Ne. Raleigh Charter Acad., Inc. v. Wake Cnty. Bd. of Educ.

• Court: Court of Appeals of North Carolina
• Decided: February 18, 2014
• Docket: 13-697
• Status: Unpublished

Opinion

An unpublished opinion of the North Carolina Court of Appeals does not con stitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA13-697 NORTH CAROLINA COURT OF APPEALS

Filed: 18 February 2014

NORTHEAST RALEIGH CHARTER ACADEMY, INC., d/b/a TORCHLIGHT ACADEMY, Plaintiff-Appellee,

v. Wake County No. 10 CVS 10858 WAKE COUNTY BOARD OF EDUCATION, d/b/a “WAKE COUNTY PUBLIC SCHOOL SYSTEM,” Defendant-Appellant.

Appeal by defendant from order entered 28 March 2012 by

Judge Abraham Penn Jones in Wake County Superior Court and from

order entered 4 September 2012 by Judge Donald W. Stephens in

Wake County Superior Court. Heard in the Court of Appeals 23

October 2013.

Bowens Law Group, PLLC, by Stephon J. Bowens and Saleisha N. Williams, for plaintiff appellee.

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

Allison B. Schafer and Christine T. Scheef, for the North Carolina School Boards Association, amicus curiae.

McCULLOUGH, Judge. -2- Defendant, Wake County Board of Education d/b/a Wake County

Public School System (“WCPSS”), appeals from the orders entered

by the trial court on 28 March 2012 and 4 September 2012. For

the following reasons, we reverse the trial court’s orders.

I. Background

Plaintiff, Northeast Raleigh Charter Academy, Inc., d/b/a

Torchlight Academy, is a charter school in Wake County that

provides free kindergarten through fifth grade public education

to students from Wake, Durham, and Johnston counties. On 29

June 2010, Torchlight Academy commenced this action against

WCPSS and Donna Hargens, in her official capacity as Interim

Superintendent of WCPSS, by filing a complaint in Wake County

Superior Court alleging it was underfunded by WCPSS for the

1999-2000 through the 2009-2010 school years. Based on this

allegation, Torchlight Academy sought a declaratory judgment

that WCPSS calculate per pupil funding in a manner consistent

with the relevant statutes and a judgment for the amount it was

underfunded. Torchlight Academy further alleged violations of

its equal protection rights under the Fourteenth Amendment to

the U.S. Constitution, Article I, Section 19 of the N.C.

Constitution, and Title VI of the Civil Rights Act of 1964. -3- Defendants responded to the complaint with an answer and

partial motion to dismiss on 7 September 2010. The partial

motion to dismiss came on for hearing in Wake County Superior

Court before Judge Shannon Joseph on 21 March 2011. Following

the hearing, the trial court filed an order on 23 March 2011

granting defendants’ partial motion to dismiss. As a result,

Torchlight Academy’s equal protection claims and claims against

Donna Hargens were dismissed with prejudice. The trial court

further concluded Torchlight Academy’s remaining claims were

subject to a three year statute of limitations and dismissed all

claims for the years prior to the 2006-2007 school year with

prejudice, leaving only Torchlight Academy’s claims for the

2006-2007 through 2009-2010 school years.

On 24 October 2011, Torchlight Academy filed a motion for

declaratory judgment and partial summary judgment that later

came on for hearing before Judge Abraham Penn Jones on 7

February 2012. By order filed 28 March 2012, the trial court

granted Torchlight Academy’s motion. Specifically, the trial

court held, “[WCPSS] failed to include the total fund balance

available for the academic years 2006-2007 through 2009-2010 in

its reimbursement payment to [Torchlight Academy], and must

include the total fund balance available in order to re-allocate -4- funds owed to [Torchlight Academy] in an equal and consistent

manner . . . .”

Thereafter, the case came on for non-jury trial in Wake

County Superior Court on 10 July 2012, the Honorable Donald W.

Stephens, Judge presiding. In a 4 September 2012 order, the

trial court issued its final judgment awarding Torchlight

Academy “an additional allocation from [WCPSS’s] general fund

balance in the amount of $126,640.18.” This award accounted for

Torchlight Academy’s per pupil share of the unreserved and

undesignated portions of the general fund balance for the years

at issue.

WCPSS filed notice of appeal from the 28 March 2012 order

and the 4 September 2012 order on 3 October 2012. Torchlight

Academy did not appeal.

II. Discussion

The sole issue raised on appeal by WCPSS is whether the

trial court erred in concluding Torchlight Academy is entitled

to an additional share of the fund balance, over and above the

share of the appropriated fund balance already paid to

Torchlight Academy by WCPSS.1 Although phrased differently, this

1 In response to this Court’s decision in Sugar Creek Charter School v. Charlotte-Mecklenburg Bd. of Educ., 195 N.C. App. 348, 673 S.E.2d 667 (2009), WCPSS made a $95,145.89 reconciliation -5- is the same issue decided by this Court in Charter Day School,

Inc. v. New Hanover County Bd. of Educ., _ N.C. App. _, _ S.E.2d

_ (18 February 2014) (COA13-488), filed simultaneously with this

opinion. For reasons set forth more fully in Charter Day, we

hold the trial court erred.

As discussed in Charter Day, the Charter School Funding

Statute during the years at issue in this case provided, in

pertinent part, “[i]f a student attends a charter school, the

local school administrative unit in which the child resides

shall 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) (2007).2 In Francine Delany New School for

Children, Inc. v. Asheville City Bd. of Educ., this Court held

the phrase “local current expense appropriation” in the Charter

School Funding Statute was synonymous with the phrase “local

current expense fund” in N.C. Gen. Stat. § 115C-426(e) of the

Fiscal Control Act. 150 N.C. App. 338, 347, 563 S.E.2d 92, 98

(2002). Thus, charter schools are entitled to a pro rata share

payment to Torchlight Academy in February 2010 to account for Torchlight Academy’s per pupil share of the fund balance used by WCPSS in the 2006-2007, 2007-2008, and 2008-2009 school years. 2 We cite to the 2007 version of the N.C. General Statutes because the statutes as they existed in 2007 were in effect throughout the years at issue in this case. -6- of the local current expense fund under the Charter School

Funding Statute.

While this Court made clear that all funds held in the

local current expense fund are subject to allocation pursuant to

the Charter School Funding Statute, see Thomas Jefferson

Classical Academy v. Rutherford County Bd. of Educ., _ N.C. App.

_, _, 715 S.E.2d 625, 630 (2011) (discussing this Court’s prior

charter school funding decisions and stating “[t]he common

thread running through each of these holdings is that if funds

are placed in the ‘local current expense 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[]”), appeal dismissed and disc. review denied, _ N.C. _,

724 S.E.2d 531 (2012), it is also clear from the Fiscal Control

Act’s description of the local current expense fund that only

that portion of the fund balance that is “made available or

accruing to the local school administrative unit for the current

operating expenses of the public school system[]” shall be

included in the local current expense fund. See N.C. Gen. Stat.

§ 115C-426(e) (2007). Pursuant to N.C. Gen. Stat. §115C-425

(2007), the local school administrative unit is required to

operate under an annual balanced budget resolution adopted by -7- the local board of education. “A budget resolution is balanced

when the sum of the estimated net revenues and appropriated fund

balances is equal to the appropriations.” N.C. Gen. Stat. §

115C-425(a). “[N]o local school administrative unit may expend

any moneys, regardless of their source . . . , except in

accordance with a[n adopted] budget resolution.” N.C. Gen.

Stat. § 115C-425(b).

As we held in Charter Day,

[c]onsidering these provisions together, we hold the fund balance is not available to the local school administrative unit for current operating expenses until it is appropriated for use in a budget resolution adopted by the local board of education. Therefore, only that portion of the fund balance that is actually appropriated in a particular year is to be included in the local current expense fund and subject to pro rata allocation pursuant to the Charter School Funding Statute. That portion of the fund balance that is not appropriated remains a balance sheet entry, subject to appropriation in future years.

Charter Day, _ N.C. App. at _, _ S.E.2d at _.

Furthermore, as we clarified in Charter Day, this holding

does not contradict this Court’s decision in Sugar Creek Charter

School, Inc. v. Charlotte-Mecklenburg Bd. of Educ., 195 N.C.

App. 348, 673 S.E.2d 667 (Sugar Creek II), appeal dismissed and

disc. review denied, 363 N.C. 663, 687 S.E.2d 296 (2009). Upon

review of the record and this Court’s reasoning in Sugar Creek -8- II, it is evident that the Sugar Creek II opinion concerned only

the appropriated portion of the fund balance. Where only the

appropriated portion of the fund balance is included in the

local current expense fund and shared pro rata pursuant to the

Charter School Funding Statute, “charter school children have

access to the same level of funding as children attending the

regular public schools of this State.” Id. at 357, 673 S.E.2d

at 673.

In addition to the single issue raised on appeal by WCPSS,

Torchlight Academy, without appealing the trial court’s order,

raises additional issues for this Court’s review. Specifically,

Torchlight Academy challenges the trial court’s exclusion of the

reserved or designated portions of the general fund balance from

the local current expense fund and contends it is entitled to a

judgment of $406,183.48 instead of the $126,640.18 awarded.

Torchlight Academy claims these additional issues are not

separate issues on appeal, but alternative bases in the law that

are proper for determination pursuant to Rules 10(c) and 28(c)

of the North Carolina Rules of Appellate Procedure. We

disagree.

The Rules of Appellate Procedure provide that, “[w]ithout

taking an appeal, an appellee may present issues on appeal based -9- on any action or omission of the trial court that deprived the

appellee of an alternative basis in law for supporting the

judgment, order, or other determination from which appeal has

been taken.” N.C.R. App. P. 28(c) (2014). In the present case,

however, the issues raised by Torchlight Academy are not

alternative bases in the law supporting the order and judgment,

but distinct challenges to the trial court’s order and judgment

seeking affirmative relief. As such, the issues are not

properly before this Court and we do not consider the arguments.

III. Conclusion

For the reasons discussed above and more fully explained in

Charter Day School, Inc. v. New Hanover County Bd. of Educ., _

N.C. App. _, _ S.E.2d _ (18 February 2014) (COA13-488), we hold

the trial court erred in concluding Torchlight Academy was

entitled to an additional share of the fund balance, over and

above the share of the appropriated fund balance already paid by

WCPSS.

Reversed.

Judges ELMORE and DAVIS concur.

Report per Rule 30(e).