A ruling by the North Carolina Supreme Court on Friday siding with the state controller means the court will revisit a school funding case in which an earlier lineup of justices issued a landmark opinion just four months ago.
In a 5-2 decision, the Supreme Court restored enforcement of a 2021 order by the Court of Appeals that prohibited the controller from transferring money from state coffers to agencies without the General Assembly's express approval. A trial judge had directed the controller's predecessor to transfer the funds — an action the Supreme Court upheld in November. Two new justices joined the bench in January, altering the court's partisan makeup.
A lawyer for current Controller Nels Roseland told the Supreme Court last month that Roseland remained worried that he or his staff faced criminal and civil penalties for making the transfer with several issues unaddressed. The controller keeps the state's books and manages cash flow.
Roseland "has made a sufficient showing of substantial and irreparable harm should the stay remain in effect," the court's prevailing order on Friday reads. It lifted the stay on the Court of Appeals ruling until the Supreme Court "has an opportunity to address the remaining issues in this case."
Superior Court Judge David Lee had also ruled in late 2021 that he had the authority to require the transfer of $1.75 billion. He said that was because state officials repeatedly failed to spend enough so that all children have an "opportunity to receive a sound basic education." That's in keeping with Supreme Court rulings from 1997 and 2004, called "Leandro" after the name of an original lawsuit plaintiff. The money would have gone to carry out two years of a remedial education plan that Lee had approved.
The Supreme Court upheld Lee's ruling in a 4-3 decision in November, saying the state constitution's declaration addressing the people's "right to the privilege of education" gave Lee authority to order funds be spent. The dissenting opinion, backed by the court's three registered Republicans, said only the General Assembly can appropriate state funds.
The justices on the prevailing side — all registered Democrats — also suspended the order preventing the controller from acting "pending any further filings" not already addressed in the November opinion.
No money has been transferred, and the case was moved to a new trial judge to ensure the transfer — potentially several hundred million dollars now — was carried out. Since the order, Republicans won two Supreme Court elections and now hold five of the seven seats.
The Feb. 8 motion by Roseland — who succeeded Linda Combs as controller last summer — said the justices, for example, haven't addressed whether the November order is expressly contrary to other state law, or whether the transferred funds must revert to state coffers if they are unspent.
Associate Justice Anita Earls wrote a scathing dissent to Friday's order, saying the majority took "extraordinary, unprincipled and unprecedented action" and Roseland's motion "merely seeks rehearing on issues this court has already decided." It could delay further carrying out of the Leandro decisions that led up to the November order, or worse, Earls added.
"If our court cannot or will not enforce state constitutional rights, those rights do not exist," Earls wrote. Justice Mike Morgan joined in her opinion.
Democratic Gov. Roy Cooper, whose administration helped develop the remedial plan that Lee approved, appointed Roseland to a seven-year term as controller. The General Assembly confirmed him last month.
Republican legislative leaders, who also say state funds can only be allocated with General Assembly approval, want to make additional arguments at the Supreme Court. The justices declined Friday to let them move ahead with legal briefs, citing a procedural omission that the lawmakers set about trying to fix later Friday.
The ruling comes a month after the same Republican majority on the court agreed to rehear cases involving partisan gerrymandering and photo voter identification that the previous Democratic-led court ruled upon in December. Those rehearings will be held in mid-March.
