WBTV Investigates: Public money, resources used to promote bond

Public funds used to promote bond
Published: Mar. 17, 2016 at 10:20 PM EDT|Updated: Mar. 21, 2016 at 8:13 PM EDT
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RALEIGH, NC (WBTV) - Governor Pat McCrory, some North Carolina state universities and the state's community college system may have violated state laws prohibiting public funds and resources from being used to promote a bond referendum, some legal experts say.

On Tuesday, voters approved a $2 billion bond measure aimed at funding building and infrastructure projects at public universities, community colleges, state parks and public sewer systems across the state.

The measure, dubbed the Connect NC bond, was first proposed by McCrory last year and was later approved for a referendum vote by the legislature.

Court ruling, state law allows educating but prohibits advocacy

Under state law, public officials cannot use state funds or resources to urge voters to vote for or against a referendum.

Chapter 126-13 of the North Carolina General Statutes prohibits any state employee subject to the North Carolina Human Resources Act or temporary employee from using "the authority of his position, or utilize State funds, supplies or vehicles to secure support for or oppose any candidate, party, or issue in an election involving candidates for office or party nominations, or affect the results thereof."

Frayda Bluestein, Professor of Law and Government at the UNC School of Government explained that, while public officials are prohibited from using state resources to promote a bond one way or another, they are allowed to use state resources to educate the public about the bond.

"Public funds can't be used to try to persuade folks," Bluestein explained. "But there is an element of it that says if the information is informational and provides information in a neutral fashion, public funds can be used for that purpose."

That law was underscored by a ruling from the North Carolina Court of Appeals handed down in 2002 in the lawsuit Dollar v. Town of Cary.

In that case, now-State Representative Nelson Dollar (R-Wake) filed a lawsuit against the Town of Cary over the town council's appropriation of public money to advocate for the election of candidates with a certain viewpoint.

"Where the advertising, however, is designed to promote a viewpoint or an issue in order to influence an election, it is impermissible," the Court ruled.

Bluestein said there is a fine line that public officials and government agencies have to walk when spending public money to be involved in a referendum.

"I think that creates challenges for both those people who are concerned about the use of public resources and also for those who are in the position of trying to legitimately get information out to people about what is clearly a need that has been recognized," Bluestein said.

In her interview with On Your Side Investigates, Bluestien said there have been lawsuits in other states challenging the outcomes of bond referendums where public money had been used to promote the issue.

Despite that, Bluestein said, she did not think a bond referendum in North Carolina could be invalidated because of the use of public money.

McCrory 'made the case' for bond

A press release sent out by McCrory's re-election campaign on Tuesday morning said the governor had been "traveling the state extensively making the case for the Connect NC bond."

Copies of public schedules sent out daily and posted online by the Governor's state press office shows he made dozens of appearances related to the bond in the months leading up to Tuesday's vote.

An inquiry from On Your Side Investigates to McCrory's staff in his official office went unanswered so we asked the Governor whether his use of state resources to make the case for the bond was appropriate.

"I was educating the public about the bonds and I will continue to do that and I'm doing that today and proud of doing that," McCrory said after an event at NC A&T University thanking voters for approving the bond.

McCrory continued to claim he did not cross the line of advocating for the bond even after a reporter read the statement from his campaign saying he traveled the state making the case for the bond; language that suggests he did more than educate.

"I think you're stretching the facts right now," McCrory said. "I was educating the public on the bond as Governor of North Carolina and I'm proud to do that. I think I made my case to you. I know you're desperate for ratings at WBTV but don't worry about it."

UNC System schools contributed more than $500,000 to promote bond

A campaign finance disclosure report filed by the Connect NC Committee - the political committee established to urge voters to support the bond—listed eight state universities that contributed public money.

NC State University, UNC Greensboro, East Carolina University, Appalachian State University, UNC Wilmington, UNC Chapel Hill, UNC Pembroke and Winston Salem State University contributed a combined $573,000 to the Connect NC Committee.

According to the report filed by the committee, the schools used institutional funds to make the contribution.

A spokesman from Appalachian State University said the $70,000 contributed by his school came from non-restricted endowment funds, which he contended are not considered public.

"It is an endowment which is managed by a separate board," spokesman Hank Foreman wrote in an email.

When On Your Side Investigates pressed on the source of the money, Foreman referred questions to the UNC System's administration.

A spokeswoman for the UNC System said individual universities were given guidance on the appropriate use of public funds to educate voters about the bond.

"Contributions to the Connect NC Committee made from other non-state sources, however, such as unrestricted funds from university-affiliated foundations, may lawfully be used in support of the bond," spokeswoman Joni Worthington said.

Connect NC Committee's disclosure report identifies multiple state universities and community colleges—including UNC Charlotte and Central Piedmont Community College—that used money from their foundations to contribute.

MORE INFORMATION: Click here to find out how much each school contributed

Worthington did not respond to questions about the universities that used institutional funds—and not foundation money—to contribute to the Connect NC Committee.

She also said the system's senior leaders had been authorized to publicly support the bond using state resources, despite the state law.

"Additionally, the UNC Board of Governors has taken the official position that passage of the Connect NC bond is in the best interests of the University," Worthington said. "Therefore, the President, chancellors, and other senior officials of the University, as part of their official duties and responsibilities, may go beyond informing and educating the public about the bond issue to soliciting a favorable vote on the bond referendum through speeches, attendance at rallies, letters to newspapers, appearances on television news programs, and other similar activities."

On Tuesday night, On Your Side Investigates caught up with new UNC System President Margaret Spellings, who had been stumping for the bond the day before at UNC Charlotte.

"We followed the guidance that was given by our attorneys and I'm confident that my team and the team and the chancellors and their folks did as well," Spellings said when asked if it was appropriate for UNC schools to have contributed a combined $573,000 in institutional funds to the committee promoting the bond.

"I'm not aware of the facts that you're raising and I'll certainly investigate them," Spellings said.

State community colleges use federal, institutional money to promote bond

A total of 34 state community colleges contributed a total of $168,473 to the Connect NC Committee, according to the disclosure report filed by the committee prior to the vote.

A spokeswoman for the North Carolina Community College System said individual schools were asked to contribute to the Connect NC Committee by the president of the community college system and the president of the state's community college association.

"We are asking that your college consider a contribution of $1,000 for every million your college will receive if the bond referendum is successful," the letter soliciting the funding said. "As in the past, you cannot use state or county funds for this purpose.  Most colleges have used foundation funds.  Other colleges have used their institutional vending fund."

DOCUMENT: Read the letter sent to community colleges seeking contributions

In an email to On Your Side Investigates, spokeswoman Linda Weiner said the use of institutional vending funds was permissible because the money did not come from tax dollars. She did not respond to a follow-up question pointing out the law prohibits the use of all public funds, not just state or local appropriations.

On Your Side Investigates also found four community colleges used federal funds to contribute to the Connect NC Committee.

According to the committee's disclosure report, Fayetteville Technical Community College, Asheville-Buncombe Technical Community College, Halifax Community College and Robeson Community College all used federal funds to contribute.

A spokesman for the US Department of Education said the department could not say definitively whether or not the specific schools violated federal law in using federal funds to make the contribution without knowing, specifically, the source of the money.

"Section (1)(i) pretty clearly states that prohibited activities include '…Attempts to influence the outcomes of any Federal, state, or local election, referendum, initiative, or similar procedure, through in-kind or cash contributions, endorsements, publicity, or similar activity,'" a department spokesman said.

Connect NC Committee stands by contributions

Top organizers of the Connect NC Committee remain adamant that none of schools' contributions violated state law.

"Our compliance efforts have been coordinated with our committee treasurer and a Certified Public Accountant, who is an accredited SBOE campaign treasurer," the committee said in a statement.

In an interview Tuesday night, former NC Supreme Court Justice Bob Orr—the committee's spokesman—stood by that statement but said questions about certain impermissible contributions should be directed to the individual schools.

"My primary concern is that we win this referendum," Orr said. "We've done the best we could. We feel like we've complied with all the campaign finance laws, all the election laws and we expect that all of our supporters have done so also."

On Wednesday, Orr followed up with an email further supporting his position.

Have just read opinion," Orr's email began, referring to the Dollar v. Town of Cary decision. "Clearly distinguishable and inapplicable to question raised. It was direct appropriation by town in a municipal election and issue came up to court of appeals on preliminary injunction. Your legal experts are wrong in my opinion if they think this opinion controls the contributions questioned by you. I reiterate my confidence that all contributions from educational groups complied with applicable laws."

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