Can the NC Association of County Commissioners (an unincorporated federation of the 100 NC counties) buy through the State purchase and contract system, the same way an individual county or state agency can?
Plain-English summary
C. Ronald Aycock, Executive Director of the NC Association of County Commissioners (NCACC), wrote the AG to ask whether his organization could buy goods through the State's purchase and contract system. Chief Counsel John McArthur said yes.
The statute in play was G.S. § 143-49(6), which authorizes the Secretary of the Department of Administration to make the State's purchasing services available to "governmental entities and other subdivisions of the State and public agencies thereof in the expenditure of public funds." The question was whether the NCACC, an unincorporated nonpartisan federation, qualified.
The AG worked through the indicia of governmental status. The Association's constitution made the 100 counties themselves its membership; there were no private members. NC statutes recognized the Association as an instrumentality wholly owned by the counties by specifically naming it in legislation affecting counties and by giving it privileges available only to political subdivisions. The Association was exempt from state sales tax. Its employees were covered under the North Carolina Local Government Employees' Retirement System. Under G.S. § 96-9(a)(4), the Association was treated for unemployment-insurance purposes as "an instrumentality wholly owned by a political subdivision of the State." It was exempt from federal income tax under Section 115 of the Internal Revenue Code, on the grounds that all income would accrue to the State or a political subdivision. More than ninety-eight percent of its revenues came from member-county fees.
Taken together, those facts made the Association a "governmental entity or subdivision of the State" for purposes of G.S. § 143-49(6). It was therefore entitled to use the State's purchase and contract system. The AG added the one obvious limit: the Association had to make sure it used only public funds for purchases under that system. Mixing private-source money into state-system purchases would be outside the scope of the statute.
The opinion is short and fact-intensive, but it is one of the cleaner examples of NC's "instrumentality" analysis: a nominally private association can carry governmental-entity status where its membership, funding, and statutory treatment line up that way.
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.
The State purchase and contract framework in Chapter 143 has been amended since 1993, and the cooperative-purchasing landscape (including statewide term contracts, P&C portals, and intergovernmental cooperative-purchasing arrangements) has evolved substantially. The NCACC's status as an instrumentality of the counties has remained stable, but anyone testing whether a particular association can use the State system today should consult current G.S. § 143-49 and current Department of Administration policies, and counsel familiar with NC public-purchasing law.
Common questions
Q: Why does it matter whether NCACC can use the State purchase and contract system?
A: Because the State system gives members access to negotiated price terms with vendors that an individual association would have to chase on its own. Eligibility brings savings, especially for office supplies, IT, and other commonly-procured goods. The opinion is the legal basis the NCACC can show to the Department of Administration when asking to be set up as a buying entity.
Q: Does the same analysis extend to other county or municipal associations?
A: Not automatically. The AG's reasoning depends on the specific facts of NCACC: 100% membership by counties, statutory treatment as an instrumentality, retirement-system coverage, federal-tax treatment, and predominantly public-source funding. Another association that lacks one or more of those features would be evaluated on its own facts. The N.C. League of Municipalities, which is structured similarly, has typically been treated the same way, but each association needs to clear its own status under the statute.
Q: What is the "use only public funds" limit really about?
A: It is about scope, not motive. The State purchase and contract system is for spending public money. If the Association used the State system to buy items paid for from a non-public source (a corporate sponsor's grant, for example), those purchases would fall outside G.S. § 143-49(6). The opinion does not say the Association can never accept non-public funds, only that it cannot route purchases of those funds through the State system.
Q: What did the AG mean by "instrumentality wholly owned by the counties"?
A: An instrumentality is an entity that exists to carry out a function of another (typically governmental) entity. The NCACC exists to serve the 100 counties; it is owned and funded by them. NC statutes recognize that relationship in specific contexts (unemployment insurance, retirement system). The IRS recognizes it through § 115 treatment. The opinion stacks those recognitions together to conclude the Association is a governmental entity for the broader purpose of using the State purchasing system.
Q: Could a court overturn this reading?
A: AG opinions are persuasive, not binding. A court could reach a different conclusion. But the facts the AG relied on are specific and easily verifiable, and the statutory standard ("governmental entities and other subdivisions of the State") is broad. A challenge would be uphill, especially without a particularized injury or a clear competing reading of the statute.
Background and statutory framework
Chapter 143 of the General Statutes governs the State's centralized purchasing function. Article 3 of Chapter 143 sets up the Department of Administration's role and gives the Secretary authority to make the State's purchasing services available beyond state agencies themselves, to "governmental entities and other subdivisions of the State and public agencies thereof." The statute's broad terms have been read to encompass political subdivisions and their instrumentalities, on the theory that the cost-saving benefits of centralized purchasing should reach the full ecosystem of public spenders.
The NCACC has a long history as an instrumentality of NC counties. Its role includes legislative advocacy, training and technical assistance, group insurance and pooled risk management, and other shared services. Many NC statutes reference the Association by name, both for what it can do (e.g., act as a clearinghouse for inter-county cooperation) and for what status it holds for purposes of related statutes (e.g., unemployment-insurance coverage, retirement-system participation). The 1993 opinion fits in that pattern: another statute that the Association satisfies because it is, functionally, the counties.
Citations
- N.C.G.S. § 96-9(a)(4) (NCACC treated as an instrumentality wholly owned by a political subdivision of the State for unemployment-insurance purposes)
- N.C.G.S. § 143-49(6) (Secretary of the Department of Administration shall make purchasing services available to governmental entities and other subdivisions of the State and public agencies thereof in the expenditure of public funds)
- Internal Revenue Code § 115 (federal income-tax exemption for income that accrues to a state or political subdivision)
- North Carolina Local Government Employees' Retirement System (Association employees covered)
Source
Original opinion text
August 16, 1993
C. Ronald Aycock Executive Director North Carolina Association of County Commissioners
P. O. Box 1488 Raleigh, N.C. 27602-1488
Re: Advisory Opinion; Participation in the State's Purchase and Contract System
Dear Ron:
You have asked whether the North Carolina Association of County Commissioners (the Association) is entitled to participate in the State's purchase and contract system. It is our opinion that it is.
N.C.G.S. §143-49(6) provides that the Secretary of the Department of Administration shall make available to ". . . governmental entities and other subdivisions of the State and public agencies thereof in the expenditure of public funds, the services of the [Department] in the purchases of materials, supplies, and equipment . . . ." (emphasis added).
The Association is an unincorporated, nonpartisan federation of county governments. The Association's constitution provides that the 100 counties themselves comprise the Association's membership. State statutes have recognized the Association as an instrumentality wholly owned by the counties of the State by specifically naming it in legislation affecting the counties and by granting it privileges afforded only to political subdivisions. For example, the Association is exempt from State sales tax, its employees are covered under the North Carolina Local Government Employees' Retirement System and for purposes of unemployment insurance, the Association is treated as "an instrumentality wholly owned by a political subdivision of the State." N.C.G.S. §96-9(a)(4). Further, the Association is exempt from federal income tax under Section 115 of the Code on the grounds that all income of the Association will accrue to the State or a political subdivision thereof. Over ninety-eight percent of the Association's revenues come from fees from member counties. (See correspondence between Riddle & Fortner, CPA and the Internal Revenue Service, attached).
Based on the foregoing, it is our opinion that the Association is a governmental entity or subdivision of the State for purposes of N.C.G.S. §143-49(6) and is entitled to use the State purchase and contract system. The Association is responsible for insuring that only public funds are used to make purchases under the State purchase and contract system.
If you have further questions, please do not hesitate to call.
John McArthur, Chief Counsel