March 28, 1994
C. Robin Britt, Sr., Secretary Department of Human Resources 101 Blair Drive Raleigh, North Carolina 27603-2041
RE: Advisory Opinion; Area Mental Health Authorities; County Commissioners; Relationship Between County Contributions to an Area Authority and State Allocations of Expansion Funds;
G.S. 122C-115; G.S. 122C-146.
Dear Secretary Britt:
We respond to your most recent inquiry concerning the relationship between county contributions of funds to an area mental health, developmental disabilities, and substance abuse authority ("area authority") and allocations of State expansion funds to the area authority.
In a previous request, you asked whether a county may reduce its contributions to an area authority as a result of the receipt by the area authority of additional funds from the State through the Division of Mental Health, Developmental Disabilities and Substance Abuse Services ("Division of MH/DD/SAS"). In an advisory opinion, we responded that, although the General Assembly has not expressly defined the precise relationship between a county’s contributions and State allocations to an area authority, it is our opinion that the General Assembly did not intend that a county reduce its share of the funding responsibility to an area authority as a result of allocations of State expansion funds to the area authority. (A copy of the advisory opinion, dated June 8, 1993, is attached for your convenient reference.)
Your present inquiry was apparently prompted by a situation in which the county commissioners of a single county area authority reduced the amount of county appropriations provided to the area authority from the amount appropriated by the county in the prior fiscal year. The State challenged that action. The board defended its action, arguing that it has the right to set its own priorities for the use of county funds. The board further argued that the new budgeted amount, while less than the amount budgeted by the county for the previous fiscal year, was greater than the amount of county funds the area authority had actually expended the previous fiscal year.
As a result of this budget dispute, you ask the following questions:
- (1)
- May an area program receive the full amount of State expansion funds if a county reduces the amount budgeted for the area program from the amount budgeted in the prior fiscal year?
- (2)
- May an area program receive the full amount of State expansion funds if a county retroactively reduces the amount budgeted in the preceding fiscal year?
- (3)
- Is the restriction on reducing a county’s commitment of local budgeted tax revenue based on increased fee collections and/or increased State funding to be determined based on the amount a county budgets for the current year or on the amount budgeted for the previous fiscal year?
Your first question concerns whether a county can unilaterally reduce its allocation to an area authority. The General Assembly has given to the various boards of county commissioners the authority, subject to statutory constraints, to develop county fiscal policy. G.S. 153A-101 provides:
The board of commissioners has and shall exercise the responsibility of developing and directing the fiscal policy of the county government under the provisions and procedures of the Local Government Budget and Fiscal Control Act.
G.S. 159-13 specifically grants the board of commissioners the authority and responsibility to adopt a budget for the county and to make appropriations "in such sums as the board may consider sufficient and proper . . . ." G.S. 159-13(a). Notwithstanding this general budgetary authority, it is our opinion, as stated in our advisory opinion dated June 8, 1993, that the General Assembly intends for State and local governments to work together to develop and fund a public system for the delivery of services to persons with mental illness, developmental disabilities and substance abuse services. See G.S. 122C-2. In G.S. 153A-149(c), the General Assembly specifically authorizes the counties to levy property taxes to raise funds:
. . . to provide for the county’s share of the cost of maintaining and administering services offered by or through the area mental health authority, developmental disabilities, and substance abuse authority.
Thus, while there is no statutory formula for determining "a county’s share of the cost" of an area authority, it is clear that the General Assembly intended for some portion of the cost to be paid by the county. Specific allocations are left for the Division of MH/DD/SAS and the counties to determine. The General Assembly neither prohibits a county from reducing its budgeted contribution to an area authority nor the Secretary from reducing the amount of expansion funds allocated to the area authority.
Your second question concerns whether a county may retroactively reduce its prior fiscal year appropriations to an area authority when the amount budgeted in the new fiscal year is greater than the amount of county funds that the area authority actually expended during the prior fiscal year.
Chapter 159 of the North Carolina General Statutes gives the board of county commissioners the authority to amend the county budget ordinance after its enactment. However, any such amendment is subject to specific statutory limitations, including a requirement that the county continue to operate under an annual balanced budget. G.S. 159-8. Specifically, G.S. 159-15 provides, in pertinent part:
Except as otherwise restricted by law, the governing board may amend the budget ordinance at any time after the ordinance’s adoption in any manner, so long as the ordinance, as amended, continues to satisfy the requirements of G.S. 159-8 and 159-13 . . . .
G.S. 159-13 contains a list of specific limitations which bind the board of commissioners in adopting or amending the budget. The list does not include a limitation regarding reductions to an area authority after the budget ordinance is adopted. Again, we note that the General Assembly has not precisely prescribed the relationship between a county’s contributions and the State allocations to an area authority. Therefore, a county has the authority to retroactively reduce the level of appropriations to the area authority by amending the budget ordinance. Of course, the Secretary has the authority to consider this reduction in determining future allocations to the area authority.
Your final question has two parts, which we will address separately.
We first address whether the restriction against reducing a county’s commitment of local budgeted tax revenue as a result of increased fee collections is to be determined based on the amount a county budgets for the current year or the amount budgeted in the previous fiscal year. The restriction to which you refer is set forth in G.S. 122C-146. Because the General Assembly has not directly addressed your specific question, we look for guidance at the wording of the statute and at the interpretation of the statute contained in rules adopted by the Commission of Mental Health, Developmental Disabilities and Substance Abuse Services.
G.S. 122C-146 provides in pertinent part:
The collection of fees by an area authority may not be used as justification for reduction or replacement of the budgeted commitment of local tax revenue.
Because the provision speaks in terms of "the budgeted commitment of local tax revenue," it is our opinion that it is intended to prohibit reduction or replacement of amounts already budgeted.
In addition, the rules adopted by the Commission for Mental Health, Developmental Disabilities and Substance Abuse Services provide as follows:
Client-earned income, such as payments received from patients or third parties (insurance, Medicare, Medicaid), which is received but not expended shall be retained by the area program or the contract program and be used to further the objectives of the legislation establishing the state categorical funding. 10 NCAC 14C.1014(a)(1)(C). (Copy attached.)
The rules further provide that when client-earned income results in an area program’s fund balance being in excess of 15 percent of its annual operating budget, the Division has the authority and an obligation to "reduce its allocation of division funds in the year subsequent to the year in which the excess occurred." 10 NCAC 14C.1125(a)(5). (A copy of the rule is attached.) Thus, the rules provide that State funds rather than local funds are to be reduced as a result of unexpended fees. The authority of the Division to reduce State allocations applies to both multi-county and single county area programs. 10 NCAC 14C.1125(a)(2).
The second part of your question concerns a restriction on reducing a county’s commitment of local budgeted tax revenue based on increased State funding. The only specific restriction against a county reducing the budget to the area authority is that the county may not use the collection of fees by the area authority as justification for the reduction. Beyond this, it is up to the county and the Secretary to determine specific budget allocations to the area authority. As is stated above, the only guidance given by the General Assembly is that the county is to pay "its share of the cost" of the area program.
Ann Reed Senior Deputy Attorney General
Jane L. Oliver
Assistant Attorney General