Clarifying County and State Responsibilities

Executive Summary of the Findings and Recommendations of the 2001-02 NCACC Functional and Fiscal Task Force

NCACC President David Plyler’s task force was charged with reviewing state and county fiscal relationships and responsibilities, with initial attention to human services and public education, in order to determine whether those relationships and responsibilities are appropriate and sound. The principal findings in the two main areas of concern are presented here.

Medicaid: Counties should be relieved of the responsibility for paying Medicaid program costs. Counties should continue to administer the program according to federal and state regulations and pay the current 50 percent administrative costs.

In most states, the state government administers the Medicaid program and fully funds the nonfederal share of Medicaid costs. In North Carolina, counties serve as agents of the state in determining eligibility for qualifying citizens, but they do so according to strict federal and state regulations. Counties pay 50 percent of the local cost to administer the Medicaid program, while the federal government pays the other 50 percent. N.C. counties are also mandated to pay 15 percent of the nonfederal program costs or about 5.7 percent of the total costs for medical services provided.

The task force found that it is inappropriate for counties to pay for Medicaid program costs, for the following reasons:

• Because the program must be provided uniformly throughout the state, the federal and state governments make all the decisions about the program. The federal and state governments decide who will be eligible, which services will be provided, and how much will be paid to medical care service providers. Counties make none of the decisions that determine Medicaid program costs, and therefore they have no control over their share of such costs.
• Poorer counties have relatively more poor people eligible for the Medicaid program. Poorer counties also have lower tax bases and lower incomes, making Medicaid program costs more burdensome for them.
• Exploding increases in Medicaid costs have greatly reduced the ability of counties to support other programs for which counties have appropriate administrative and program cost responsibilities, such as: EMS, law enforcement, jail and court facilities, public works projects, economic development, senior services, social services, public health programs, library services, public schools, and other functions and services.

Public education: The General Assembly should act to fulfill its responsibilities under existing laws by providing from state revenues the resources needed for the standard course of study that must be made available in every public school throughout the state. Counties should continue to be responsible for building and maintaining capital facilities.

Since 1868, North Carolina’s constitution has made the General Assembly responsible for providing a "general and uniform" system of public schools. In 1933 the state accepted responsibility for paying all the operating expenses of the public schools for an eight-month term. In subsequent decades, as counties increasingly supplemented state operating funds, the responsibilities of the states and counties became unclear. In 1984, in an effort to improve public schools, the General Assembly enacted into law a requirement that a "standard course of study" be devised that would define an adequate, minimum education program to be provided in all public schools. One provision of the law (General Statutes, Chapter 115C) established the state’s responsibility, as follows:

"To insure a quality education for every child in North Carolina, and to assure that the necessary resources are provided, it is the policy of the State of North Carolina to provide from State revenue sources the instructional expenses for current operations of the public school system as defined in the standard course of study."