RALEIGH (AP) - The state of North Carolina owes local school districts nearly $750 million because state agencies wrongly held on to civil penalties for nearly a decade, according to a judge's decision made public Tuesday that may have lawmakers to scrambling to pay it.
Wake County Superior Court Judge Howard Manning set the final price tag for the state to meet requirements of a state Supreme Court opinion three years ago that found several agencies failed to forward certain fees between 1996 and mid-2005.
Manning's ruling stops short of ordering the Legislature or the agencies to place the money in a special fund now earmarked for school technology needs. Manning said doing so would exceed the judiciary's powers in the state constitution.
"Ultimately it is the General Assembly that will decide whether to appropriate sufficient funds to those agenda to allow them to make the required payments without disrupting their ongoing operations," Manning wrote.
State lawmakers said they would consider ways to comply with the order in the months ahead. They pointed out Tuesday they've improved education spending in recent years but paying it all at once would be difficult in part due to a slowing economy.
"There's not another $700 million out there to pay this without reductions in the education budget," said House Speaker Joe Hackney, D-Orange.
Manning's decision comes after the Supreme Court justices in 2005 expanded the types of fees that must go to the schools - everything from university parking tickets and overweight vehicle fines to late tax payments. The opinion came in a 1998 lawsuit filed by school districts.
The state constitution requires that all fines and forfeitures collected because of violations of the law be used "exclusively for maintaining free public schools." The courts had often struggled to determine which penalties and fees assessed by the state actually punish violations of the law and should be earmarked for schools.
The total amount collected was $767.8 million, but the amount was reduced to $747.8 million to account for the costs of collecting them. The Department of Revenue has the largest bill - $583.3 million - in the form of fees on late payments and underpayments and other rule violations by taxpayers.
Manning said any money should be distributed on a per-pupil basis, meaning the more students in a district, the more money it would receive.
An appeal is possible, although it likely would focus on narrow issues that if successful wouldn't change the crux of the ruling since it's already gone before the justices once.
Attorney General Roy Cooper's office, which represented the state agencies in the case, will consult with Gov. Mike Easley's office and legislative leaders before deciding what to do next, Cooper spokeswoman Noelle Talley said.
Ed Dunlap, executive director of the North Carolina School Boards Association, the lead plaintiff in the lawsuit, said in a statement that school leaders "look forward to working with the General Assembly to devise a fair way for those funds to be repaid within a reasonable timetable and put to work for school children across this state."
The technology money already is used by school district to pay for computer labs, high-tech whiteboards and expanding high-speed Internet to all schools, said Leanne Winner, an association lobbyist.
Manning's ruling sets no timetable for lawmakers to resolve the issue, so legislators could make payments over several years if needed. But he wrote that any payments must go solely for technology matters.
About $800 million sits in the state's rainy day fund, but Hackney said it wouldn't be prudent to take money from a reserve traditionally used to respond to natural disasters.
Hackney suggested that the public schools already have been receiving more funds because lawmakers would have had to shift other tax dollars to run state agencies had they not retained the civil fines.
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