Are the licensing fees collected by the North Carolina Board of Nursing considered 'State funds,' and if so, does that mean Board members must be paid the standard $15-per-day per diem that applies to state board members generally?

Plain-English summary

Occupational licensing boards in North Carolina sit in an awkward legal space. They are created by the General Assembly to enforce state licensing laws (here, the Nursing Practice Act, Article 9A of Chapter 90), and they exercise sovereign power over private practice. But they typically self-fund through license fees paid by the people they regulate, rather than receiving general fund appropriations. Their funds are sometimes called "self-funded" or "off-budget," and the General Assembly has historically left them with significant autonomy to manage their own operations.

The 2001 AG opinion addressed a slice of that autonomy question. The Board of Nursing's general counsel asked two related things: are the fees the Board collects "State funds," and if so, must Board members be paid the same $15-per-day per diem rate that the Executive Budget Act establishes for state board members generally?

On the first question, the answer is yes. The Executive Budget Act, N.C.G.S. § 143-1, defines "State funds" broadly to include "any and all moneys appropriated by the General Assembly of North Carolina, or moneys collected by or for the State, or any agency thereof, pursuant to the authority granted in any of its laws." The Board collects nursing license fees pursuant to N.C.G.S. § 90-171.23, which is a state law authority. The fees fit the definition. They are State funds.

On the second question, the answer is no. N.C.G.S. § 138-5(a) sets the standard $15-per-day per diem (with related travel and subsistence reimbursement) only for members of state boards, commissions, committees, and councils that "operate from funds deposited with the State Treasurer." The Board of Nursing's funds are State funds, but they are not deposited with the State Treasurer. N.C.G.S. § 90-171.25 directs the Board's Executive Director to deposit fees in financial institutions designated by the Board itself. And N.C.G.S. § 90-171.27 reinforces this by saying Board salaries, compensation, and expenses "shall not be charged against the State treasury, but shall be paid by the Board exclusively out of the fees received by the Board or funds received from other sources."

So the Board's funds qualify as State funds for purposes of the Executive Budget Act's revenue tracking definition, but the State Treasurer's deposit prerequisite in § 138-5(a) is not met. The per diem mandate does not apply. The Board is therefore free, within its own statutory governance, to set members' per diem compensation at a different rate.

The opinion noted that the conclusion was consistent with a 1979 AG opinion to State Auditor Henry L. Bridges. That earlier opinion had concluded that even though fees collected by occupational licensing boards are State funds, the Division of State Budget has only limited jurisdiction over the boards because the boards do not bank with the State Treasurer. The 2001 opinion extended that same reasoning to the per diem question.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The North Carolina occupational licensing boards have been the subject of significant legislative and judicial scrutiny since 2001, including federal antitrust litigation (N.C. State Board of Dental Examiners v. FTC) and General Assembly oversight initiatives. The basic statutory framework cited here (Executive Budget Act definition of State funds, § 138-5 per diem mechanics, Nursing Practice Act self-funding provisions) may have been amended. Verify current N.C.G.S. § 143-1, § 138-5, and the relevant Nursing Practice Act provisions before relying on the rule.

Background and statutory framework

Why the "State funds" question matters across multiple statutes. The "State funds" label appears in several places in the North Carolina General Statutes (Executive Budget Act, state employee compensation rules, public records laws, ethics rules, etc.). A finding that an entity holds State funds can trigger different compliance regimes depending on which statute uses the phrase. The 2001 opinion is careful to draw a narrow conclusion: the Board's fees are State funds for purposes of § 143-1, but § 138-5(a) has its own additional condition (deposit with the State Treasurer) that has to be met before the per diem rule applies. The same "State funds" label may produce different practical results in different statutes.

The Nursing Practice Act's self-funding architecture. The Nursing Practice Act, Article 9A of Chapter 90, gives the Board both the authority and the obligation to fund itself. Section 90-171.23 authorizes the Board to "recommend and collect fees for licensure, licensure renewal, examinations and reexaminations as it deems necessary for fulfilling the purposes of the Article." Section 90-171.25 directs the Executive Director to deposit those fees "in a financial institution or institutions" designated by the Board. Section 90-171.27 makes the funding loop explicit: "all salaries, compensation and expenses incurred in furtherance of the Article shall not be charged against the State treasury, but shall be paid by the Board exclusively out of the fees received by the Board or funds received from other sources."

That last sentence has two important consequences. First, the Board cannot get money from the General Fund (so it has to set fees high enough to cover its operations). Second, the State Treasury cannot draw from the Board's revenues. The Board is fenced off from the state's general budgeting machinery on both sides.

Why the General Assembly designed boards this way. Self-funding has both practical and political advantages. Practically, it lets a board scale its operations to its actual workload (more licensees, more revenue) without depending on the General Assembly to add budget. Politically, it insulates the board from being defunded as part of broader state budget disputes. Critics note that it also reduces legislative oversight, which is why the General Assembly has periodically passed sunset and review legislation, public records and meetings requirements, and other accountability frameworks for occupational boards.

The § 138-5 per diem framework. Section 138-5 sets standard compensation and reimbursement rules for members of state boards and commissions, ostensibly to prevent boards from setting their own member-compensation levels in ways the General Assembly considers excessive. The standard rate in subsection (a) is $15 per day of service (with exceptions for certain rehabilitation councils up to $50 per day), plus subsistence and travel reimbursement at the rates applicable to state officers and employees and reimbursement of actual convention registration fees.

But the General Assembly built a gateway into § 138-5(a): the rule applies only to boards "which operate from funds deposited with the State Treasurer." For boards whose funds are held in financial institutions designated by the board itself, § 138-5(a) does not bind. The General Assembly preserved board autonomy on compensation for self-funded boards, even as it constrained appropriations-funded boards.

The two-part test the opinion applies. Section 138-5(a) is best read as imposing two conditions: (1) the entity is a state board, commission, committee, or council, and (2) it "operates from funds deposited with the State Treasurer." The first condition is met for the Board of Nursing. The second is not. The condition is conjunctive; both must be met for the per diem rule to attach. The opinion's straight-line application of statutory text is unremarkable, but the practical implication (boards like Nursing can set their own per diem) is significant.

Self-funded board autonomy on compensation. The opinion does not say what rate the Board of Nursing may set instead of $15 per day. The implicit answer is that the Board's authority comes from its general governance powers under the Nursing Practice Act. Section 90-171.27's broad authorization to pay "salaries, compensation and expenses incurred in furtherance of the Article" from Board fees provides the funding basis. Reasonable per diem rates are within the Board's discretion, subject to its fiduciary obligations to manage Board fees prudently.

The 1979 Bridges precedent. The opinion's reliance on the 1979 AG opinion to State Auditor Henry L. Bridges is illustrative of how the AG's office builds doctrine over time. The Bridges opinion addressed the Division of State Budget's jurisdiction over occupational licensing boards and reached the same Treasurer-deposit conclusion: boards that do not bank with the Treasurer are largely outside the Division of State Budget's authority. By citing Bridges, the 2001 opinion fits the per diem question into a broader doctrinal framework about board autonomy.

Why State Auditor oversight may differ from Treasurer oversight. A separate question, not addressed in this opinion, is whether the State Auditor has access to a self-funded board's records. The State Auditor's general public records and financial review authority typically reaches all entities that hold State funds, regardless of where they are deposited. So the same "State funds" label that does not trigger the per diem mandate may still trigger Auditor jurisdiction. Boards considering their compliance posture should treat the "State funds" label as a context-dependent term and check the specific statute at issue.

Common questions

Q: What does "State funds" mean in North Carolina law?
A: Under the Executive Budget Act, N.C.G.S. § 143-1, "State funds" includes both money the General Assembly appropriates and any money "collected by or for the State, or any agency thereof, pursuant to the authority granted in any of its laws." The definition is broad. Fees collected by occupational licensing boards qualify, as do regulatory penalties, license-related charges, and most other revenue collected under state statutory authority.

Q: Why aren't the Board of Nursing's fees deposited with the State Treasurer?
A: Because the Nursing Practice Act, N.C.G.S. § 90-171.25, directs the Board's Executive Director to deposit fees in a financial institution designated by the Board. The General Assembly chose to give the Board direct control over its operating funds rather than route them through the State Treasury. This is typical of self-funded occupational licensing boards in North Carolina.

Q: Does the Board of Nursing's status as a self-funded entity exempt it from other accountability requirements?
A: No. The Board is still subject to North Carolina's public records and open meetings laws, to legislative oversight, to State Auditor jurisdiction (which generally reaches all entities that hold State funds regardless of where deposited), to occupational licensing board sunset and review legislation, and to federal antitrust principles (per North Carolina State Board of Dental Examiners v. FTC, decided much later in 2015). The Treasurer-deposit exemption in § 138-5(a) is narrow and applies only to that per diem rule.

Q: If the $15-per-day rate doesn't apply, what per diem do Board of Nursing members get?
A: The opinion does not say, because that depends on what the Board itself has adopted. The Board has authority under N.C.G.S. § 90-171.27 to pay "salaries, compensation and expenses incurred in furtherance of the Article" from its fees. The actual per diem rate is set by Board action. Anyone wanting the current rate should check the Board's bylaws, regulations, or budget documents.

Q: Does this analysis apply to other North Carolina occupational licensing boards?
A: The same statutory framework applies to most occupational licensing boards in North Carolina. Each enabling statute typically directs that fees be deposited in a financial institution designated by the board, not in the State Treasury, and that all board expenses be paid from those fees. The result is that § 138-5(a)'s per diem mandate generally does not apply to occupational licensing boards. But each board's enabling statute should be checked individually, because some include treasury-deposit clauses or specific per diem caps that produce different answers.

Q: Could the General Assembly change this by amending § 138-5?
A: Yes. The General Assembly could remove the "deposited with the State Treasurer" condition in § 138-5(a) and make the per diem rule generally applicable. The General Assembly could also impose a separate cap on occupational licensing board per diem rates by amending each board's enabling statute or by passing a general law specific to occupational boards. The 2001 opinion reflects the statutory framework as it stood; it is a snapshot, not a constitutional bar to a different framework.

Q: How does this affect a nurse paying licensing fees?
A: From the licensee's perspective, fees go to the Board, the Board funds its own operations from those fees, and the State Treasury is not involved in the loop. The fees support investigations of practice complaints, examination administration, license processing, and other Board operations. Per diem paid to Board members is one of the items funded from those fees.

Citations

Statutes
- N.C.G.S. § 143-1 — Executive Budget Act definition of "State funds" includes money appropriated by the General Assembly and money collected by or for the State or any agency under state law authority.
- N.C.G.S. § 138-5 (and § 138-5(a)) — compensation rates for members of state boards, commissions, committees, and councils that operate from funds deposited with the State Treasurer.
- N.C.G.S. § 138-6(a) — subsistence and travel reimbursement rates for state officers and employees, cross-referenced by § 138-5(a).
- N.C.G.S. § 90-171.19 — Nursing Practice Act; purpose of mandatory licensure of nurses.
- N.C.G.S. § 90-171.23 — Board of Nursing's authority to recommend and collect license, renewal, and examination fees.
- N.C.G.S. § 90-171.25 — Executive Director to deposit fees in financial institutions designated by the Board; fees used to pay all Board expenses.
- N.C.G.S. § 90-171.27 — all Nursing Practice Act salaries, compensation, and expenses paid from Board fees, not from the State treasury.

Prior AG opinion
- Attorney General opinion to Henry L. Bridges, State Auditor, dated November 4, 1979 — fees collected by occupational licensing boards are "State funds," but the Division of State Budget has only limited jurisdiction over the boards because the boards do not bank with the State Treasurer. The 2001 opinion cites this as consistent precedent.

Source

• Landing page: https://ncdoj.gov/opinions/whether-funds-collected-by-the-north-carolina-board-of-nursing-are-state-funds/

Original opinion text

RE: Advisory Opinion; Whether Funds Collected by the North Carolina Board of Nursing are "State Funds" and Whether A Designation as "State Funds" Impacts the Application of N.C.G.S. § 138-5.

Dear Mr. Kramer:

At the direction of the North Carolina Board of Nursing ("Board"), you have requested an Attorney General's Opinion on the following issues:

(1) Are funds collected by the Board "State funds" as that term is used in N.C.G.S. § 143-1? and

(2) If so, how does that affect the distribution of per diem compensation to Board members?

For the reasons stated below, funds collected by the Board do constitute "State funds." "State funds" are defined in the Executive Budget Act as "any and all moneys appropriated by the General Assembly of North Carolina, or moneys collected by or for the State, or any agency thereof, pursuant to the authority granted in any of its laws."

N.C.G.S. § 143-1.

The Board of Nursing was created by the General Assembly to administer the Nursing Practice Act, Article 9A, which is the mandatory licensure act to ensure minimum standards of competency and to provide the public safe nursing care. N.C.G.S. § 90-171.19. The Board's duties include recommending and collecting fees for licensure, licensure renewal, examinations and reexaminations as it deems necessary for fulfilling the purposes of the Article. N.C.G.S. § 90-171.23. The fees collected by the Board are "State funds" as defined in the Executive Budget Act.

The compensation of members of State boards and commissions is addressed in N.C.G.S. § 138-5. Pursuant to this statute, the compensation of members of State boards and commissions depends on whether the funds of the board or commission at issue are deposited with the State treasury.

N.C.G.S. § 138-5(a) provides:

Except as provided in subsections (c) and (f) of this section, members of State boards, commissions, committees and councils which operate from funds deposited with the State Treasurer shall be compensated for their services at the following rates:

(1) Except as otherwise provided by this subdivision, compensation at the rate of fifteen dollars ($15.00) per diem for each day of service. Members of the North Carolina Vocational Rehabilitation Council, the Statewide Independent Living Council, and the Commission for the Blind who are unemployed or who shall forfeit wages from other employment to attend Council or Commission meetings or to perform related duties, may receive compensation not to exceed fifty dollars ($50.00) per diem for attending these meetings or performing related duties, as authorized by sections 105 and 705 of the Rehabilitation Act of 1973, P.L. 102-569, 42 U.S.C. § 701, et seq., as amended.

(2) Reimbursement of subsistence expenses at the rates allowed to State officers and employees by subdivision (3) of N.C.G.S. 138-6(a).

(3) Reimbursement of travel expenses at the rates allowed to State officers and employees by subdivisions (1) and (2) of N.C.G.S. 138-6(a).

(4) For convention registration fees, the actual amount expended, as shown by receipt.

(Emphasis added.)

Pursuant to N.C.G.S. § 138-5(a), it is only members of those State boards, commissions, committees and councils which operate from funds deposited with the State Treasurer who shall be compensated in accordance with the provisions of this statute. While the North Carolina Board of Nursing funds are State funds, they are not deposited with the State Treasurer. Rather, the Executive Director of the Board is required to deposit all fees payable to the Board into a financial institution or institutions as designated by the Board. These deposits are required to be used to pay all expenses incurred by the Board in carrying out its legislative mandate. N.C.G.S. § 90-171.25. Specifically, all salaries, compensation and expenses incurred in furtherance of the Article shall not be charged against the State treasury, but shall be paid by the Board exclusively out of the fees received by the Board or funds received from other sources. N.C.G.S. § 90-171.27.

In summary, while the funds used to pay Board members their per diem compensation are "State funds," they are not funds deposited with the State Treasurer. Therefore, the payment of members of State boards and commissions as mandated by N.C.G.S. § 138-5(a) does not apply to the members of the Board of Nursing. The conclusions set forth herein are consistent with the conclusions contained in the prior Opinion of the Attorney General addressed to Henry L. Bridges, State Auditor, dated November 4, 1979. In that opinion, the conclusion was that even though the funds collected by the occupational licensing boards constituted "State funds," the Division of State Budget had only limited jurisdiction over those boards, in part, because the boards do not bank with the State Treasurer.

We trust that we have answered your concerns, but if we may be of further assistance, please let us know.

Sincerely,

J. B. Kelly
General Counsel

John R. Corne
Special Deputy Attorney General