Improper Equipment Fee Is Punitive, Must Go to Schools

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The Statewide Misdemeanant Confinement Program took a hit this week in the court of appeals. In Richmond County Board of Education v. Cowell, about half of the money that comes into the program fund—the $50 fee for anyone found responsible for an improper equipment violation—was deemed to be punitive. Under the North Carolina Constitution, the money must therefore go to the public schools.

First, a little bit of background on the Statewide Misdemeanant Confinement Program (SMCP). The SMCP was created in 2011 as part of the Justice Reinvestment Act. Noting that North Carolina was unusual in the number of misdemeanants housed in its prisons, the drafters of that legislation decided to transfer most  misdemeanants from prison to the local jails. To avoid making the transfer an unfunded mandate on the counties, the drafters hatched a plan through which counties with available jail beds could volunteer to house misdemeanants and receive compensation for doing so.

That plan was the SMCP. I described the original structure of the SMCP here and here. The Program was expanded in 2014 as described here. Under the current framework, all misdemeanor active sentences in excess of 90 days and all active DWI sentences regardless of length must be served in the SMCP. SMCP_volunteersThe sentencing judge must commit an eligible defendant to the Program; the North Carolina Sheriffs’ Association then finds space for the defendant in one of the 56 counties that have volunteered bed space to the Program. N.C. Sheriffs’ Assoc., Statewide Misdemeanant Confinement Program Monthly Status Report (July 2015).  Those counties receive $40 per day, plus certain medical and transportation expenses, for every inmate they house.

The money used to provide that payment comes from the Statewide Misdemeanant Confinement Fund. The Fund, established under G.S. 148-10.4, gets its money from two sources: (1) an $18 court cost attached to all district court convictions, G.S. 7A-304(a)(2b); and (2) a $50 fee for all improper equipment offenses, G.S. 7A-304(a)(4b).

That second source, the improper equipment fee, was the focus of the dispute in Richmond County Board of Education v. Cowell. Article IX, Section 7(a) of the North Carolina Constitution requires the “clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State” to be “faithfully appropriated and used exclusively for maintaining free public schools.” The Richmond County Board of Education argued that the improper equipment fee was covered under that subsection because it is “punitive in nature.” The trial court agreed with the school board.

Citing to a seminal article written by School of Government faculty member David Lawrence, Fines, Penalties, and Forfeitures: An Historical and Comparative Analysis, 65 N.C. L. Rev. 49 (1986), the court of appeals affirmed. Though improper equipment violations (most of them, anyway) are infractions, not crimes, they are nonetheless “breaches of the penal laws” within the meaning of Article IX, Section 7. And they are punitive—not remedial—to the extent that the money is paid into a Fund that has no real connection to the defendant’s offense. To sum up the court’s analysis: nobody is going to jail for an improper equipment offense. Absent any nexus between the compensated party (the Fund) and the defendant’s offense, the fee is merely punitive, and must therefore be paid to the public schools. The court went on to conclude that all the improper fees collected in Richmond County thus far must be repaid through the clerk’s office.

How much money are we talking about here? Let’s assume the court’s ruling survives any appeal and winds up getting applied statewide, back to the fee’s inception in 2011. Through some back-of-the-envelope calculations based on the monthly Program status reports from the Sheriffs’ Association, I estimate that a total of about $90 million have come into the Fund since 2011. My understanding is that a little more than half of that money comes from the $18 district court cost and a little less than half comes from the improper equipment fee. If all of that is correct, then somewhere in the neighborhood of $40 million would be owed to the schools.

As of July 1, 2015 the Fund balance was about $30 million.

The General Assembly was apparently anticipating this issue. Proposed budgets would amend G.S. 7A-304(a) to change the purpose of the improper equipment fee from “contractual services to reduce jail populations” to “additional support of the General Court of Justice,” and to designate the State Treasurer (not the Statewide Misdemeanant Confinement Fund) as the recipient of the money. The separate $18 district court cost would go away, but the General Court of Justice cost would be increased by $18. Finally, in place of the funding previously collected through court costs, sufficient money to cover the Fund would be legislatively appropriated as part of the Adult Correction budget (see page I-4 of the money report on the Senate budget).

For now, court officials don’t need to change anything in response to the Richmond County case. The SMCP is still functioning, and judges and clerks should continue to check “Misdemeanant Confinement Program” as the custodian for eligible inmates. Under G.S. 148-32.1(b2), the “Program shall only operate as long as sufficient State funds are available through the Statewide Misdemeanant Confinement Fund established in G.S. 148-10.4(c),” but it appears that the existing Fund balance and the proposed legislative appropriation will keep the Program afloat.

4 comments on “Improper Equipment Fee Is Punitive, Must Go to Schools

  1. Seems to me that they should reduce the budget of the schools in Raleigh by about 40 million dollars to cover the cost of confining misdemeanor offenders. Or, maybe a change is due in the NC State Constitution. It doesn’t seem to matter how much money the schools get, the level of education has not improved. We continue to throw money at the problems and nothing is fixed. Time to look into a real fix.

    • Not sure what money you are seeing thrown at the education problem. NC has some of the lowest per student spending in the nation, and some of the lowest paid teachers.

  2. Yet, when they made this mandatory even for offenses that occurred before the triggering date, the AOC was adamant that it was not punitive.

    I made the argument for the fee to be struck as an ex post facto punishment, the judge granted my motion, and the clerks were under strict rules from AOC (i suppose) that the IE fee had to be added and it led to an awkward moment where the courtroom clerk was apologetically declining to do what the judge ordered.

    Finally, and because my client had authorized it, I asked the judge to reconsider his ruling as I wanted to withdraw my motion as $50 was not worth the hassle.

  3. If the $50 fine is punitive, is G.S. 7A-304(a)(4b) now in conflict with language of the most commonly plead IE statute “may be ordered to pay a penalty of not more than twenty-five dollars ($25.00)”, G.S. 20-123.2, and how should this conflict be resolved?

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