricted” funds.

     In Union Acad. v. Union Cnty. Pub. Sch., ___ N.C. App. ___,

735 S.E.2d 452, 2012 WL 5857373 (2012) (unpublished) this Court

instructed the trial court on remand to determine, based on the

rules set forth in Thomas Jefferson I, “the amount of restricted

funds properly placed” in a separate fund.                   Id. at *5.     Notably,

this Court said “[w]ithout specific evidence as to what the

funds in UCPS’ Fund 8 actually were, any attempt by this panel

3
  I agree with the majority opinion concerning attorneys’ fees in
Section III.
                                        -3-
to    define   ‘restricted      funds’     would   amount      to   an   improper

advisory opinion.”         Id. at *4.

      Here,    the    trial     court     followed     the     exact     procedure

prescribed by Union Academy: the trial court collected what the

majority describes as an “extensive record” and then examined

the   nature   of    the    funds.       The   trial   court    relied     on    the

testimony of the Chief Financial Officer of Cleveland County

Schools (“CCS”) to find as fact that $2,109,377 of the funds at

issue in Column A were unrestricted in nature.                  The trial court

then found as fact that the roughly $671,904 at issue in Columns

B and C were funds used for “(a) part of ‘moneys made available’

to CCS for its ‘current operating expenses,’ (b) used by CCS to

operate its general K-12 programs and activities, and (c) not

restricted     to    purposes     outside      CCS’s    general        educational

program . . . .”       As the trial court properly took evidence,

considered the “nature” of the funds, and determined that the

funds were unrestricted in nature, the trial court has already

followed the proper procedure under Thomas Jefferson I and the

example provided in Union Academy.             Accordingly, I would affirm

the trial court.

      The   majority’s      definition    unnecessarily      adds   a    layer   of

complexity     and   will     foster     further   litigation       relating      to
                                       -4-
charter school funding disputes for the 2009–10 school year.

Funds appropriated by a donor to a local school district and

designated   for   a   “specific   program        or   purpose”   conceivably

captures a wider variety of programs intended to benefit the

general   K-12   population   of   a    local    school   system,   including

charter school students.      This Court’s prior cases have already

lead to local school units “increasingly allocat[ing] monies for

operating expenses to funds other than the local current expense

fund”4 as well as a bevy of litigation discussed supra.              Creating

an additional avenue for argument—that a particular budgetary

item is a “specific program” or has a “specific purpose”—will

only exacerbate those trends.                For the foregoing reasons, I

respectfully dissent.

4
  See Kara Millonzi, Allocating Operating Monies Among Local
School Unit Funds: Local Current Expense Fund vs. Fund 8,
Coates’ Canons: NC Local Government Law, Univ. of N.C. Sch. Of
Gov’t. (June 10, 2014), http://canons.sog.unc.edu/?p=7721; see
also Lisa Lukasik, Deconstructing a Decade of Charter School
Funding Litigation: An Argument for Reform, 90 N.C. L. Rev.
1885, 1918 (2012) (“After the court of appeals’ charter school-
funding trilogy and the subsequent regulatory and legislative
changes . . . the base amount of local per pupil funding for
charter schools may fluctuate depending upon how local boards of
education account for ‘other’ funds.”).