If the State sends more money to a NC county's area mental-health, developmental-disabilities, and substance-abuse authority mid-year, or if the authority collects more fees than it budgeted, can the county trim its own contribution by the same amount?

Plain-English summary

North Carolina's Secretary of Human Resources asked whether a county could reduce its area mental-health authority contribution during the fiscal year for either of two reasons: the authority received additional State funds, or it collected more service fees than budgeted. The AG answered no to both.

The fee question had an express statutory answer. G.S. § 122C-146 required area authorities to seek appropriate reimbursement from people able to pay and said fee collections could not justify reducing or replacing budgeted local tax revenue. The AG applied that text to collections above the budgeted amount.

The State-funding question required interpretation. The opinion said the General Assembly had not stated that relationship as precisely. It read the chapter's policy of joint county, State, and federal support together with a provision returning unspent State and federal funds after an audit. On that basis, it concluded that additional State funding was not meant to replace a county's contribution. The opinion did not address whether a county could reduce its contribution when adopting a later annual budget.

Currency note

This opinion interprets the funding provisions and midyear questions presented in 1993. Check current law and funding terms for a present area-authority budget.

Background and statutory framework

The opinion cited G.S. § 122C-2 for the State's policy of serving people with mental illness, developmental disabilities, and substance-abuse problems through a system requiring financial assistance from counties, the State, and the federal government. It reasoned that allowing counties to withdraw funding as State support increased would leave service levels unchanged despite the increase. G.S. § 122C-147(a), requiring return of unspent State and federal funds after a certified audit, supported that reading.

These reasons address a reduction because of additional State funds or higher fee collections during the year. The letter gives no rule for a general annual budget decision made for other reasons.

Common questions

Could a county cut its budgeted local tax contribution because service fees exceeded the estimate?

No. G.S. § 122C-146 expressly said fee collections could not be used to justify reducing or replacing the budgeted local tax commitment.

Could a county reduce its contribution when the State sent additional funds?

The AG said no. It concluded that the chapter's joint-funding design did not let the county treat new State money as a substitute for its own contribution.

Did the opinion say a county could cut the following year's annual budget contribution?

No. The questions and answers concerned reductions during the fiscal year prompted by additional State funding or fee receipts. The opinion did not decide a later annual budget question.

Citations

• N.C.G.S. § 122C-2 (legislative policy; mental-health system requires cooperation and financial assistance of counties, State, and federal government)
• N.C.G.S. § 122C-146 (area authority fee schedules and collection duty; collection of fees may not be used as justification for reduction or replacement of budgeted commitment of local tax revenue)
• N.C.G.S. § 122C-147(a) (unspent State and federal funds shall be remitted to the Department within 60 days after certified audit)
• N.C.G.S. § 122C-147(b) (referenced in subject line of opinion)
• Alberti v. Manufactured Homes, Inc., 339 N.C. 727, 407 S.E.2d 819 (1991) (NC Supreme Court; legislative intent may be inferred from nature and purpose of statute and consequences of various constructions)
• N.C. Commissioner of Insurance v. Rate Bureau, 300 N.C. 381, 269 S.E.2d 547, rehearing denied, 301 N.C. 107, 273 S.E.2d 300 (1980) (NC Supreme Court; statutes construed to avoid absurd results)
• Electric Supply Co. v. Swain Electrical Co., 328 N.C. 651, 403 S.E.2d 291 (1991) (NC Supreme Court; statute must not be given a construction which would undermine or subvert the very objective of the statute)
• Hall v. Simmons, 329 N.C. 779, 407 S.E.2d 816 (1991) (NC Supreme Court; significance and effect should be accorded every part of an act, including every section, paragraph, sentence or clause, phrase, and word)

Source

• Landing page: https://ncdoj.gov/opinions/counties-reduction-of-contributions-to-area-authorities/

Original opinion text

June 8, 1993

C. Robin Britt, Sr., Secretary Department of Human Resources 101 Blair Drive Raleigh, North Carolina 27603-2041

RE: Counties' Reduction Of Contributions To Area Authorities As The Result Of Additional Funds From The State Or Collection Of Fees Exceeding Budget Receipts; G.S. § 122C-2; G.S. § 122C-147(b)

Dear Secretary Britt:

On behalf of the Division of Mental Health, Developmental Disabilities and Substance Abuse Services, North Carolina Department of Human Resources, you have requested this office's response to the following questions: (1) may a county, during the fiscal year, reduce its contribution to an area mental health, developmental disabilities, and substance abuse authority (hereinafter "area authority") as a result of the receipt by the area authority of additional funds from the State, and (2) may a county reduce its local tax revenue commitment to an area authority during the fiscal year if the area authority's collection of fees for services exceeds its budgeted receipts during the year.

Your second question will be dealt with initially because G.S. § 122C-146 specifically addresses the issue. G.S. § 122C-146 requires area authorities to ". . . prepare fee schedules for services and to make every reasonable effort to collect appropriate reimbursement for costs in providing these services from individuals able to pay, including insurance and third-party payment, . . ." Additionally, the statute specifically provides that "[t]he collection of [such] fees by an area authority may not be used as a justification for reduction or replacement of the budgeted commitment of local tax revenue." (A copy of G.S. § 122C-146 is attached.) Therefore, a county may not reduce its local tax revenue commitment to an area authority during the fiscal year if the area authority's collection of fees for services exceeds its budgeted receipts during the year.

With respect to your first question, the General Assembly has not so precisely explained the intended relationship between State-funded appropriations to area authorities and local revenue commitments. Thus, it is necessary to consider Chapter 122C as a whole in order to discern what the General Assembly intended the relationship to be. While recognizing that it is the courts and not the Attorney General's office which have the prerogative to definitively determine the intent of the General Assembly when legislative intent is not clearly stated, this office can apply accepted rules of statutory construction to make a reasonable determination as to whether the General Assembly intended to permit a county to reduce its financial contribution to the area authority as a result of the receipt of an area authority of additional funds from the State.

It is well-established that "legislative intent may be inferred from the nature and purpose of [a] statute and the consequences which would follow, respectively, from various constructions." Alberti v. Manufactured Homes, Inc., 339 N.C. 727, 732, 407 S.E.2d 819 (1991). In addition, statutes are to be construed in such a way as to avoid absurd results. N.C. Commissioner of Insurance v. Rate Bureau, 300 N.C. 381, 434, 269 S.E.2d 547, rehg. denied, 301 N.C. 107, 273 S.E.2d 300 (1980). For example, a statute must not be given a construction which would undermine or subvert the very objective of the statute. Electric Supply Co. v. Swain Electrical Co., 328 N.C. 651, 656, 403 S.E.2d 291 (1991). Also, "significance and effect should be accorded every part of [an] act, including every section, paragraph, sentence or clause, phrase, and word." Hall v. Simmons, 329 N.C. 779, 784, 407 S.E.2d 816 (1991).

Bearing in mind the foregoing principles of statutory construction, it is the avowed policy of the State "to assist individuals with mental illness, developmental disabilities and substance abuse problems in ways consistent with the dignity, rights, and responsibilities of all North Carolina citizens." G.S. § 122C-2 (copy attached). To this end, the General Assembly has obligated both the State and local governments to work together to develop and maintain a public system for the delivery of services to persons with mental illness, developmental disabilities and substance abuse problems. G.S. § 122C-2 specifically provides that "[t]he furnishing of services to implement [this] policy requires the cooperation and financial assistance of counties, the State, and the federal government."

Given the stated purpose of Chapter 122C and the statutorily prescribed scheme for accomplishing same, this office cannot conclude that the General Assembly intended to allow a county to reduce its financial assistance to an area authority to the extent that the State is, from time to time, able to provide additional funding for mental health services. To construe the statute to permit a reduction in funding by a county would necessarily mean that the level of services provided by the area authority would remain constant despite increased State funding. Had the General Assembly intended to alleviate the fiscal burden or obligation of local governments by increasing State appropriations to the area authorities, we believe that the General Assembly would have plainly and clearly stated this intent.

Because the provision of mental health services is clearly intended by the General Assembly to be a joint effort on the part of the counties, the State and the federal government, it necessarily follows that the General Assembly did not intend to permit a county to reduce its obligation to an area authority simply because additional State funding becomes available. This conclusion is consistent with G.S. § 122C-147(a), which provides in pertinent part:

Unspent State and federal funds shall be remitted to the Department within 60 days after the date that a certified audit is rendered as required by the Local Government Commission.

It is apparent from the foregoing language that the General Assembly intended that if a surplus of funds exists as a result of the receipt of State funds by an area authority, the area authority must return the unspent State funds to the Department of Human Resources. Therefore, it is our opinion that funds appropriated by the State are not intended to be used as a substitute or replacement for local funding.

Ann Reed Senior Deputy Attorney General

Jane L. Oliver Assistant Attorney General