When Monroe City and Union County school systems merged in 1993, did the two separate voter-approved local school taxes collapse into one county-wide tax, and could either tax pay for any school in the merged system?
Plain-English summary
On July 1, 1993 the Monroe City School System and the Union County School System merged into a single county-wide school administrative unit. Both former systems had voter-approved supplemental school taxes in place: Monroe up to 15 cents per $100 valuation, Union County up to 7 cents per $100 valuation. The merger raised two questions that the county attorney and the school board attorney sent up to the AG.
First, did the merger collapse the two pre-merger tax districts into one county-wide district, or did the districts stay separate even after the schools they funded were combined? Second, did the proceeds of each tax have to be spent exclusively on schools located in the geographic territory of the former district that levied it, or could the proceeds support the merged system as a whole?
Senior Deputy AG Edwin M. Speas, Jr. answered both questions by going to the merger plan itself. Under G.S. § 115C-68.2 the State Board of Education had adopted the merger plan effective July 1, 1993. Section 10(a) of that plan said the Monroe 15-cent supplemental tax and the Union County 7-cent supplemental tax would both remain in effect to support the merged system, subject to Article 36 of Chapter 115C, with the Board of County Commissioners directed to "levy both taxes" in the same amount, not exceeding seven cents.
On the district-continuity question: the AG read the merger plan's instruction to "levy both taxes" as preserving both districts. The reason is structural. If the plan had collapsed the two districts into one, it would have referred to "the tax" or "a county-wide tax". Instead it expressly named both pre-existing taxes and required both to be levied. Under G.S. § 115C-68.3, the merger plan was ratified and "considered to have been adopted by act of the General Assembly", so its district-preservation language carried the same weight as a legislative enactment.
On the use-of-proceeds question: the AG concluded both taxes could fund the merged system as a whole. The merger plan said so directly: both taxes "shall be used to support the Merged School System." The harder question was whether that violated G.S. § 115C-511(c), which makes it unlawful to use any part of a supplemental school tax for "any purpose other than those purposes authorized by the election." The AG resolved that potential conflict by reading the original referendum purpose at a higher level of abstraction. Each set of voters had approved their tax to provide additional financial support for "the school system in which the voters resided." After the merger, the school system the voters resided in was the merged county-wide system. So using the proceeds for the merged system was consistent with the original referendum purpose, not contrary to it.
The 1993 amendment to § 115C-68.3 ratifying the Monroe/Union plan and similar plans had the effect of making the State Board's plan-adoption decision functionally equivalent to a legislative enactment. That is what gave the AG's reasoning its anchor: the plan's instruction to "levy both taxes" was not just an administrative direction but a statutory command, immune from challenges that the State Board had exceeded its authority by preserving two districts after merging the schools.
Currency note
This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. North Carolina has continued to revise the school administrative unit merger provisions in Chapter 115C, and the specific Monroe/Union arrangement described in this opinion may have been superseded by later mergers, tax changes, or referenda. Anyone facing a similar question today should confirm current statutory law and the operative tax-levy resolutions.
Background and statutory framework
North Carolina has long permitted city and county school administrative units to operate as separate entities within the same county. By the early 1990s many of these arrangements were under fiscal and demographic stress, with the city units (often older urban centers) facing declining tax bases and the county units (often surrounding suburbs) facing growing enrollment. The General Assembly responded with G.S. §§ 115C-67 through 115C-68.3, which set out a merger procedure and authorized the State Board of Education to adopt merger plans on the joint application of the affected local boards.
A merger plan had to address several issues, including under § 115C-67(6) "whether or not there shall be continued in force any supplemental school tax which may be in effect in either or all local school administrative units involved." The drafting choice gave the State Board considerable flexibility: it could end one or both taxes, harmonize them at a single rate, or preserve them. The Monroe/Union plan chose preservation, capped both at seven cents (the lower of the two), and dedicated both to the merged system.
G.S. § 115C-68.3 went further than the standard merger procedure by ratifying a slate of merger plans (Monroe/Union among them) and declaring those plans to have been "adopted by act of the General Assembly." This functional ratification mattered for two reasons. First, it foreclosed challenges that the State Board had exceeded its delegated authority in adopting the plan. Second, it made the plan's text effectively statutory, which is why the AG was comfortable treating the plan's instruction to "levy both taxes" as a binding command.
The G.S. § 115C-511(c) limitation on supplemental tax use was the trickiest part of the analysis. That subsection was written to prevent a school board from spending supplemental tax money on purposes the voters had not approved, for example by diverting a tax voted for "operating expenses" to capital construction. The AG's reading of the original referendum purpose at a higher level of abstraction (support of the school system in which voters resided) was a workable solution but not the only possible reading. A stricter reading might have required tracing each dollar back to schools physically located in the former Monroe city limits or the former Union county outside-Monroe area. The AG rejected that stricter reading by treating the merger plan's ratification under § 115C-68.3 as legislative permission to redirect both streams to the merged system.
The seven-cent cap on both taxes was an additional structural feature. By capping the Monroe tax at seven cents (rather than its previously authorized fifteen cents), the merger plan effectively reduced what the higher-rate district could be levied at, even though the voters there had authorized up to fifteen. That reduction was within the State Board's power under the merger plan structure because both boards had jointly applied for merger and the State Board had statutory authority to set the plan's terms.
Common questions
Did the merger plan eliminate the two tax districts and create one county-wide tax district?
No. The merger plan instructed the Board of County Commissioners to "levy both taxes", preserving both pre-merger districts even though the schools they funded had merged. The AG read the word "both" as deliberate and treated the two districts as continuing separately.
Could the Monroe tax proceeds be spent on a school physically located in the former Union County area?
Yes, under this opinion. The merger plan said both taxes were to be used to support the merged system as a whole. The AG read the original referendum purpose (support of the school system in which voters resided) at a level of abstraction that made the merged system the relevant unit.
Why was the Monroe tax capped at seven cents instead of its previously authorized 15 cents?
The merger plan capped both taxes at seven cents, the lower of the two pre-merger rates. That harmonized the burden on Monroe taxpayers with Union County taxpayers. The State Board had authority to do that under the merger plan provisions.
Did the voters have to approve the post-merger tax structure in a new referendum?
The opinion did not address that directly. The merger plan's ratification under § 115C-68.3 as an act of the General Assembly was treated as the legislative authority for the new structure, so a fresh referendum was not required.
Could a future board of commissioners reduce or repeal either tax without a referendum?
The merger plan said the taxes "shall remain in effect... unless or until abolished or modified in accordance with the provisions of Article 36, Chapter 115C." Article 36 set out the referendum procedures for changing supplemental taxes. So abolition or modification would have required following the Article 36 procedure, which generally meant another referendum.
Citations
- N.C. Gen. Stat. §§ 115C-67, 115C-68.2, 115C-68.3 (school administrative unit merger procedures)
- N.C. Gen. Stat. §§ 115C-500 et seq. (Article 36, supplemental school tax authority)
- N.C. Gen. Stat. § 115C-511(c) (use of supplemental tax proceeds limited to voter-authorized purposes)
Source
Original opinion text
- P.O.
- Drawer 399 Monroe, N.C. 28111-0399 Sanford L. Steelman, Jr. Union County Attorney
- P.O.
- Box 1034 Monroe, N.C. 28110
Re: Advisory Opinion; Union County School Merger Plan; Supplemental Taxes; G.S. 115C-67, 115C-68.2, 115C-68.3
Gentlemen:
As counsel for the Union County Board of Education and the Union County Board of Commissioners, you request our opinion about the levy and use of local supplemental taxes to support the newly merged Union County School System.
Under authority of G.S. 115C-68.2, the State Board of Education adopted a plan merging the former Monroe City School System and the former Union County School System effective July 1, 1993. G.S. 115C-68.2 required that merger plan to be "prepared and approved in accordance with G.S. 115C-67." Under G.S. 115C-67(6), one issue that had to be addressed in the merger plan was "whether or not there shall be continued in force any supplemental school tax which may be in effect in either or all local school administrative units involved."
Prior to the merger, local supplemental taxes had been approved by the voters in both the former Monroe City School System and the former Union County School System under authority of Article 36, Chapter 115C of the General Statutes. See, G.S. 115C-500, et seq. The authorized tax in Monroe was up to 15 cents per $100 valuation and in Union County was up to 7 cents per $100 valuation. The merger plan, as required by G.S. 115-68.2 and -67(6) addresses the continuation of these taxes. Section 10(a) of the merger plan provides:
The supplemental school tax of up to fifteen cents ($.15) previously authorized by referendum for support of the City School System and the supplemental tax of up to seven cents ($.07) previously authorized by referendum for support of the County School System shall remain in effect and be used to support the Merged School System unless or until abolished or modified in accordance with the provisions of Article 36, Chapter 115C of the General Statutes; provided the Merged School Board shall request the Board of County Commissioners to levy and the Board of County Commissioners shall levy both taxes in the same amount, but not in excess of seven cents ($.07).
You have asked two questions regarding the interpretation and application of this provision. They are:
- Does the merger plan eliminate the separate tax districts and create a single county-wide tax district; and
- May the proceeds of the taxes be used to support the merged system as a whole or must the tax for the former Monroe City School System be used exclusively to support schools located within the former city system and the tax for the former Union County School System be used exclusively to support the schools located within the former county system?
In our opinion both tax districts remain in effect and do not merge into a single county-wide tax district. We base this conclusion on the specific language of the supplemental tax provision of the merger plan that the "Board of County Commissioners shall levy both taxes." (emphasis added). These straight forward words, though contained in the merger plan, must be treated as the equivalent of an act of the General Assembly. See, G.S. 115C-68.3 (Ratifying a series of merger plans, including the Monroe/Union plan, and declaring that such plans shall be "considered to have been adopted by act of the General Assembly.")
It is also our opinion that both taxes may be used to support the merged school system as a whole and that their use is not limited to the support of schools located within the respective boundaries of the former school systems. The merger plan, which is now the law under G.S. 115C-68.3, specifically states that both taxes "shall . . . be used to support the merged school system."
In this regard, we do not perceive any irreconcilable conflict between the plan, as adopted by the General Assembly, and G.S. 115C-511(c). That statute makes it "unlawful for any part of a [local supplemental school] tax . . . to be used for any purpose other than those purposes authorized by the election in the unit or district." Each tax in question was approved by the voters to provide additional financial support for the school system in which the voters resided. With merger, the voters formerly residing within the Monroe City School System and Union County School System now reside within a single system, the newly merged county-wide school system. Thus, using the proceeds of both taxes to support the merged system as a whole is consistent with the purposes authorized by the voters; that is the support of the school system in which they reside.
If we can provide further assistance with these issues, please call.
Edwin M. Speas, Jr.
Senior Deputy Attorney General