STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

COUNTY OF WAKE 17 CVS 6465

STATE OF NORTH CAROLINA, )

)
Upon the relation of, )
)
ROY A. COOPER, III, individually and in his )
official capacity as GOVERNOR OF THE )
STATE OF NORTH CAROLINA, )
)
Plaintiff, )
)
v. )
)
PHILIP E. BERGER, in his official capacity, ) AFFIDAVIT OF DARRELL T.
as PRESIDENT PRO TEMPORE OF THE ) ALLISON
NORTH CAROLINA SENATE; TIMOTHY )
K. MOORE, in his official capacity as )
SPEAKER OF THE NORTH CAROLINA )
HOUSE OF REPRESENTATIVES; )
CHARLTON L. ALLEN, in his official )
capacity as CHAIR OF THE NORTH )
CAROLINA INDUSTRIAL COMMISSION; )
and YOLANDA K. STITH, in her official )
capacity as VICE-CHAIR OF THE NORTH )
CAROLINA INDUSTRIAL COMMISSION, )
)
Defendants. )

NOW COMES Darrell T. Allison and, being duly sworn, deposes and says of

his own personal knowledge as follows:

1. I am over the age of eighteen (18) and am competent to testify to the

matters set forth herein. Except where specified as true upon information as belief,

the following statements are true of my own personal knowledge. If a statement is

set forth as true upon information and belief, I believe it to be true.

EXHIBIT

I B
 2. I am the President of Parents for Educational Freedom in North

Carolina, Inc. ("PEFNC"), amicus curiae seeking leave from the Court to file an

amicus curiae brief in this lawsuit. I am the founding President of PEFNC.

3. I am also a member of the Board of Governors of the University of North

Carolina.

4. PEFNC is a North Carolina charitable and education nonprofit

corporation that provides information to parents statewide and assists them in

understanding and navigating North Carolina's expanded educational opportunities.

PEFNC focuses its efforts on options and programs that allow parents to send their

children to the school of their choice, including traditional public schools, public

charter schools, magnet schools, private schools, homeschools, and special needs

programs, regardless of students' race, national origin, income, or religion. PEFNC's

principal place of business is in Raleigh, North Carolina.

5. Since 2005, PEFNC has promoted parental school choice, which means

allowing parents to send their children to the school of their choice-traditional or

nontraditional-regardless of their address or income. PEFNC strongly supported

the Legislature's 2013 enactment of the Opportunity Scholarship Program (the

"Scholarship Program" or "Program") and the increased opportunities it provides to

schoolchildren in North Carolina. Since 2013, PEFNC has assisted thousands of

lower-income and working-class families and students with applying to, and enrolling

in, the Program.

6. Though the Scholarship Program has only been through four application

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cycles, families submitted 10,578 student applications for the 2017-2018 school year,

competing for 8,300 available scholarships; families have accepted 7,242 of these

scholarships. Four hundred and fifty-seven schools are now registered to participate

in the Scholarship Program. Families, children, schools, and teachers all rely on the

Program, and will face substantial harm and undue hardship in the event that the

Legislation at issue is deemed invalid.

7. As a key proponent, promoter, and supporter of the Scholarship

Program since its inception, and having assisted many families with the scholarship

application and enrollment process, PEFNC, as . amicus curiae, has a unique

knowledge about the subject matter of this litigation. PEFNC also has a substantial

interest in ensuring that North Carolina schoolchildren and their families continue

to receive fair treatment, and that the Scholarship Program is allowed to operate in

a fair and effective manner.

8. Amicus curiae participation by PEFNC will permit the court to

understand better the significant negative impact that the avoidance of section 6.6(b)

of Session Law 2017-57 will have on North Carolina schoolchildren and their families.

Upon information and belief, the Governor's briefing will contend that section 6.6(b)

encroaches on the executive function by requiring that funds for the Opportunity

Scholarship Program be included in the Base Budget. I believe that the real reason

the Governor is attempting to remove Scholarship Program funding from the Base

Budget is purely political, and that his arguments that section 6.6(b) encroaches on

the executive function are a pretext for advancing his frequently stated goal of

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abolishing the Scholarship Program entirely.

9. PEFNC can provide a unique perspective from its extensive experience

and, in particular, can address early Scholarship Program hurdles and practical

school-year timing and funding issues, which the legislation at issue has remedied

through "forward funding," and which has helped many families and children. In

fact, legislation employing forward funding has been, and continues to be, used for

University of North Carolina tuition and scholarship programs. PEFNC's

knowledgeable view will aid the Court in understanding both how the Scholarship

Program has worked, and how avoidance of section 6.6(b) will unnecessarily

destabilize the Scholarship Program and place schoolchildren back into a political

game, disrupting their lives, creating uncertainty, and causing significant harm.

Avoidance of section 6.6(b) may also have the unforeseen collateral consequence of

putting other important public education forward-funding statutes at risk.

OVERVIEW AND HISTORY OF THE OPPORTUNITY SCHOLARSHIP

PROGRAM

10. After much debate, the General Assembly adopted the Opportunity

Scholarship Program in 2013 to expand school choice for North Carolina families by

providing state-sponsored scholarships for eligible children, usable to pay for

education from kindergarten through high school. See Current Operations and

Capital Improvements Appropriations Act of 2013, ch. 360, sec. 8.29, 2013 N.C. Sess.

Laws 995, 1064-69. The legislation established a start date for the 2014-15 school

year.

11. The Scholarship Program is administered by the North Carolina State

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Education Assistance Authority (the "SEAA'') and provides up to $4,200 per year

(maximum) for an eligible student to attend a participating nonpublic school. 1

12. The application process for the Opportunity Scholarship Program

contains two eligibility determinations for families: (1) parents must meet eligibility

criteria based on household income; and (2) students must have been enrolled in

public school during the prior school year (with the exception of students entering

grades K-1 or those students qualifying for other exceptions).

a. Only children of North Carolina households within certain lower

income ranges are eligible for the Opportunity Scholarship Program. For

example, the maximum household gross income for 2016 for a family of four

could not exceed $45,510 for a full scholarship. ("Income" generally includes

all income and public assistance payments before any deductions, such as

taxes, Social Security, and insurance premiums. See SEAA, Rules Governing

the Opportunity Scholarship Program 4-6 (Sept. 23, 2016); see also Child

Nutrition Programs: Income Eligibility Guidelines, 82 Fed. Reg. 17182, 17183

(Apr. 10, 2017). Priority is given to those students who previously received a

scholarship grant, and at least fifty percent (50%) of any remaining funds must

1 PEFNC has been successful in working closely with the SEAA, building a unique
infrastructure of service and support so that parents can effectively access grades K through
12 scholarships in North Carolina. This includes ensuring that parents are adequately
prepared to apply for the Opportunity Scholarship by, inter alia, maintaining a toll-free
telephone number and providing one-on-one direct support to parents throughout the
application cycle, offering a relevant resource ("NC Schools Around Me") on the SEAA
website, which makes parents aware of the nonpublic school options located near their home,
providing valuable information from eligible schools to parents about their enrollment
process, and investing in staff dedicated to providing customer service and support for
parents throughout their connection to state scholarship programs.
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 be awarded to students who qualify for free and reduced-price lunch.

b. In order to be eligible for an Opportunity Scholarship, students

must also have attended a North Carolina public school for at least 75 days

during the spring semester of the prior school year, unless they are entering

kindergarten or first grade or qualify for other exceptions.

c. Schools must also register and meet certain qualifications in

order to participate in the Scholarship Program. For example, a school must

satisfy the State's nonpublic school requirements, register with the SEAA, and

conduct criminal background checks on certain individuals in authority. The

school must also adhere to standardized testing and reporting requirements.

The Application Process

13. Priority application for the Opportunity Scholarship opens on February

1st and lasts until March 1st. Applicants submitting applications during the priority

period are entered into a lottery. All others who apply after March 1st are placed on

a waiting list in the order in which their applications are received.

14. There is a forty percent (40%) cap on kindergarten/ first grade ("Kil")

scholarships, so those applications are placed in a separate lottery. When forty

percent of all scholarships are allocated to Kil scholarships, no more Kil scholarships

can be awarded. The remaining funds may only be allocated for students in the

second grade and higher.

15. Procedurally, a parent establishes an account with the SEAA, which

creates an online student portal. Each student receives a student identification

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number. The parent accesses all information through his or her portal.

16. Schools seeking to participate must also establish a similar account with

the SEAA.

17. The parent may then apply for the Opportunity Scholarship through the

portal, and he or she is notified of scholarship award status (awarded or wait-listed)

through the portal and by e-mail.

18. The SEAA next initiates income verification and confirmation of public

school enrollment. This sometimes requires additional documentation from the

parent.

19. The parent must then accept the award through the portal by the

deadline. Parents are typically given approximately one month to indicate whether

they will accept or decline the award.

20. After accepting the award, the parent must choose a participating

nonpublic school in which to seek enrollment, if he or she did not already select a

school on the application.

21. The school then receives a list of "interested families" within its SEAA

school portal, indicating those families and children who intend to seek enrollment.

22. The next step is generally for parents to consider their own finances and

how they will pay for costs not covered by the Opportunity Scholarship. Parents also

begin conversations with nonpublic schools about additional financial aid that may

be available.

23. Parents then begin the enrollment process (and typically pay enrollment

7
fees) at the nonpublic school. The school must confirm that a parent has enrolled his

or her child in the school through the online portal.

24. Parents must sign their student's endorsement forms in person at the

participating nonpublic school and submit their student's endorsement forms to the

SEAA.

25. Finally, the SEAA disburses funds directly to the participating

nonpublic school.

History of the Opportunity Scholarship Program

26. Opponents of the Opportunity Scholarship Program not only fought its

passage in the Legislature, but also filed multiple lawsuits seeking to stop or delay

its implementation, with some unfortunate success. In December 2013, five months

after the General Assembly adopted the Scholarship Program, opponents filed a pair

of lawsuits challenging the Program's constitutionality. See Hart v. State, 368 N.C.

122, 129-30, 774 S.E.2d 281, 286-87 (2015); Richardson v. State, 368 N.C. 158, 159-

60, 774 S.E.2d 304 (2015) (per curiam). In January 2014, the Institute for Justice

intervened on behalf of North Carolina parents to defend the Scholarship Program.

Despite the filing of the lawsuits, implementation of the Program continued and

applications opened on February 1, 2014.

27. On February 21, 2014, the Scholarship Program was temporarily

enjoined, causing disruption and uncertainty for children, families, and schools. The

priority application period (February 1st - March 1st) was halted abruptly on

February 25, 2014; 4,500 applications had already been submitted.

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 28. In April 2014, the North Carolina Court of Appeals rejected a petition to

lift the injunction. See Hart v. State, No. P14-210 (N.C. Ct. App. Apr. 2, 2014).

Thereafter, PEFNC launched its "Oneof4500" campaign, documenting parents'

frustrations about the setback in attaining a better education for their children, and

representing the voices of the 4,500 families that qualified, applied for, and were then

denied an Opportunity Scholarship, given the injunction.

29. In May 2014, the North Carolina Supreme Court lifted the injunction.

See Hart v. State, No. 121P14-1 (N.C. May 14, 2014). In June 2014, the SEAA moved

forward with the lottery for Opportunity Scholarship awards, and in July the lower

court ruled that no scholarship money would be interrupted.

30. Remarkably, however, in August 2014, at the precise time school was

starting and the Scholarship Program funds were to be disbursed to schools, the

Superior Court granted a permanent injunction on the Program and funds were

halted. See Hart v. State, No. 13CVS16771, 2014 WL6724598, at *3 (N.C. Super. Ct.

Wake County Aug. 28, 2014). Once again, children who were promised scholarships

were put on hold, at the very time that school was to start and that the scholarship

funds were needed. Moreover, the schools that had reserved spots and had made

plans to accommodate the Scholarship Program children faced uncertainty.

31. The Court of Appeals dismissed an appeal to stay the injunction. See

Hart v. State, No. P14-659 (N.C. Ct. App. Aug. 25, 2014); see also id. (Sep. 9, 2014)

(denying the same). That same month, school began for nonpublic schools in North

Carolina. Families with limited financial resources that were promised a new

9
educational beginning for their children were thrust into limbo because of the Court's

newest ruling.

32. The Institute for Justice refiled a petition at the Court of Appeals, and

the Court agreed to allow some funds to be disbursed, but only for those families that

had applied for and that had accepted their scholarship awards prior to entry of the

injunction.

33. Although the number of applicants ultimately outnumbered the

available scholarships, the Scholarship Program had only 68% subscription because

disbursements were allowed only for those families that had accepted their awards

prior to the injunction, even though the application and acceptance deadline was

supposed to occur after the injunction date. Those families that were in the midst of

the application process were otherwise denied. Thus, only $4.6 million of the

allocated $6.8 million was expended for 1,216 scholarship recipients in 2014.

Opportunity Scholarship Program Declared Constitutional but Delayed

Legislatively

34. In December 2014, the North Carolina Supreme Court allowed the

SEAA to open the 2015-16 application period, and on February 1, 2015, applications

opened officially. While applications were accepted throughout the application period

without interruption, a legal cloud remained over the Scholarship Program due to the

uncertainty of the Hart and Richardson litigation.

35. Nonetheless, the SEAA received 8,675 new applications for the 2015-16

school year. Notably, parents and students sought fit to apply for a program even

though no funding had been provided. In July 2015, after nineteen months, the North

10
Carolina Supreme Court declared the Opportunity Scholarship Program

constitutional.

36. Uncertainty regarding the Opportunity Scholarship Program has not

been limited to litigation. Even when the Legislature and the Executive represented

the same political party, a "three-month standoff' occurred during the 2015 summer

budget negotiations, which delayed important Program funding until September,

well after the school year had started. See Act of Sept. 18, 2015, ch. 241, 2015 N.C.

Sess. Laws 641. Because no budget had been enacted, and without the benefit of any

forward-funding legislation, parents, children, and schools were forced to begin the

school year uncertain about whether the Scholarship Program would be funded at all.

37. For most nonpublic schools in North Carolina that receive money under

the Scholarship Program, school starts in early to mid-August. However,

accommodations, resources, and the like must be arranged and secured well prior to

this time. Because of this timing, and the uncertainty regarding the funding of the

Scholarship Program, PEFNC received a steady stream of phone calls in July and

August 2015 from parents and school leaders who were unsure about their next steps

as they waited for the General Assembly to send its final budget to the Governor.

38. For schools, the process was especially frustrating, and potentially

detrimental, because the schools did not know what, if any, Scholarship Program

money to include in their budgets or if these students would ultimately decide to

enroll at all. When the school year began, schools had to decide if their budgets would

allow them to move forward with enrolling Scholarship Program students-even if

11
scholarship funds were not eventually awarded. This uncertainty disincentivized

schools to accept Scholarship Program students.

39. Despite the uncertainty, and out of concern that undue detriment would

result to the children, some schools made accommodations to ensure that each

Scholarship Program child would be guaranteed a spot, even if the schools had to

underwrite the child's tuition out of their own much-needed resources.

40. If students have enrolled in Program schools, but the students'

scholarship awards are not thereafter funded, both the parents and the schools face

a difficult and tenuous situation. The school might not be able to absorb the

budgetary hit for educating Scholarship Program students on its own dime, whose

scholarships may not be funded by the Legislature. Moreover, one of the eligibility

requirements for the Opportunity Scholarship is that the student must come from a

public school to a nonpublic school, so if the student stays in a nonpublic school

without receiving Scholarship Program funds, he or she cannot re-apply for

Scholarship Program funding the following year.

41. The nonpublic school taking on a child whose parents cannot afford

tuition is also presented with a dilemma. The school must either commit fully to

waiving or subsidizing the student's tuition (not just for this year, but for every year

that the student is enrolled-potentially 13 years-as the student becomes ineligible

to re-apply for a scholarship during the following application cycle) or the school must

ask the student to withdraw. Neither is a good option. If parents wish to apply for

the Opportunity Scholarship again the following year, they must withdraw their

12
student from the nonpublic school and re-enroll that child in public school in order to

maintain eligibility for the Opportunity Scholarship. This set of circumstances truly

represents a no-win situation for both families and schools that are forced, through

no fault of their own, to make these difficult and life-altering decisions.

42. It should also be noted that as part of the application process, the SEAA

must undergo an income verification process for awarded families that directly affects

tuition disbursement. As the SEAA represented to PEFNC: "[Income verification]

delays with 2016-17 ... caused some issues, and thus, understandable frustration on

the part of schools throughout the year."

43. Ultimately, the 2015-17 state budget provided an increase in funding for

the Scholarship Program: $17.6 million for 2015-16 (funding 4,200 scholarships) and

$24.8 million for 2016-17 (funding 6,025 scholarships).

44. For the 2015-16 school year, the SEAA offered 6,109 scholarships to

eligible students; of these students offered awards, 3,682 accepted and became

recipients. Because of the five-month lag time between applying for the Opportunity

Scholarship, waiting for the North Carolina Supreme Court to rule on the Program's

constitutionality, and then waiting for money to be appropriated, twelve percent

(12%) of scholarships went unused because many families did not want to start school

without knowing whether they would ultimately receive a scholarship.

45. For the 2016-17 school year, uncertainty about the Scholarship Program

lingered; this necessitated rebuilding trust among North Carolina families that the

Program would be sustainable. Of the 6,025 scholarships available for that year,

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5,624 students became recipients, leaving six percent (6%) of the available

scholarships unused.

FORWARD FUNDING IN THE BASE BUDGET PROVIDES STABILITY

AND CERTAINTY TO SCHOOLCHILDREN, THEIR FAMILIES, AND
SCHOOLS UNDER THE OPPORTUNITY SCHOLARSHIP PROGRAM

46. As described above, obstruction has consistently impeded the

Opportunity Scholarship application and disbursement process since the Program's

inception. On the other hand, PEFNC has seen first-hand how certainty and

assurance for schools and parents allows the Scholarship Program to operate

successfully when it is free from entanglement. I believe the Legislature took steps

to address some of these issues by providing "forward funding" appropriations for the

Program in 2016, see Current Operations and Capital Improvements Appropriations

Act of 2016, ch. 94, sec. 11A.3(g), 2015 N.C. Sess. Laws (Reg. Sess. 2016) _,_,and

most recently by 6.6(b) of Session Law 2017-57 at issue here, which clarifies that the

appropriations are included in the Base Budget, Current Operations Appropriations

Act of 2017, ch. 57, sec. 6.6(b), 2017 N.C. Sess. Laws_,_. Such "forward funding"

in the Base Budget provides a starting-point, annual allocation, and reserve to ensure

that adequate funds are available to pay for schoolchildren who received, or plan to

receive, an Opportunity Scholarship award. See ch. 94, sec. 11A.3(g), 2016 N.C. Sess.

Laws at _ ("[T]here is appropriated from the General Fund to the Reserve the

following amounts ...."). For a detailed breakdown of the rollout of forward funding,

see PEFNC's Table 1 below:

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 Opportunity Scholarship Program Funding and Enrollment. Table 1

School Year Appropriation Estimated Estimated New

Scholarships Scholarships
Available* Available
2016-17 $24,800,000 6,025 1,825
2017-18 $34,800,000 8,300 2,275
2018-19 $44,840,000 10,701 2,401
2019-20 $54,840,000 13,170 2,469
2020-21 $64,840,000 15,640 2,470
2021-22 $74,840,000 18,109 2,469
2022-23 $84,840,000 20,578 2,469
2023-24 $94,840,000 23,047 2,469
2024-25 $104,840,000 25,516 2,469
2025-26 $114,840,000 27,985 2,469
2026-27 $124,840,000 30,454 2,469
2027-28 $134,840,000 32,923 2,469
2028-29 $144,840,000 35,393 2,470

Funding Appropriation as stated in section 11A.3(g) of the Current Operations and

Capital Improvements Appropriations Act of 2016.
2016-17 and 2017-18 figures are based on SEAA reporting.
2017-29 figures estimate approx. $1. 5 million for SEAA administrative costs per
fiscal year.
*Estimated scholarships are based on an average award of $4,050; the maximum
annual per-student award is $4,200.

47. Notably, and contrary to certain published articles, forward funding

does not greatly expand the Scholarship Program, but rather continues to fund

original recipients' scholarships as they advance in school, while also funding "new"

recipients each year. As the last column of Table 1 illustrates (see "Estimated New

Scholarships Available"), the forward-funding "Appropriation" ensures that every

child who has received an Opportunity Scholarship (and has thus begun his or her

education at a new nonpublic school) will have funds available to remain at that new

15
school throughout his or her tenure. In other words, the forward funding accounts

for the fact that a child will need tuition dollars for more than just one year, and will

potentially need such funds for thirteen years, from kindergarten through the twelfth

grade.

48. For a further illustration, if 2,470 students receive a full Opportunity

Scholarship at $4,200, the product is $10,374,000. If each child starts in kindergarten

and continues to need a full Opportunity Scholarship through the twelfth grade (13

years), the total outlay in year 13, with 2,470 students receiving scholarships each

year and forward funding for each recipient, is $134,862,000. Thus the forward

funding simply ensures that about 2,500 children are properly accounted for coming

on to the Program each year, providing stability and certainty, and shielding children

from political gamesmanship.

49. In fact, the Legislature has previously adopted similar forward-funding

statutes for use at the University of North Carolina, in particular, UNC Need-Based

Financial Aid, for just such a purpose-"to provide additional program stability"-as

further discussed below. See, e.g., Current Operations and Capital Improvements

Appropriations Act of 2013, ch. 360, sec. 11.2(a), 2013 N.C. Sess. Laws 995, 1124.

50. While opponents of the Scholarship Program conflate these

Appropriation numbers as evidence of"extra" State expense and cost to the taxpayer,

this argument overlooks the fact that a large portion, if not all, of the Appropriation

funding is already being spent on the students. It is not a zero sum game. The State

spends money on the students regardless of whether they remain in public school or

16
whether they become Opportunity Scholarship recipients. The State does not pay

twice; it simply directs the funds needed per child to the school of their parents'

choice.

51. Moreover, the forward-funding statutory provision creates much-needed

certainty for children, parents, and schools, allowing the Scholarship Program to flow

seamlessly from one year to the next without putting schoolchildren and their

families in "legislative limbo" while they wait for the budget to be signed into law.

This year-to-year budgetary stability has likely helped to increase the total overall

number of nonpublic schools that participate in the Scholarship Program. School

leaders can now be assured that the Program is better-established, funded, and likely

to continue.

52. In fact, an independent study conducted by North Carolina State

University ("N.C. State") revealed that nonpublic schools' top concerns about the

Scholarship Program were its future regulation and the stability of its funding. See

N.C. State, School Leaders' Voices: Private School Leaders' Perspectives on the North

Carolina Opportunity Scholarship Program 21, 25 (July 2017). As the Program has

moved toward greater stability across the years, in terms of favorable public

perception, established constitutionality, and forward funding, the number of

participating nonpublic schools has also increased from 333 for the 2014-15 school

year to 457 for the 2017-18 year, as illustrated in Table 2 below:

17
 Opportunity Scholarship Program Nonpublic School Participation.
Table 2

School Year Participating Participating

Nonpublic Schools Nonpublic Schools with
Recipients Enrolled
2014-15 333 224
2015-16 429 328
2016-17 437 358
2017-18 457 405

North Carolina State University Independent Research and Analysis

53. Based on the independent study of the Scholarship Program, in July

2017, N.C. State published three Evaluation Reports, which revealed results very

favorable to the Program and underscored the importance of forward funding and

certainty. The academic co-authors of the three studies are Trip Stallings, Director

of Policy Research at the William and Ida Friday Institute for Educational

Innovation, College of Education, N. C. State; Stephen R. Porter, Professor, and Anna

J. Egalite, Assistant Professor, in the Department of Educational Leadership, Policy,

and Human Development at N.C. State; and Ashley Gray, a Ph.D. candidate of

Educational Research and Policy Analysis in the Higher Education Program at N.C.

State.

54. In the first report, this team of N.C. State researchers evaluated how

school leaders perceived the quality of the Program and its demand. See School

Leaders' Voices: Private School Leaders' Perspectives on the North Carolina

Opportunity Scholarship Program. The primary reason nonpublic schools gave for

participating in the Program was to help disadvantaged students. Id. at 13. School

18
leaders' main concerns were future regulation and that the value of the Opportunity

Scholarships might not be increased legislatively to "keep pace" with the cost of

educating students. Id. at 17. Similarly, schools choosing not to participate in the

Opportunity Scholarship Program expressed uncertainty over future regulation as

their primary concern. Id. at 24.

55. In the second report, N.C. State researchers reported on their travels

across the state to learn more about parental perceptions of the Scholarship Program.

N.C. State, Parent Perspectives: Applicants to North Carolina's Opportunity

Scholarship Program Share Their Experiences (July 2017). The primary reason that

parents gave for leaving their child's previous school was that the school's quality was

unacceptable. Id. at 2. Sixty-nine percent (69%) of parents gave their child's new

school environment an "A'' rating, with another twenty-four percent (24%) giving a

"B" rating. Id. at 14.

56. Many parents in the data sample did not believe that returning their

children back to their former schools, after having participated in the Scholarship

Program, would represent a viable option. Id. at 18. Parents expressed concerns over

their children's well-being. Id. Many indicated that if funding for the Scholarship

Program was discontinued, they would make major lifestyle changes or work extra

jobs to ensure that their child would be able to remain at his or her new school. Id.

57. In the third report, researchers analyzed data from student applications

that reflected various demographic characteristics as well as final scholarship status.

N.C. State, A Profile of Applicants to North Carolina's Opportunity Scholarship

19
Program (July 2017). Data revealed that, for the 2016-17 school year, sixty-nine

percent (69%) of the applications were from new or "first time" applicants, while

thirty-one percent (31 %) were from students renewing scholarships from the year

before. Id. at 1.

58. According to the N.C. State researchers, the SEM received 3,502

renewal applications for the 2016-17 school year, of which eighty-six percent (86%)

were ultimately renewed. Id. at 4. The median annual adjusted household income

for those students who accepted a scholarship was $16,213; among those who

renewed, the median income was $15,000. Id. at 15.

FORWARD FUNDING IN THE BASE BUDGET PREVENTS HARM AND

PROVIDES STABILITY TO THE SCHOLARSHIP PROGRAM

59. Thousands of low-income and working-class families benefit from, and

have come to rely upon, the Scholarship Program. Both students and schools alike

depend on funding from the Program to meet their educational needs.

60. The timing of the Program funding is critical. Parents and their

children need adequate lead time to make their plans and arrangements prior to the

start of the school year; this includes time to apply, secure acceptance, obtain and

plan for additional financial resources that may be needed (such as financial aid or

flexible tuition arrangements), and general planning for the school year. Similarly,

schools need adequate lead time to plan for classes, allocate resources, teachers, and

supplies, and finalize their budgets. All of this must be done well in advance of the

start of the school year.

61. As PEFNC has seen during the 2015-16 school year, without the proper

20
lead time, uncertainty can place children into "legislative limbo," during which there

may or may not be funds available for the Scholarship Program. By law, if a child

does not receive an Opportunity Scholarship, but remains enrolled at the nonpublic

school anyway (possibly at the school's own expense), he or she becomes ineligible to

receive an Opportunity Scholarship in the future should funding become available.

See N.C.G.S. § 1150-562.1(3) (2017).

62. Neither the forward funding provided in the 2016 legislation nor the

inclusion of that funding as a starting point in the Base Budget in the legislation at

issue here greatly expands the Scholarship Program, but rather provides sufficient

funds so that those students who are currently enrolled will have funds available for

the remainder of their schooling, as far as the twelfth grade. See Table 1. As shown,

only about 2,500 new scholarships are available each year. Id.

63. The forward-funding model takes children out of the year-to-year,

political budget debate and provides security, ensuring that proper lead time is

available so that students, families, and schools can plan and allocate resources

appropriately. Without such funding, the Scholarship Program simply will not work

effectively and is at substantial risk of failure.

Related Forward Funding is Already Being Used for University of North

Carolina Higher Education

64. Forward funding is already being used to provide stability in other state-

funded higher education programs. If the legislation at issue here is avoided,

unintended consequences may arise, which may put other important education

forward-funding arrangements at risk.

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 65. In addition to providing students with certain federal financial aid and

student loan programs, North Carolina provides financial assistance to lower-income,

in-state students who attend North Carolina colleges and universities-both public

and private institutions alike.

66. North Carolina financial aid has generally been fulfilled by a

combination of budgetary funds: the General Fund, the Escheat Fund, and the

Educational Lottery Fund. N.C. Center for Pub. Policy Research, The Commitment

Revisited: Financial Aid and Tuition Policy in North Carolina 146 (2014). The

Escheat Fund, which is comprised of abandoned and unclaimed money and property,

has traditionally funded the lion's share of financial aid. Id. (citing, inter alia, various

budget committee reports).

67. In 2011, in response to diminishing Escheat Fund principal, the

General Assembly adopted legislation that forward funded certain North Carolina

financial aid programs from the General Fund. Current Operations and Capital

Improvements Appropriations Act of 2011, ch. 145, sec. 9.9, 2011 N.C. Sess. Laws

253, 340; see also The Commitment Revisited: Financial Aid and Tuition Policy in

North Carolina 146.

68. Resembling the funding of the Scholarship Program, the 2011 UNC

legislation established a forward-funding "reserve" account to provide for need-based

student financial aid for students enrolled in higher education in North Carolina. See

ch. 145, sec. 9.9, 2011 N.C. Sess. Laws at 340. The UNC statute allocated $59.9

million for the 2012-2013 school year, and another $59.9 million for the 2013-2014

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school year, from the General Fund. See id. As the Legislature noted, the UNC

statute was necessary to provide stability in funding to college students, families, and

universities. See S. Appropriations Comm., Report on the Continuation, Expansion

and Capital Budgets, at F-14 (June 16, 2011) ("An additional $59.9M in forward-

funding is provided ... to increase program stability (Section 9.9)."); Univ. of N.C.,

Summary of Policy Changes Affecting UNC 6 (2011) ("In an effort to begin forward

funding financial aid, the budget directs $59 million for the UNC Need-Based

Financial Aid Program to be carried forward .... "). The UNC legislation, like the

Opportunity Scholarship Program, also directed the SEAA to administer and

disburse the funds.

69. Importantly, and related to the statute at issue here, the 2011

legislation directed the disbursal of funds in future years (and in particular, after the

next biennium) "for need-based financial aid." Ch. 145, sec. 9.9(b), 2011 N.C. Sess.

Laws at 340; see also Current Operations and Capital Improvements Appropriations

Act of 2014, ch. 100, sec. 11.26, 2013 N.C. Sess. (Reg. Sess. 2014) Laws 328, 399-400

(providing same).

70. In 2013, to "provide additional program stability," Current Operations

and Capitalimprovements Appropriations Act of 2013, ch. 360, sec. 11.2(a), 2013 N.C.

Sess. Laws 995, 1124, and to further ensure "that funds appropriated for grants in a

fiscal year are awarded to students in the following academic year," id., (thus

preventing funding uncertainty and "legislative limbo"), the General Assembly

adopted legislation to shift the entire UNC Need-Based Financial Aid Program to

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forward funding, id.; see J. Conf. Comm., Report on the Continuation, Expansion, and

Capital Budgets, at F-12 (July 21, 2013) ("Provid[ing] additional funding ... to shift

the entire program to forward funding ...."). The legislation initially directed that

funds from 2013-14 and 2014-15 fiscal years be use·d to fund the Financial Aid

Program beginning in the 2015-16 school year. Ch. 360, sec. 11.2(b), 2013 N.C. Sess.

Laws at 1124.

71. The 2013 state budget allocated transfers of $100 million for 2013-14

and $22.5 million for 2014-15 from the General Fund to the UNC Financial Aid

Program. See ch. 360, sec. 11.2(c), 2013 N.C. Sess. Laws at 1124; see also The

Commitment Revisited: Financial Aid and Tuition Policy in North Carolina 146. As

Senator Peter S. Brunstetter, Co-Chairman of the Appropriations and Budget

Committee and Member of the Finance Committee, stated: "[M]oving to a forward

funding model for college scholarships was necessary so that the amount of money

needed for scholarships can be determined nine months in advance." The

Commitment Revisited: Financial Aid and Tuition Policy in North Carolina 146.

72. Thus forward funding is a model currently used by, and essential to, the

funding of various tuition programs and is necessary to provide stability and

adequate planning for the children, families, and schools that rely upon these aid

programs.

The Governor Fails to Account Properly for Opportunity Scholarships and

Intends to Dismantle the Program

73. Funding of the Opportunity Scholarship Program is not a zero sum

prospect. A student who qualifies for and makes use of an Opportunity Scholarship

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at a nonpublic school does not doubly incur costs and expenses at a public school.

Rather, the student's "per pupil" money allocation is effectively directed and used to

cover his or her Opportunity Scholarship. The Governor has consistently failed to

recognize this important point and instead characterizes all of the forward funding

as a pure cost and expense.

74. During a recent news conference on June 20, 2017, the Governor

explained: "And while public schools are in need of so much more, this budget drains

money from the public school system for private school vouchers." Roy Cooper Press

Conference, at 2:40 (News & Observer, June 20, 2017),

http://www.newsobserver.com/news/politics-government/politics-columns-

blogs/under-the-dome/article157174664.htm1. Similarly, in a June 26, 2017 press

release, the Governor stated: "The legislative budget ... drains millions of dollars

from public education to pay for private school vouchers with no accountability."

North Carolina Governor Roy Cooper Press Release (June 26, 2017), available at

http s ://governor. nc. gov/news/cooper-cites-lack-education-funding- irresponsible-tax -

cuts-wealthy-vetoing-budget.

75. Despite the very practical reasons for the forward-funding legislation,

regardless of which political party heads the executive branch, it appears the

Governor here seeks to cloak his intentions to dismantle the Scholarship Program

under the guise of a constitutional argument. A sampling of press releases and

interviews reveals that Governor Cooper has consistently expressed his distaste for

the Scholarship Program, as well as his adamant desire to dismantle it. Though such

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preferences and policy may be appropriate for political discussion, they are not

appropriate to guide the judicial action here.

76. Recently, the Governor was quoted as "call[ing] for the phase-out of the

[Opportunity Scholarship] program," Caulder, Matt, Cooper to Veto Budget, NCGA to

Override, N.C. Capital Connection, June 26, 2017,

http ://nccapitolconnection.com/201 7/06/26/cooper-to-veto-budget-ncga-to-override/,

and that "his proposed education changes would include ... phasing out what critics

label private-school vouchers," Governor Cooper Vetoes $23 Billon State Budget,

Associated Press, June 26, 2017, available at http://www.witn.com/content/news/Gov-

Cooper-vetoes-state-budget-430867 413.html.

77. Moreover, the Governor's budget would "end" the Opportunity

Scholarship Program, which "gives accepted students up to $4200 per year." Bellamy,

Cammie, Local Legislators Want Teacher Pay Raise, StarNews, Mar. 10, 2017,

http://starnewsonline.com/news/20170310/local-legislators-want-teacher-pay-raise.

"This school year 5,432 students in North Carolina received scholarships, including

63 in New Hanover County, 30 in Brunswick County, and 11 in Pender County ....

'A lot of families utilize these opportunity scholarships so that they have more choice

in their child's education .... To deny them the ability to take their child somewhere

that will better help them meet their education needs I think is unfortunate.'" Id.

(quoting Senator Michael Lee, Co-Chairman of the Education Committee).

" 'Obviously there will be no voucher funding in any budget that I propose with the

General Assembly,' Cooper told The Associated Press before his Jan. 1 inauguration."

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Travis, Kari, Cooper, NCGA Will Butt Heads over Opportunity Scholarships,

CAROLINA JOURNAL, https://www.carolinajournal.com/news-article/cooper-ncga-

will-butt-heads-over-opportunity-scholarships/.

78. Thus, despite the Scholarship Program's constitutionality, as affirmed

by the North Carolina Supreme Court, if Plaintiffs requested relief is granted,

schoolchildren, their families, and schools will be wrongfully and needlessly harmed.

CONCLUSION

79. North Carolina is just beginning to see real momentum for the

Opportunity Scholarship Program as parental demand continues to grow and more

families make use of these state-sponsored scholarships. Despite initial legal

challenges, the Scholarship Program is soundly constitutional. Furthermore, it has

taken a great deal of work from stakeholders to ensure that parents and nonpublic

school leaders have remained engaged in the process, and ultimately, remain

reassured that the State is committed to the Scholarship Program's stability and

continuity through forward funding. Forward funding has already been used in

North Carolina for higher education, ensuring program stability, and protecting

students from being placed into "legislative limbo" from year to year. Should the

court conclude the inclusion under section 6.6(b) of Session Law 2017-57 of forward

funding in the Base Budget is voidable, students, families, and schools, both as it

relates to the Opportunity Scholarship Program and as it relates to University of

North Carolina and other financial aid programs, will face undue and significant

harm.

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This t h e ~ day of January, 2018.

SWORN TO AND SUBSCRIBED BEFORE ME

This the 5 rs+ day of January, 2018.

LINDA C. MCKINNEY
NOTARY P!.\BUC
WAKE COvNTY
STATE OF NORTH CAROLINA
'>(:_;£!, {! f)11---K. . ' MY COMM1SSION EXPIRES 08-28-201.8...
- -
~tary Public

My Commission Expires: '6/;)?;,/; Q

I

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