Mortellus
Jun 10, 2016
After challenging the school district's handling of nearly $4.9 million in public funds, three charter schools secured a $54,527.80 judgment that was ultimately affirmed by the North Carolina Supreme Court.
What happened: On January 9, 2012, Thomas Jefferson Classical Academy joined Piedmont Community Charter School and Lincoln Charter School in filing a lawsuit against the Cleveland County Board of Education, alleging that Cleveland County Schools had failed to distribute public education funding as required under North Carolina law.
The dispute concerned funds allocated during the 2009–2010 fiscal year. Under the applicable charter-school funding statute, local school districts were required to transfer a proportionate share of certain local operating funds to charter schools educating students residing within their districts.
The three charter schools alleged that Cleveland County Schools had improperly transferred approximately $4.9 million from its local current expense fund into a separate special revenue account known as Fund 8, thereby excluding money that should have been considered when calculating charter-school funding.
The plaintiffs initially sought approximately $102,480 in additional funding, arguing that the district's accounting practices improperly reduced the amounts owed to their schools.
Cleveland County Schools disputed the allegations, maintaining that the funds were appropriately classified as restricted revenues and therefore did not have to be included in the amounts shared with charter schools.
The resulting litigation continued through multiple court proceedings and appeals, ultimately reaching the North Carolina Supreme Court in 2016.
What was established: Court records confirm that TJCA and the two other charter schools successfully challenged Cleveland County Schools' treatment of certain revenue sources.
Initial litigation: On January 9, 2012, the three charter schools filed their complaint in Cleveland County Superior Court, alleging that approximately $102,480 in required funding had been withheld.
2013 trial court judgment: Following a nonjury trial in October 2012, the Superior Court entered judgment in February 2013 awarding the charter schools a combined $57,836. The court also initially awarded attorney's fees.
2014 appellate proceedings: Cleveland County Schools appealed. The North Carolina Court of Appeals determined that the classification of restricted funds required an examination of their origin, intended purpose, and actual use, rather than reliance solely on the district's accounting designations. The court remanded the case for additional findings and reversed the attorney's-fee award.
Revised 2015 judgment: Following reconsideration, the Superior Court entered a revised judgment on January 29, 2015, awarding the three charter schools a combined $54,527.80 in additional funding.
November 2015 appellate decision: Cleveland County Schools appealed again. On November 3, 2015, the North Carolina Court of Appeals affirmed the judgment, concluding that the district had improperly excluded certain unrestricted funds from the amounts used to calculate payments to charter schools.
June 2016 Supreme Court decision: Cleveland County Schools pursued a further appeal. On June 10, 2016, the North Carolina Supreme Court affirmed the Court of Appeals' decision, leaving the $54,527.80 judgment in favor of the charter schools intact.
The Court of Appeals examined several categories of revenue, including tuition and fee payments, federal indirect-cost reimbursements, Medicaid reimbursements, E-Rate telecommunications funding, and grants supporting student services.
The central legal issue was whether these revenues were genuinely restricted to specific uses or available for general school operations. The court concluded that the particular funds at issue were not restricted in the manner asserted by Cleveland County Schools and therefore had to be considered in calculating the charter schools' per-pupil funding.
The 2015 appellate decision was not unanimous. Judge Wanda Bryant concurred with portions of the majority opinion but dissented concerning the treatment of indirect-cost reimbursements and E-Rate funding, arguing that those revenues should have been classified as restricted. The North Carolina Supreme Court subsequently affirmed the majority's judgment.
What was not established: The litigation did not establish that TJCA, Piedmont Community Charter School, or Lincoln Charter School engaged in financial misconduct or violated public-school funding requirements.
Rather, the courts determined that Cleveland County Schools had improperly excluded certain revenues from calculations governing its financial obligations to the plaintiff charter schools.
The approximately $4.9 million transferred into Fund 8 represented the broader pool of disputed district funds. It was not the amount awarded to the charter schools, nor did the judgment require that entire sum to be transferred.
Similarly, the final $54,527.80 judgment was awarded to the three charter schools collectively, not exclusively to TJCA. The available appellate opinion does not establish how that total was ultimately divided among the individual schools.
Although the courts found that Cleveland County Schools had underfunded the plaintiffs under applicable law, the rulings did not establish that district officials intentionally concealed funds, committed fraud, or acted with criminal intent.
The litigation also did not establish that all restricted-purpose grants or federal program funds must be shared with charter schools. The decisions addressed the specific revenues and statutory requirements applicable to the 2009–2010 fiscal year.
Original evidence:
North Carolina Court of Appeals — Thomas Jefferson Classical Academy Charter School v. Cleveland County Board of Education, June 3, 2014
North Carolina Court of Appeals — Revised Opinion Following Rehearing, September 2, 2014
North Carolina Court of Appeals — Thomas Jefferson Classical Academy Charter School v. Cleveland County Board of Education, November 3, 2015
North Carolina Judicial Branch — Official Appellate Opinion and Related Supreme Court Decision
North Carolina Supreme Court — Thomas Jefferson Classical Academy Charter School v. Cleveland County Board of Education, June 10, 2016, 368 N.C. 900
Case information:
Cleveland County Superior Court: No. 12 CVS 41
North Carolina Court of Appeals: Nos. COA13-893 and COA15-464
North Carolina Supreme Court: No. 400A15
Subsequent developments: On June 10, 2016, the North Carolina Supreme Court affirmed the November 2015 appellate ruling, bringing the Cleveland County funding dispute to a conclusion. The decision upheld a combined judgment of $54,527.80 for the three charter schools, including TJCA. The case followed TJCA's earlier successful lawsuit against Rutherford County Schools, which resulted in a $730,889 judgment over disputed funding allocations. Together, the two cases document the Academy's involvement in significant legal challenges concerning the distribution of taxpayer-funded educational resources between traditional public-school districts and charter schools.
Both disputes centered on how school districts classified and distributed public funds, with the resulting judgments demonstrating the financial consequences of those accounting decisions.
Although the Cleveland County judgment is documented, the available records do not establish when the funds were paid, how the award was divided among the participating charter schools, or how TJCA ultimately used its share. TJCA Truth welcomes historical Board correspondence, settlement or payment documentation, financial records, and other materials that may help establish how the judgment was satisfied, what motivated the Academy's participation in the litigation, and how the recovered funding benefited its students and educational programs.
Report from the community: No independent firsthand accounts from TJCA families, employees, or community members specifically concerning the Cleveland County funding litigation have yet been obtained by TJCA Truth. The published court opinions preserve the competing legal arguments of the participating charter schools and Cleveland County Schools, along with the courts' findings concerning the disputed funds. TJCA Truth welcomes firsthand perspectives from former Board members, administrators, educators, and families familiar with the lawsuit or its financial consequences. Particularly valuable would be accounts describing how the funding dispute affected school operations, administrative decisions, educational resources, or TJCA's relationship with neighboring public-school districts. Contributors may request anonymity, and private correspondence will not be published without permission.