County Legal Authority to Fund Non-Mandated Social Services Programs

Published for Coates' Canons on June 06, 2023.

State law requires North Carolina counties to administer and provide a number of social services and public assistance programs described in Chapter 108A of the North Carolina General Statutes, including (among others) Work First, Food and Nutrition Services, Medicaid, child protective services, adoption services, adult protective services, and guardianship services. These mandated programs and services are funded through a combination of federal, state, and/or county dollars (in varying proportions depending on the program or service). In addition to funding these mandated programs and services, each county also has statutory authority to create and fund optional, non-mandated social services programs. This post discusses that authority.

Foundational Considerations

Before addressing social services funding, it’s important to consider two basic requirements for spending public funds.

First, every expenditure of public funds must satisfy the North Carolina Constitution’s “public purpose requirement.” See N.C. Const. Art. V, Sect. 2(1).  In order to satisfy this requirement, the expenditure must (1) involve a reasonable connection with “the convenience and necessity” of the unit of government (e.g. serve a legitimate aim of government) and (2) must benefit the public generally, as opposed to primarily benefitting a particular individual or private entity. My colleague Kara Millonzi discusses that requirement in much more detail in this blog post.

Second, a county must have statutory authority to spend public funds for a particular public purpose. See  N.C. Const. Art. V, Sect. 2(2) and Art. VII, Sect. 1. “[A] county has no power to appropriate funds unless authorized to do so by the General Assembly.” Hughey v. Cloninger, 297 N.C. 86, 88 (1979).

Authority to Levy Property Taxes to Fund Social Services

Mandated programs: The General Assembly has authority to determine how much of the “nonfederal share” of costs for mandated social services programs counties must pay. State law requires each board of county commissioners to levy and collect taxes as necessary to meet the county’s allocated share of the cost of mandated social services programs. Counties may levy property taxes “without restriction as to rate or amount” for purposes of paying their share of the cost of mandated public assistance programs. See G.S. 153A-149(b)(8).

Non-mandated programs: State law authorizes counties to levy property taxes, subject to a tax rate limitation, to pay the cost of non-mandated public assistance and social services programs.  See G.S. 153A-149(c)(30).  Counties may also levy property taxes for any purpose for which the county is authorized by law to appropriate money, subject to voter approval. See G.S. 153A-149(d).

Authority to Create and Fund Non-Mandated Social Services Programs

  1. Statutory Authority – G.S. 153A-255

G.S. 153A-255 states: “Each county shall provide social service 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 health, welfare, education, employment, safety, comfort, and convenience of its citizens” (emphasis added). The first part of this statute requires counties to provide certain mandated social services programs (primarily set forth in Chapter 108A), while the second part of this statute authorizes counties to create and fund non-mandated social services programs.

What “other social services programs” may a county legally create and fund? Any such programs must, under G.S. 153A-255, “be intended to further the health, welfare, education, employment, safety, comfort, and convenience” of a county’s citizens. Although this limitation narrows the universe of possible programs that a county could create and fund, its plain language is still quite broad.

  1. Judicial and Administrative Interpretations of G.S. 153A-255

Few North Carolina court cases have addressed a county’s authority to fund non-mandated social services programs pursuant to G.S. 153A-255. In the first of these cases, Hughey v. Cloninger, 297 N.C. 86 (1979), the North Carolina Supreme Court held that G.S. 153A-255 did not authorize a county board of commissioners to appropriate funds to a private school for dyslexic children. The court limited the application of G.S. 153A-255 to programs “of the type created in Chapters 108 and 111 of the General Statutes.” (Chapter 108 has since been repealed and recodified as Chapter 108A.) Further, the Hughey court concluded that the programs contemplated by Chapters 108 and 111 were “addressed exclusively to the problems of poverty.” Since the proposed school for dyslexic children would provide educational opportunities without regard to financial status of the students, the court determined that it was not a “social services program” under G.S. 153A-255 and thus could not be funded under that statute.

Subsequently, in Stam v. State, 302 N.C. 357 (1981), the North Carolina Supreme Court held that G.S. 153A-255 did not authorize a county to fund “medically unnecessary” abortions for indigent women. In doing so, the court found that (1) Hughey limited the broad language of G.S. 153A-255 to “programs similar in nature to those provided for in Chapter 108 and 111,” and (2) the programs contemplated by Chapter 108 and 111 were limited to “providing the poor with the basic necessities of life…including, for example, nursing care, employment opportunities, and food stamps.”

A 1998 opinion from the North Carolina Attorney General’s office reiterated the North Carolina Supreme Court’s holdings in Hughey and Stam, concluding based on those cases that G.S. 153A-255 did not authorize a county to establish a college scholarship program for students in the county public school system. In reaching that conclusion, the opinion reasoned that (1) no programs in Chapter 108A or Chapter 111 of the General Statutes were “similar to” the proposed scholarship program, and (2) the scholarship program did not “provide the poor with the basic necessities of life.”

What Programs Are “Similar in Nature” to Those Authorized Under Chapter 108A?

Hughey and Stam limit a county’s authority under G.S. 153A-255 to funding programs that are “similar in nature” to those described in Chapters 108A and 111 of the General Statutes. Stam further concludes that the programs in Chapters 108A and 111 are solely limited to “providing the poor with the basic necessities of life.”

At present, Chapter 108A describes a number of programs and services that are not income-based or means-tested.  Under G.S. 108A-14, each county director of social services is responsible for, among other things, investigating cases for adoption and supervising adoptive placements, assessing reports of child abuse and neglect and taking appropriate action to protect such children, supervising foster home placements, and providing protective services to disabled adults who have been abused, neglected, or exploited.

A county department of social services must provide child welfare services, adult protective services, and guardianship services regardless of an individual’s income. Moreover, these services address social problems—including abuse, neglect, and exploitation—that impact people in all socioeconomic classes, not only those with lower incomes or resources.  These services are not “addressed exclusively to the problems of poverty,” as described in Hughey, nor are they intended to “provide the poor with the basic necessities of life” as described in Stam.

Although Hughey and Stam limit a county’s authority under G.S. 153A-255 to funding programs “similar in nature” to those described in Chapters 108A and 111, that authority arguably might extend beyond programs that “address the problems of poverty.” For example, such funding authority could conceivably extend to non-mandated programs that address the problems of abuse, neglect, or exploitation of children and vulnerable adults. Chapter 108A mandates that counties provide services to address these problems for individuals and families of all income or wealth levels—not just those of lesser means.

How can we reconcile the fact that Hughey and Stam overlooked the non-means-tested programs in Chapter 108A, leading the court to make imprecise characterizations about the nature of the programs authorized by Chapter 108A?

One possible interpretation is that Hughey and Stam were solely focused on the means-tested public assistance programs in Chapter 108A due to the nature of the facts in those cases. Hughey examined whether a county had authority to fund a private school for dyslexic children, while Stam examined whether a county could fund “medically unnecessary” abortions for indigent women. The school contemplated in Hughey bore little resemblance to any program in Chapter 108A. The program in Stam was compared with (though ultimately distinguished from) a means-tested public assistance program (Medicaid). Neither program at issue in these cases squarely addressed the problems addressed by Chapter 108A’s non-means-tested social services programs, such as the abuse, neglect, or exploitation of children and vulnerable adults.

The Hughey and Stam courts arguably had no reason to analyze or grapple with the programs and services contemplated by Chapter 108A that do not “provide the poor with the basic necessities of life,” because those programs and services were irrelevant to the facts of the cases before them. Nonetheless, counties will continue to have to grapple with the limitations imposed by Hughey and Stam as they determine which non-mandated social services programs they have statutory authority to fund.

What are “Mandated” Social Services Programs Under G.S. 108A?

Under Hughey and Stam, any non-mandated social services programs that a county creates or funds must be “similar in nature” to the mandated social services programs contemplated in Chapter 108A. What types of social services programs is a county mandated to administer or provide? A non-exhaustive list of examples is included below.

  • Work First (TANF), which provides direct cash assistance as well as assistance with childcare, transportation, job searches, and job training for eligible families who need help achieving self-sufficiency through employment.
  • Food and Nutrition Services (SNAP), which helps low-income individuals and families be able to purchase food.
  • Medicaid, which covers most of the cost of medical care and services for several categories of people who cannot afford these costs, including low-income aged, disabled, or blind persons; needy children and pregnant women; individuals who receive federal Supplemental Security Income (SSI) benefits; and other low-income people who meet eligibility requirements.
  • State-County Special Assistance, which provides a cash supplement to certain older and disabled adults with low incomes to help pay for room and board in residential facilities or to help these individuals continue to live at home safely.
  • Low Income Energy Assistance Program (LIEAP), which provides a one-time vendor payment to help eligible low-income households pay their heating bills.
  • Crisis Intervention Program (CIP), which provides financial assistance to individuals and families who are experiencing or in danger of experiencing a heating or cooling related crisis.
  • Child protective services, which include assessing suspected cases of abuse, neglect, or dependency; providing in-home counseling and supportive services to help children stay at home with their families when possible; coordinating community and agency services for the impacted family; and petitioning the court for removal of the child from their home if necessary.
  • Adult protective services, which serve adults with disabilities who are alleged to be abused, neglected, or exploited by mobilizing the provision of essential services including medical care for physical and mental health needs, assistance in personal hygiene, food, clothing, shelter, protection from health and safety hazards, and protection from physical mistreatment and exploitation.
  • Adoption services, which include recruiting and screening adoptive parents and arranging and supervising adoptive placements.
  • Guardianship services, which are provided on behalf of adults adjudicated to be incompetent in cases where the clerk of superior court orders DSS to serve as guardian.
  • Foster care and adoption assistance payments, which provide financial assistance to individuals who serve as foster parents or adopt certain eligible children.

While some of these services have income-based eligibility requirements, others must be provided to individuals regardless of income.

How May a County “Address the Problems of Poverty?”

What if a county does, in fact, want to fund a non-mandated social services program that squarely “addresses the problems of poverty”? May a county fund a non-mandated program that provides financial assistance or services to individuals based on their level of income or assets?

First, in order to be “similar to” programs provided for in Chapter 108A, such programs would arguably need to have similar financial eligibility criteria as public assistance programs described in Chapter 108A. The financial eligibility limits for those programs—including Work First, Food and Nutrition Services, and Medicaid, among others—currently range from 100% to 200% of the federal poverty level. The U.S. Department of Health and Human Services’ 2023 federal poverty guidelines are available on this website.

Second, a county contemplating direct payments of financial assistance to its citizens must consider constitutional issues. The emoluments clause of the North Carolina Constitution (Art. I, Sect. 32) prohibits a local government from providing “exclusive or separate emoluments or privileges” to private individuals except “in consideration of public services.” However, activities that satisfy the North Carolina Constitution’s “public purpose” requirement are not exclusive emoluments. See Blinson v. State, 186 N.C. App. 328, 342 (2007); see also Saine v. State, 210 N.C. App. 594, 607 (2011).

The North Carolina Constitution (Art. XI, Sec. 4) establishes “[b]eneficent provision for the poor, the unfortunate, and the orphan” as “one of the first duties of a civilized and a Christian state.” Since aid to vulnerable individuals is one of the “recognized objects of State government”—a duty recognized explicitly in the N.C. Constitution—expenditures supporting that goal arguably serve a public purpose. See State Ed. Assistance Auth. v. Bank of Statesville, 276 N.C. 576 (1970); Green v. Kitchin, 229 N.C. 450, 455–56 (1948).

In evaluating the public purpose inquiry, the North Carolina Supreme Court has stated:

“It is not necessary, in order that a use may be regarded as public, that it should be for the use and benefit of every citizen in the community. An expenditure does not lose its public purpose merely because it involves a private actor. Generally, if an act will promote the welfare of a state or a local government and its citizens, it is for a public purpose. The fact that the individual obtains a private benefit cannot be considered sufficient ground to defeat the execution of a paramount public purpose.”

Hart v. State, 368 N.C. 122, 137–38 (2015) (internal citations, quotation marks, and punctuation omitted). In other words, the fact that a program provides direct benefits to particular individuals (for example, individuals with lower incomes) does not mean that the program is not for a public purpose or does not promote the general welfare of the public.

The North Carolina Supreme Court has upheld a number of programs that provide direct assistance to low-income individuals, including:

  • scholarships for students from low-income families to attend nonpublic schools (Hart v. State, 368 N.C. 122 (2015));
  • loans for persons of low and moderate income to acquire housing (In Re Denial of Approval of Bonds, 307 N.C. 52 (1982));
  • loans for education for those “of slender means” (State Education Assistance Authority v. Bank of Statesville, 276 N.C. 576 (1970)); and
  • loans for veterans to purchase homes (Hinton v. Lacy, 193 N.C. 496 (1927)).

While these cases do not examine a county’s authority under G.S. 153A-255, they demonstrate that programs providing direct financial assistance to individuals may, in some circumstances, pass constitutional muster. Notably, a number of mandated public assistance programs described in Chapter 108A provide financial assistance or benefits either directly to low-income individuals or to vendors on an individual’s behalf, including Work First, Food and Nutrition Services, the Low-Income Energy Assistance Program, and the State-County Special Assistance Program.

Alternative Statutory Authority

G.S. 153A-255 does not provide the only statutory authority for funding programs that address the health, safety, and welfare of a county’s citizens. What if more than one statute appears to provide a county with authority to fund a program? A county should look to the doctrine of statutory construction known as in pari materia. Applying this doctrine, the North Carolina Supreme Court has stated, “Where one of two statutes might apply to the same situation, the statute which deals more directly and specifically with the situation controls over the statute of more general applicability…even if the general statute is more recent, unless it clearly appears that the legislature intended the general statute to control.” Trustees of Rowan Tech. Coll. v. J. Hyatt Hammond Assocs., Inc., 313 N.C. 230, 238 (1985). Thus, if a statute more directly and specifically addresses authority to fund a particular type of program, counties should typically look to that statute (and case law interpreting that statute) for authority instead of a more broadly-worded, general statute like G.S. 153A-255.

With that context in mind, here are some other state statutes that may authorize a county to fund related programs:

  • G.S. 160A-497 authorizes a county to appropriate funds to programs for the assistance and care of its senior citizens, including but not limited to programs for in-home services, food service, counseling, recreation and transportation.
  • Subject to certain conditions and limitations, G.S. 153A-248 authorizes a county to appropriate funds to (i) a licensed facility for individuals with intellectual or other developmental disabilities; (ii) a private, nonprofit, charitable organization offering work or training activities to individuals with physical, intellectual, or developmental disabilities; or (iii) a training center or other private, nonprofit, charitable organization offering education, treatment, rehabilitation, or developmental programs to individuals with physical, intellectual, or developmental disabilities.
  • G.S. 153A-256 authorizes counties to establish, erect, acquire, lease, equip, support, operate, and maintain a county home for “aged and infirm persons.”
  • G.S. 160A-492 authorizes a county to appropriate funds for “human relations, community action, and manpower development programs.” The statute defines a human relations program as “one devoted to (i) the study of problems in the area of human relations, (ii) the promotion of equality of opportunity for all citizens, (iii) the promotion of understanding, respect and goodwill among all citizens, (iv) the provision of channels of communication among the races, (v) dispute resolution, (vi) encouraging the employment of qualified people without regard to race, or (vii) encouraging youth to become better trained and qualified for employment.”
  • G.S. 143B-1211(23) authorizes counties to appropriate funds as necessary to provide a veterans’ services program.
  • Multiple statutes provide authority for a local government’s affordable housing activities, as detailed in this comprehensive blog post by my colleague Tyler Mulligan.

Additionally, G.S. 160D-1311(a)(2) provides broad authority for a local government to appropriate and expend funds for “community development programs and activities,” including programs “concerned with employment, economic development, crime prevention, child care, health, drug abuse, education, and welfare needs of persons of low and moderate income.” This statute authorizes counties and municipalities to fund programs addressing many of the same problems and concerns that are addressed by programs in Chapter 108A, but G.S. 160D-1311(a)(2) is more specifically limited in scope to programs related to housing and community development that serve persons of low and moderate income. Note that G.S. 160D-1311(d) requires counties to hold a referendum prior to appropriating funds for activities not explicitly listed in G.S. 153A-149 (among other things, G.S. 153A-149 authorizes housing programs for low- and moderate-income persons and housing rehabilitation in populous counties).

If G.S. 160D-1311(a)(2) is limited in scope to “community development programs and activities,” then what does “community development” mean? The history of the statute sheds some light on this question. G.S. 160D-1311 is the merger of G.S. 160A-456 and G.S. 153A-376, both of which were initially enacted to enable local governments to expend Community Development Block Grants (CDBG). CDBG activities include blight removal, improving community facilities and services, and preserving housing stock principally for the benefit of low and moderate-income persons. CDBG funds may not be used for “income payments” made to an individual or family for items such as food, clothing, housing, or utilities, except for emergency grant payments made over a period of up to three consecutive months to the provider of such items or services on behalf of an individual or family (see 24 CFR 570.201 and 24 CFR 570.207(a)(4)). To be clear, G.S. 160D-1311 does not explicitly reference the federal CDBG regulations, nor does it solely provide authority for spending CDBG funds. However, the origin and purpose of G.S. 160D-1311 suggest that the CDBG regulations may be instructive when interpreting the meaning of “community development programs and activities.” More analysis of G.S. 160D-1311(a)(2) is available in blog posts by my colleagues here and here.

Contracting with Private Entities for Social Services Programs

What if a county wants to provide funding to a local nonprofit or other private entity to offer social services programs? G.S. 153A-449 gives a county authority to contract with and appropriate money to any private individual or entity in order to carry out any public purpose that the county is authorized by law to engage in. Thus, if a county has statutory authority to fund and undertake a social services program itself, then it may contract with a private entity to provide that program. More specifically, G.S. 153A-259 authorizes counties to contract with any governmental agency, person, or private entity for the provision of health or social services. For more information on local government appropriations to private entities, please see my colleague Kara Millonzi’s blog post on this topic.

The post County Legal Authority to Fund Non-Mandated Social Services Programs appeared first on Coates’ Canons NC Local Government Law.

Topics - Local and State Government