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House Legislation Moves Forward With New Process For Resolving School Board And County Funding Disputes

House Bill 1031 aimed at resolving funding disputes between county commissioners and school boards was revised by the House Rules Committee Tuesday night after both the N.C. Association of County Commissioners (NCACC) and the N.C. School Boards Association (NCSBA) asked for a change in the bill. Lobbyists for the two groups said they were unhappy with a provision setting a formula for school construction funding.

The bill would create a default funding formula for situations where county commissioners and school boards can't reach a budget agreement on local spending on school operations. The two boards would then be banned from filing lawsuits over the funding issue. The formula would be based on the district's student enrollment and inflation, with funding increasing at a faster pace if the two sides can't reach agreement for three consecutive years. An amendment to the bill filed in the Rules Committee by Rep. John Fraley (R-Iredell) removed construction funding from the formula and instead allows for court action to settle disputes if mediation between the two sides doesn't resolve the impasse over how much to spend on new buildings, renovations and maintenance. The amendment also calls for the General Assembly’s Program Evaluation Division to study construction funding dispute issues to develop a funding formula for that aspect of school district budgets in the future.

The revised bill, sponsored by Rep. Craig Horn (R-Union), originated as a recommendation from the Program Evaluation Oversight Committee that he co-chairs. The organizations representing school boards and county commissioners both expressed general support for the new default mechanism for settling funding disputes over school operations expenditures but raised concerns then and again this week over the need to identify a different process for handing capital funding disputes.

The bill also calls for the Local Government Commission and the School of Government at the University of North Carolina at Chapel Hill to convene a working group to develop and recommend statutory parameters for fund balances held by local school boards and report by 3/30/2019 to the Joint Legislative Education Oversight Committee. The working group must include representatives of NCACC, NCSBA and the N.C. Association of School Business Officials (NCASBO), which is the finance officer affiliate of the N.C. Association of School Administrators (NCASA).

The bill passed the House Wednesday night and then moved to the Senate, where it gained final approval Friday and then was sent to the Governor.