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Union County appeal of $91M judgment heard by N.C. Court of Appeals

The high-stakes appeal in a budget funding dispute between Union County commissioners and the school board made its way to the state Court of Appeals Tuesday.

The school board successfully sued county commissioners last year for more money and wound up with a $91 million verdict. The two sides had been about $8 million apart before a jury delivered its surprise verdict in October 2013, which the commissioners appealed.

The Court of Appeals heard oral arguments Tuesday morning and typically tries to issue opinions within 90 days of hearing a case. This likely won’t be the last court to hear the case, however, since the losing side can turn to the state Supreme Court.

Commissioners have decried what they said was a “runaway verdict” and warned they would need to have a big tax increase or slash services to cover the judgment. In their appeal, they also cited what they claimed were errors by the trial judge, including allowing the school board to present evidence of needs outside of its 2013-14 budget request.

In its brief, the school board said the verdict, “while substantial, was well within both the scope of the evidence and the county’s present ability to pay; it is not a ‘runaway verdict.’ ”

Commissioners, the school board stated, were the ones running away from their legal obligation to provide sufficient funds to the school district.

Further implications

There also are implications beyond Union County, experts said.

State law allows for school districts to sue counties for funds if mediation fails. But funding disputes rarely wind up in court, said John Stephens, a public policy dispute resolution expert at the UNC School of Government.

Such lawsuits may be one of the only ways North Carolina school districts can deal with funding concerns since they cannot control growth decisions by counties and municipalities, said John Chesser, a senior analyst at the UNC Charlotte Urban Institute.

Growth brings in more students and can lead to big discrepancies between a district’s needs and funding levels, Chesser said, especially in high-growth areas such as Union County. He expects big-growth school districts will be closely watching the case.

Indeed, the state associations for county commissioners and school boards have filed dueling amicus briefs.

The commissioners association warned that if the verdict is upheld, it could devastate poor counties by forcing them to have massive tax increases or slash vital services because of the standard the case would set. “The consequences of this case extend far beyond the boundaries of Union County,” the association said.

The school board association, in its brief, countered that the idea of statewide chaos if the verdict stands was “greatly overstated.” The jury dealt with the facts of an individual case and mainly focused on capital needs that the county had long ignored, the association stated.

As for Union County taxpayers, the bill for legal and related services keeps rising. The total for the two boards is approaching $1.8 million, including more than $1.04 million in school district bills and $755,163 for the county.

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