Ne. Raleigh Charter Acad., Inc. v. Wake Cnty. Bd. of Educ. ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not con stitute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.
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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.
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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
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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
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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.
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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
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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
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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
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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).