Can a county board of commissioners create and run its own college scholarship program for students from county public schools?

Plain-English summary

Ashe County wanted to set up its own college scholarship program for students from the county's public schools. The county manager asked the AG: does NC law authorize the county to do this?

Senior Deputy AG Ann Reed and Special Deputy AG Charles Murray answered no. The reasoning hinges on NC's "Dillon Rule" treatment of counties: a county can spend public money only if (1) the spending serves a public purpose, and (2) a statute specifically authorizes the program. The county scholarship plan failed prong 2.

Prong 1 (public purpose) was satisfied. The state Supreme Court in Education Assistance Authority v. Bank (1970) confirmed that publicly funded scholarship programs serve a public purpose by encouraging higher education for the broader student population, even though specific scholarship recipients are individual beneficiaries.

Prong 2 (statutory authority) was the problem. The AG walked through every plausible statutory hook:

• N.C.G.S. § 153A-149(b)(7) lets counties levy property taxes for "the county's share of the cost of kindergarten, elementary, secondary, and post-secondary public education." This is just a tax authorization; subsection (g) says it does not grant separate program authority. Stam v. State (1981) confirms that the power to tax depends on the existence of statutory authority for the underlying program.
• N.C.G.S. § 153A-255 lets counties run "social service programs" similar to those in Chapter 108A and Chapter 111 of the General Statutes. The NC Supreme Court has read this narrowly: social-service programs under § 153A-255 must be similar in nature to social-welfare programs like food assistance, housing, and child welfare. A college scholarship program for students from across the county school system is not similar in nature to those welfare-oriented programs.

So neither of the two main candidate statutes works. The legislature has not enacted a general statute granting counties the authority to run their own scholarship programs, and (as far as the opinion identifies) no local act for Ashe County specifically authorizes one.

But there is a constitutional pathway. N.C. Const. Art. IX, § 2(2) says: "The governing boards of units of local governments with financial responsibility for public education may use local revenues to add to or supplement any public school or post-secondary school program." The AG read this as authorizing counties to transfer funds to an existing public post-secondary scholarship program (one run by a public community college, a public technical college, or a constituent institution of UNC), but not to establish their own freestanding scholarship program. So Ashe County could give money to, say, Wilkes Community College (which serves Ashe) to be used for scholarships for students from Ashe County public schools, but it could not run its own program directly.

Practical implication: a NC county that wants to support college access for its students has to partner with an existing public institution. Setting up a county-administered scholarship fund, with applications managed by county staff and awards selected by a county-appointed committee, is not authorized.

Currency note

This opinion was issued in 1998. 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 Dillon-Rule treatment of NC counties has not changed, and the broad reasoning of this opinion remains sound. Specific statutes cited (§ 153A-149, § 153A-255) have been amended multiple times. Some counties may have local acts authorizing scholarship programs that did not exist in 1998. Counties exploring scholarship support should check current general statutes, local acts, and partnership arrangements with public post-secondary institutions.

Background and statutory framework

NC counties are creatures of the state. The state Constitution gives the General Assembly the authority to "provide for the organization and government of counties, including the granting of such powers and duties to the counties as it deems advisable." Counties have no inherent power. They can do only what the General Assembly has authorized, either expressly or by necessary implication.

This is the "Dillon Rule" framework, named after John F. Dillon's 19th-century treatise on municipal corporations. NC has remained a Dillon-Rule state. The Supreme Court's In re Easement in Fairfield Park (1988) reaffirms the rule: a county may exercise only those powers prescribed by statute and those necessarily implied by law.

The two standard questions the AG identified (public purpose + statutory authority) are the standard NC framework for testing the legality of any local government appropriation. The Watauga County Bd. of Education v. Town of Boone (1992) case lays out the same framework. Both prongs must be satisfied; failing either is fatal.

The Article IX, § 2(2) constitutional provision is a partial workaround. By giving counties the express constitutional authority to add to or supplement public school or post-secondary programs, the framers ensured that counties could direct local revenues toward education even where the underlying program is operated by the state, the school district, or a public post-secondary institution. But the constitutional language refers to adding to or supplementing existing programs, not to establishing new freestanding county-run programs. The AG read that distinction narrowly.

Common questions

Can a county fund scholarships for vocational training through a community college?

Yes, under the constitutional supplementing provision. The county can transfer funds to a public community college (which is a public post-secondary institution) to be used for vocational scholarships for students from the county. The community college runs the scholarship program; the county adds money to it.

Can a county partner with a private nonprofit to run a scholarship program?

The 1998 opinion does not directly address this, but the underlying Dillon-Rule reasoning suggests no. A county appropriation to a private nonprofit to run a scholarship program is functionally the same as the county running its own program, and the public-purpose framework requires the appropriation to be supported by specific statutory authority. There is no statute granting counties the authority to fund private scholarship organizations as a substitute for direct program operation.

Can the county school district run a scholarship program?

That is a different legal question than the one the AG addressed. School districts are also Dillon-Rule entities with limited authority, but the specific statutory framework for school districts differs from that for counties. School-board scholarship authority depends on the relevant Chapter 115C provisions, which were not analyzed in this opinion.

Did Ashe County eventually get a scholarship program through partnership?

The opinion doesn't say. Wilkes Community College and Ashe Community Foundation are the typical local conduits for scholarships in Ashe County, and many NC counties have set up similar partnerships with their local community college or with a community foundation.

Source

• Landing page: https://ncdoj.gov/opinions/authority-of-board-of-county-commissioners-college-scholarship-program/

Citations

• N.C. Const. Art. VII, § 1
• N.C. Const. Art. IX, § 2(2)
• N.C.G.S. § 153A-149(b)(7)
• N.C.G.S. § 153A-149(g)
• N.C.G.S. § 153A-255
• Watauga County Bd. of Education v. Town of Boone, 106 N.C. App. 270, 416 S.E.2d 411 (1992)
• Education Assistance Authority v. Bank, 276 N.C. 576, 174 S.E.2d 551 (1970)
• Stam v. State, 302 N.C. 357, 275 S.E.2d 439 (1981)
• In re Easement in Fairfield Park, 90 N.C. App. 303, 368 S.E.2d 639 (1988)

Original opinion text

August 4, 1998

Mr. Wm. Jeff Miller
County Manager
Ashe County
P.O. Box 633
Jefferson, North Carolina 28640

Re: Advisory opinion; Authority of board of county commissioners; college scholarship program; Ashe County; Article IX, Section (2)(2), North Carolina Constitution; N.C.G.S. § 153A-149(b)(7); N.C.G.S. § 159A-149(g); N.C.G.S. § 153A-255.

Dear Mr. Miller:

The following is in response to your request for an opinion in your letter dated May 21, 1998. Your letter contains the following question:

May a board of county commissioners fund a college scholarship program available for students of the county public school system?

Under North Carolina law, the issue of the authority of local government units to appropriate public funds is determined by the answer to the following two standard questions: First, is the appropriation for a public purpose; and, second, is there specific statutory authority for the appropriation. Watauga County Bd. Of Education v. Town Of Boone, 106 N.C.App. 270, 416 S.E.2d 411 (1992).

[Citations omitted; the opinion notes that the Supreme Court has previously held that a scholarship program serves a public purpose.] Education Assistance Authority v. Bank, 276 N.C. 576; 174 S.E.2d. 551 (1970). Therefore the answer to the first of the two standard questions is yes, because the appropriation for the scholarship program is for a public purpose. The fact that the actual scholarships will benefit individual persons does not defeat the public purpose of the program, which is to provide incentive to further the education of the general county public school student body.

With regard to the second standard question, the statutory provisions must either expressly authorize the activity, or it must be necessarily implied within the language of the statute.

Article VII, Section 1 of the North Carolina Constitution gives the General Assembly the authority to provide for the organization and government of counties, including the granting of such powers and duties to the counties as it deems advisable. As an agent of the State, a county has no inherent power, but may exercise only those powers prescribed by statute and those necessarily implied by law. In re Easement in Fairfield Park, 90 N.C.App. 303, 308, 368 S.E.2d 639, 641 (1988). Chapter 153A contains two statutory provisions that refer to the authority of a board of county commissioners with regard to education, i.e., N.C.G.S. § 153A-149(b)(7) and N.C.G.S. § 153A-255.

N.C.G.S. § 153A-149(b)(7) reads as follows: "(b) Each county may levy property taxes without restriction as to rate or amount for the following purposes: …. (7) Schools.— To provide for the county's share of the cost of kindergarten, elementary, secondary, and post-secondary public education." However, N.C.G.S. § 153A-149(g) provides that the section does not grant any separate authorization for any county to undertake any program not otherwise authorized by law, and that its intent is only to authorize the levy of property taxes for programs authorized by other statutes. Additionally, the North Carolina Supreme Court has described the effect of N.C.G.S. § 153A-149(g) as follows: "It is clear, then, that the power to tax conferred by section [N.C.G.S. § 153A-149] (c)(30) depends in turn upon the existence of authority to implement a given program in the first instance." Stam v. State, 302 N.C. 357, 360, 361, 275 S.E.2d 439, 441, 442 (1981). From the preceding, it is very clear that N.C.G.S. § 153A-149(b)(7) does not provide the necessary statutory authority for a board of county commissioners to establish a college scholarship program.

N.C.G.S. § 153A-255 provides in part as follows: "Each county shall provide social services programs pursuant to Chapter 108A and Chapter 111 and may otherwise undertake, sponsor, organize, engage in, and support other social service programs intended to further the … education … of its citizens." The term "social service program" is not defined in Chapter 153A; however, the North Carolina Supreme Court has addressed the scope of N.C.G.S. § 153A-255 and has limited its application to programs that are similar in nature to the programs set out in Chapters 108A and 111 of the General Statutes.

Stam v. State, 302 N.C. 357, 362, 275 S.E.2d 439, 442 (1981). There are no programs in Chapter 108A or Chapter 111 of the General Statutes that are at all similar to the scholarship program described in the request for an opinion, nor does the scholarship program provide the poor with the basic necessities of life.

Therefore, N.C.G.S. § 153A-255 does not grant the statutory authority for a county to establish the described scholarship program, and the answer to the second standard question is no. Because there is no General Statute or local act which either expressly provides authority for the scholarship program or which necessarily implies such authority, a board of county commissioners may not fund a college scholarship program.

Finally it is noted that Section 2(2) of Article IX of the North Carolina Constitution authorizes a board of county commissioners to add to or supplement a post-secondary scholarship program. That provision reads, in part, as follows: "The governing boards of units of local governments with financial responsibility for public education may use local revenues to add to or supplement any public school or post-secondary school program." While a board of county commissioners has a clear and express financial responsibility for public education (N.C.G.S. § 153A-149(b)(7)), it is the opinion of this office that the language of Section 2(2) only authorizes a board of county commissioners to appropriate funds to be transferred to a post-secondary scholarship program established by a public community or technical college, or a constituent institution of The University of North Carolina.

Thus, the constitutional provision would authorize Ashe County to transfer funds to one or more public post-secondary institutions to be used for scholarships for students from the Ashe County public school system, but would not authorize Ashe County to establish its own independent college scholarship program.

Charles J. Murray
Special Deputy Attorney General

Ann Reed
Senior Deputy Attorney General