NC Supreme Court blocks transfer of school funds in Leandro court case

The state Supreme Court’s new Republican majority has blocked enforcement of a trial judge’s order to transfer hundreds of millions of dollars to fund public schools.

In an order issued Friday, the Supreme Court voted 5-2 to reinstate an order from a panel of appeals court judges saying that Superior Court David Lee had exceeded his authority when he ordered a transfer of money as part of the long-running Leandro school funding case.

In November, the then-Democratic-controlled Supreme Court had voted 4-3 to back Lee’s order to increase funding. But since then, Republicans won two seats in the fall elections to gain a 5-2 majority on the high court.

The Supreme Court’s two remaining Democratic justices dissented on Friday.

“Today’s order abandons the concepts of respect for precedent, law of the case, stare decisis, and the rule of law all in the name of preventing the State from complying with its constitutional duty to provide a sound basic education to the children of this state,” Judge Anita Earls wrote in the dissent.

Nearly 30 years of litigation

The Leandro school funding lawsuit was initially filed in 1994 by low-wealth school districts to get more state funding.

Over the years, the state Supreme Court has ruled that the state constitution guarantees every child “an opportunity to receive a sound basic education” and that the state was failing to meet that obligation.

In November 2021, Lee, who has since died, ordered the state treasurer, controller and budget director to transfer $1.75 billion to fund the next two years of a plan developed by a consultant. The plan is meant to try to provide every student with high-quality teachers and principals.

During the case, the leaders of the Republican-led General Assembly have argued that only lawmakers and not the courts have the state constitutional authority to spend state funds.

Then State Controller Linda Combs, a Republican, appealed Lee’s order to the N.C. Court of Appeals. A three-judge panel with a GOP majority sided with Combs and blocked the order.

In November, just days before the election, the Supreme Court’s Democratic majority upheld Lee’s ruling and ordered the new trial judge to determine how much to transfer. The court majority said it had to intervene “to guard and maintain the constitutional rights of North Carolina schoolchildren.”

The first trial judge who replaced Lee had lowered the court-ordered amount to $785 million. In a December court filing, Anca Grozav, the chief deputy director of the state budget office, wrote that last year’s state budget left $678 million unfunded in the second and third years of the Leandro plan.

Friday’s court order comes a week before the latest trial judge, James Ammons, was to hear the case.

‘Irreparable harm’

State Controller Nels Roseland has continued his predecessor’s arguments against the money transfer even though he was nominated by Democratic Gov. Roy Cooper, who supports the court-ordered money transfer.

A lawyer for Roseland told the Supreme Court last month that the controller remained worried that he or his staff faced criminal and civil penalties for making the transfer with several issues unaddressed, The Associated Press reported. The controller keeps the state’s books and manages cash flow.

“The Controller has made a sufficient showing of substantial and irreparable harm should the stay remain in effect, we lift the stay, thereby reinstating the writ of prohibition, until this Court has an opportunity to address the remaining issues in this case,” Judge Trey Allen wrote for the majority.

Allen was one of the two new GOP judges elected in November.