S.L. 1975-437

NORTH CAROLINA GENERAL ASSEMBLY

1975 SESSION

CHAPTER 437

HOUSE BILL 47

AN ACT TO BE KNOWN AS THE SCHOOL BUDGET AND FISCAL CONTROL ACT.

The General Assembly of North Carolina enacts:

Section 1. Articles 9 and 10 of Chapter 115 of the General Statutes, comprising G.S. 115-78 through G.S. 115-100, are repealed, and a new Article 9 is inserted in Chapter 115 of the General Statutes as follows:

"Article 9.

"The School Budget and Fiscal Control Act.

"Part 1. General Provisions.

"§ 115-78. Short title. — This Article may be cited as 'The School Budget and Fiscal Control Act.'

"§ 115-79. Definitions. — The words and phrases defined in this section have the meanings indicated when used in this Article, unless the context clearly requires another meaning:

(1) 'Administrative unit' includes both county and city school administrative units.

(2) 'Board of education' is the governing body of an administrative unit.

(3) 'Budget' is a plan proposed by a board of education for raising and spending money for specified school programs, functions, activities, or objectives during a fiscal year.

(4) 'Budget resolution' is a resolution adopted by a board of education that appropriates revenues for specified school programs, functions, activities, or objectives during a fiscal year.

(5) 'Budget year' is the fiscal year for which a budget is proposed and a budget resolution is adopted.

(6) 'Fiscal year' is the annual period for the compilation of fiscal operations.

The fiscal year begins on July 1 and ends on June 30.

(7) 'Fund' is an independent fiscal and accounting entity consisting of cash and other resources together with all related liabilities, obligations, reserves, and equities which are segregated by appropriate accounting techniques for the purpose of carrying on specific activities or attaining certain objectives in accordance with established legal regulations, restrictions, or limitations.

"§ 115-80. Uniform laws; local acts superseded — It is the intent of the General Assembly by enactment of this Article to prescribe for the public schools a uniform system of budgeting and fiscal control. To this end, all provisions of general laws and local acts in effect as of July 1, 1976, and in conflict with the provisions of this Article are repealed except local acts providing for the levy or for the levy and collection of school supplemental taxes. No local act enacted or taking effect after July 1, 1976, may be construed to modify, amend, or repeal any portion of this Article unless it expressly so provides by specific reference to the appropriate section.

"Part 2. Budget.

"§ 115-82. Annual balanced budget resolution. — (a) Each administrative unit shall operate under an annual balanced budget resolution adopted and administered in accordance with this Article. A budget resolution is balanced when the sum of estimated net revenues and appropriated fund balances is equal to appropriations. Appropriated fund balance in any fund shall not exceed the sum of cash and investments minus the sum of liabilities, encumbrances, and deferred revenues, as those figures stand at the close of the fiscal year next preceding the budget year. The budget resolution shall cover one fiscal year.

(b) It is the intent of this Article that all moneys received and expended by an administrative unit should be included in the school budget resolution. Therefore, notwithstanding any other provisions of law, after July 1, 1976, no school administrative unit may expend any moneys, regardless of their source(including moneys derived from federal, State, or private sources), except in accordance with a budget resolution adopted pursuant to this Article.

"§ 115-83. Uniform budget format. — (a) The State Board of Education, in cooperation with the Local Government Commission, shall cause to be prepared and promulgated a standard budget format for use by school administrative units throughout the State.

(b) The uniform budget format shall be organized so as to facilitate accomplishment of the following objectives: (i) to enable the board of education and the board of county commissioners to make the local educational and local fiscal policies embodied therein; (ii) to control and facilitate the fiscal management of the administrative unit during the fiscal year; and (iii) to facilitate the gathering of accurate and reliable fiscal data on the operation of the public school system throughout the State.

(1) The State Public School Fund.

(2) The Local Current Expense Fund.

(3) The Capital Outlay Fund.

In addition, other funds may be required to account for trust funds, federal grants restricted as to use, and special programs. Each administrative unit shall maintain those funds shown in the uniform budget format that are applicable to its operations.

(d) The State Public School Fund shall include appropriations for the current operating expenses of the public school system from moneys made available to the administrative unit by the State Board of Education.

(e) The Local Current Expense Fund shall include appropriations sufficient, when added to appropriations from the State Public School Fund, for the current operating expense of the public school system in conformity with the educational goals and policies of the State and the local board of education, within the financial resources and consistent with the fiscal policies of the board of county commissioners. These appropriations shall be funded by revenues accruing to the administrative unit by virtue of Article IX, Section 7 of the Constitution, moneys made available to the administrative unit by the board of county commissioners, supplemental taxes levied by or on behalf of the administrative unit pursuant to a local act or Article 14 of this Chapter, State money disbursed directly to the administrative unit, and other moneys made available or accruing to the administrative unit for the current operating expenses of the public school system.

(f) The Capital Outlay Fund shall include appropriations for:

(1) The acquisition of real property for school purposes, including but not limited to school sites, playgrounds, athletic fields, administrative headquarters, and garages;

(2) The acquisition, construction, reconstruction, enlargement, renovation, or replacement of buildings and other structures, including but not limited to buildings for classrooms and laboratories, physical and vocational educational purposes, libraries, auditoriums, gymnasiums, administrative offices, storage, and vehicle maintenance;

(3) The acquisition or replacement of furniture and furnishings, instructional apparatus, data processing equipment, business machines, and similar items of furnishings and equipment;

(4) The acquisition of school buses as additions to the fleet;

(5) The acquisition of activity buses and other motor vehicles;

(6) Such other objects of expenditure as may be assigned to the Capital Outlay Fund by the uniform budget format.

The cost of acquiring or constructing a new building, or reconstructing, enlarging, or renovating an existing building, shall include the cost of all real property and interests in real property, and all plants, works, appurtenances, structures, facilities, furnishings, machinery, and equipment, necessary or useful in connection therewith; financing charges; the cost of plans, specifications, studies, reports, and surveys; legal expenses; and all other costs necessary or incidental to the construction, reconstruction, enlargement, or renovation.

No contract for the purchase of a site shall be executed nor any funds expended therefor without the approval of the board of county commissioners as to the amount to be spent for the site; and in case of a disagreement between a board of education and a board of county commissioners as to the amount to be spent for the site, the. procedure provided in G.S. 115-88 shall, insofar as the same may be applicable, be used to settle the disagreement.

Appropriations in the Capital Outlay Fund shall be funded by revenues made available for capital outlay purposes by the State Board of Education and the board of county commissioners, supplemental taxes levied by or on behalf of the administrative unit pursuant to a local act or Article 14 of this Chapter, the proceeds of the sale of capital assets, the proceeds of claims against fire and casualty insurance policies, and other sources.

(g) Other funds shall include appropriations for such purposes funded from such sources as may be prescribed by the uniform budget format.

"§ 115-84. Preparation and submission of budget and budget message. — (a) Before the close of each fiscal year, the superintendent shall prepare a budget for the ensuing year for consideration by the board of education. The budget shall comply in all respects with the limitations imposed by G.S. 115-89.

(b) The budget, together with a budget message, shall be submitted to the board of education not later than May 1. The budget and budget message should, but need not, be submitted at a formal meeting of the board. The budget message should contain a concise explanation of the educational goals fixed by the budget for the budget year, should set forth the reasons for stated changes from the previous year in program goals, programs, and appropriation levels, and should explain any major changes in educational or fiscal policy.

"§ 115-85. Filing and publication of the budget; budget hearing. — (a) On the same day that he submits the budget to the board of education, the superintendent shall file a copy of it in his office where it shall remain available for public inspection until the budget resolution is adopted. He may also publish a statement in a newspaper qualified under G.S. 1-597 to publish legal advertisements in the county that the budget has been submitted to the board of education, and is available for public inspection in the office of the superintendent of schools. The statement should also give notice of the time and place of the budget hearing authorized by subsection (b) of this section.

(b) Before submitting the budget to the board of county commissioners, the board of education may hold a public hearing at which time any persons who wish to be heard on the school budget may appear.

"§ 115-86. Approval of budget; submission to county commissioners; commissioners action on budget. — (a) Upon receiving the budget from the superintendent and following the public hearing authorized by G.S. 115-85(b), if one is held, the board of education shall consider the budget, make such changes therein as it deems advisable, and submit the entire budget as approved by the board of education to the board of county commissioners not later than May 15, or such later date as may be fixed by the board of county commissioners.

(b) The board of county commissioners shall complete its action on the school budget on or before July 1, or such later date as may be agreeable to the board of education. The commissioners shall determine the amount of county revenues to be appropriated in the county budget ordinance to the administrative unit for the budget year. The board of county commissioners may, in its discretion, allocate part or all of its appropriation by purpose, function, or project as defined in the uniform budget format.

(c) The board of county commissioners shall have full authority to call for, and the board of education shall have the duty to make available to the board of county commissioners upon request, all books, records, audit reports, and other information bearing on the financial operation of the administrative unit.

(d) Nothing in this Article shall be construed to place a duty on the board of commissioners to fund a deficit incurred by an administrative unit through failure of the unit to comply with the provisions of this Article or rules and regulations issued pursuant hereto, or to provide moneys lost through misapplication of moneys by a bonded officer, employee or agent of the administrative unit when the amount of the fidelity bond required by the board of education was manifestly insufficient.

"§ 115-87. Apportionment of county appropriations among administrative units. — If there is more than one administrative unit in a county, all appropriations by the county to the Local Current Expense Funds of the units, except appropriations funded by supplemental taxes levied less than county-wide pursuant to a local act or Article 14 of this Chapter, must be apportioned according to the membership of each unit. County appropriations are properly apportioned when the dollar amount obtained by dividing the amount so appropriated to each unit by the total membership of the unit is the same for each unit. The 'total membership' of the administrative unit is the unit's projected average daily membership for the budget year to be determined by and certified to the unit and the board of county commissioners by the State Board of Education.

"§ 115-88. Procedure for resolution of dispute between board of education and board of county commissioners. — (a) If the board of education determines that the amount of money appropriated to the Local Current Expense Fund, or the Capital Outlay Fund, or both, by the board of county commissioners is not sufficient to support a system of free public schools, the chairman of the board of education and the chairman of the board of county commissioners shall arrange a joint meeting of the two boards to be held within seven days after the day of the county commissioners' decision on the school appropriations. At the joint meeting, the entire school budget shall be considered carefully and judiciously, and the two boards shall make a good faith attempt to resolve the differences that have arisen between them.

(b) If no agreement is reached at the joint meeting of the two boards, either board may refer the dispute to the clerk of superior court for arbitration within three days after the day of the joint meeting. The clerk shall render his decision on the matters in disagreement within 10 days after the day of the referral. The clerk of the superior court shall have the authority to subpoena or issue any orders necessary to have appear before him any member of a board of education and any member of a board of commissioners involved in the dispute and to require that the records of either board be presented to him for the purpose of arbitration of the issues.

(c) Within 10 days after the date of award, either board may appeal the clerk's award to the Superior Court Division of the General Court of Justice. The court shall find the facts as to the amount of money necessary to maintain a system of free public schools, and the amount of money needed from the county to make up this total. Either board has the right to have the issues of fact tried by a jury. When a jury trial is demanded, the cause shall be set for the first succeeding term of the superior court in the county, and shall take precedence over all other business of the court. However, if the judge presiding certifies to the Chief Justice of the Supreme Court, either before or during the term, that because of the accumulation of other business, the public interest will be best served by not trying the cause at the term next succeeding the appeal, the Chief Justice shall immediately call a special term of the superior court for the county, to convene as soon as possible, and assign a judge of the superior court or an emergency judge to hold the court, and the cause shall be tried at this special term. The issue submitted to the jury shall be what amount of money is needed from sources under the control of the board of county commissioners to maintain a system of free public schools.

All findings of fact in the superior court, whether found by the judge or a jury, shall be conclusive. When the facts have been found, the court shall give judgment ordering the board of county commissioners to appropriate a sum certain to the administrative unit, and to levy such taxes on property as may be necessary to make up this sum when added to other revenues available for the purpose.

(d) If an appeal is taken to the Appellate Division of the General Court of Justice, and if such an appeal would result in a delay beyond a reasonable time for levying taxes for the year, the judge shall order the board of county commissioners to appropriate to the administrative unit for deposit in the Local Current Expense Fund a sum of money sufficient when added to all other moneys available to that fund to equal the amount of this fund for the previous year. All papers and records relating to the case shall be considered a part of the record on appeal.

(e) If, in an appeal taken pursuant to this section, the final judgment of the General Court of Justice is rendered after the due date prescribed by law for property taxes, the board of county commissioners is authorized to levy such supplementary taxes as may be required by the judgment, notwithstanding any other provisions of law with respect to the time for doing acts necessary to a property tax levy. Upon making a supplementary levy under this subsection, the board of county commissioners shall designate the person who is to compute and prepare the supplementary tax receipts and records for all such taxes. Upon delivering the supplementary tax receipts to the tax collector, the board of county commissioners shall proceed as provided in G.S. 105-321.

The due date of supplementary taxes levied under this subsection is the date of the levy, and the taxes may be paid at par or face amount at any time before the one hundred and twentieth day after the due date. On or after the one hundred and twentieth day and before the one hundred and fiftieth day from the due date there shall be added to the taxes interest at the rate of two percent(2%). On or after the one hundred and fiftieth day from the due date, there shall be added to the taxes, in addition to the two percent (2%) provided above, interest at the rate of three-fourths of one percent (3/4 of 1%) per 30 days or fraction thereof until the taxes plus interest have been paid. No discounts for prepayment of supplementary taxes levied under this subsection shall be allowed.

"§ 115-89. The budget resolution; adoption, limitations, tax levy, filing. — (a) After the board of county commissioners has made its appropriations to the administrative unit, or after the appeal procedure set out in G.S. 115-88 has been concluded, the board of education shall adopt a budget resolution making appropriations for the budget year in such sums as the board may deem sufficient and proper. The budget resolution shall conform to the uniform budget format established by the State Board of Education.

(b) The following directions and limitations shall bind the board of education in adopting the budget resolution:

(1) If the county budget ordinance allocates appropriations to the administrative unit pursuant to G.S. 115-86(b), the school budget resolution shall conform to that allocation. The budget resolution may be amended to change allocated appropriations only in accordance with G.S. 1 15-90.

(2) Subject to the provisions of G.S. 115-86(d), the full amount of any lawful deficit from the prior fiscal year shall be appropriated.

(3) Contingency appropriations in a fund may not exceed five percent (5%) of the total of all other appropriations in that fund. Each expenditure to be charged against a contingency appropriation shall be authorized by resolution of the board of education, which resolution shall be deemed an amendment to the budget resolution, not subject to G.S. 115-86(b) and G.S. 115-90(b), setting up or increasing an appropriation for the object of expenditure authorized. The board of education may authorize the superintendent to authorize expenditures from contingency appropriations subject to such limitations and procedures as it may prescribe. Any such expenditure shall be reported to the board of education at its next regular meeting and recorded in the minutes.

(4) Sufficient funds to meet the amounts to be paid during the fiscal year under continuing contracts previously entered into shall be appropriated.

(5) The sum of estimated net revenues and appropriated fund balances in each fund shall be equal to appropriations in that fund.

(6) No appropriation may be made that would require the levy of supplemental taxes pursuant to a local act or Article 14 of this Chapter in excess of the rate of tax approved by the voters, or the expenditure of revenues for purposes not permitted by law.

(7) In estimating revenues to be realized from the levy of school supplemental taxes pursuant to a local act or Article 14 of this Chapter, the estimated percentage of collection may not exceed the percentage of that tax actually realized in cash during the preceding fiscal year, or if the tax was not levied in the preceding fiscal year, the percentage of the general county tax levy actually realized in cash during the preceding fiscal year.

(8) Amounts to be realized from collection of supplemental taxes levied in prior fiscal years shall be included in estimated revenues.

(9) No appropriation may be made to or from the Capital Outlay Fund to or from any other fund, except as permitted by G.S. 115-90(d).

(c) If the administrative unit levies its own supplemental taxes pursuant to a local act, the budget resolution shall make the appropriate tax levy in accordance with the local act, and the board of education shall notify the county or city that collects the levy in accordance with G.S. 159-14.

(d) The budget resolution shall be entered in the minutes of the board of education, and within five days after adoption, copies thereof shall be filed with the superintendent, the school finance officer and the county finance officer.

The board of education shall file a copy of the budget as approved and a copy of the budget resolution with the Controller of the State Board of Education.

"§ 115-90. Amendments to the budget resolution; budget transfers. — (a) Subject to the provisions of subsection (b) of this section, the board of education may amend the budget resolution at any time after its adoption in any manner, so long as the resolution, as amended, continues to satisfy the requirements of G.S. 115-82 and G.S. 115-89.

(b) If the board of county commissioners allocates part or all of its appropriations pursuant to G.S. 115-86(b), the board of education must obtain the approval of the board of county commissioners for an amendment to the budget that (i) increases or decreases expenditures from the Capital Outlay Fund for projects listed in G.S. 115-83(f)(l) or (2), or (ii) increases or decreases the amount of county appropriation allocated to a purpose or function by twenty-five percent (25%) or more from the amount contained in the budget ordinance adopted by the board of county commissioners: provided, that at its discretion, the board may in its budget ordinance specify a lesser percentage, so long as such percentage is not less than ten percent (10%).

(c) The board of education may by appropriate resolution authorize the superintendent to transfer moneys from one appropriation to another within the same fund, subject to such limitations and procedures as may be prescribed by the board of education or State or federal law or regulations. Any such transfers shall be reported to the board of education at its next regular meeting and shall be entered in the minutes.

(d) The board of education may amend the budget to transfer money to or from the Capital Outlay Fund to or from any other fund, with the approval of the board of county commissioners, to meet emergencies unforeseen and unforeseeable at the time the budget resolution was adopted. When such an emergency arises, the board of education may adopt a resolution requesting approval from the board of commissioners for the transfer of a specified amount of money to or from the Capital Outlay Fund to or from some other fund. The resolution shall state (i) the nature of the emergency, (ii) why the emergency was not foreseen and was not foreseeable when the budget resolution was adopted, (iii) what specific objects of expenditure will be added or increased as a result of the transfer, and (iv) what objects of expenditure will be eliminated or reduced as a result of the transfer. A certified copy of this resolution shall be transmitted to the board of county commissioners for their approval and to the boards of education of all other school administrative units in the county for their information. The board of commissioners shall act upon the request within 30 days after it is received by the clerk to the board of commissioners or the chairman of the board of commissioners, after having afforded the boards of education of all other administrative units in the county an opportunity to comment on the request. The board of commissioners may either approve or disapprove the request as presented. Upon either approving or disapproving the request, the board of commissioners shall forthwith so notify the board of education making the request and any other board of education that exercised its right to comment thereon. Upon receiving such notification, the board of education may proceed to amend the budget resolution in the manner indicated in the request. Failure of the board of county commissioners to act within the time allowed for approval or disapproval shall be deemed approval of the request. The time limit for action by the board of county commissioners may be extended by mutual agreement of the board of county commissioners and the board of education making the request. A budget resolution amended in accordance with this subsection need not comply with G.S. 1 15-87.

"§ 115-91. Interim budget. — In case the adoption of the budget resolution is delayed until after July 1, the board of education shall make interim appropriations for the purpose of paying salaries and the usual ordinary expenses of the administrative unit for the interval between the beginning of the fiscal year and the adoption of the budget resolution. Interim appropriations so made and expended shall be charged to the proper appropriations in the budget resolution.

"Part 3. Fiscal Control.

"§ 115-95. School finance officer. — Each administrative unit shall have a school finance officer who shall be appointed or designated by the superintendent of schools and approved by the board of education, with the school finance officer serving at the pleasure of the superintendent. The duties of school finance officer may be conferred on any officer or employee of the administrative unit or, upon request of the superintendent; with approval by the board of education and the board of county commissioners, on the county finance officer. In counties where there is more than one school administrative unit, the duties of finance officer may be conferred on any one officer or employee of the several administrative units by agreement between the affected superintendents with the concurrence of the affected board of education and the board of county commissioners. The position of school finance officer is hereby declared to be an office that may be held concurrently with other appointive(but not elective) offices pursuant to Article VI, Section 9 of the Constitution.

"§ 115-96. Duties of school finance officer. — (a) The school finance officer shall be responsible to the superintendent for:

(1) Keeping the accounts of the administrative unit in accordance with generally accepted principles of governmental accounting, the rules and regulations of the State Board of Education, and the rules and regulations of the Local Government Commission;

(2) Giving the preaudit certificate required by G.S. 115-99.2;

(3) Signing and issuing all checks, drafts, and State warrants by the administrative unit, investing idle cash, and receiving and depositing all moneys accruing to the administrative unit;

(4) Preparing and filing a statement of the financial condition of the administrative unit as often as requested by the superintendent, and when requested in writing, with copy to the superintendent, by the board of education or the board of county commissioners;

(5) Performing such other duties as may be assigned to him by law, by the superintendent, or by rules and regulations of the State Board of Education and the Local Government Commission.

All references in other portions of the General Statutes or local acts to school treasurers, county treasurers, or other officials performing any of the duties conferred by this section on the school finance officer shall be deemed to refer to the school finance officer.

(b) The State Board of Education has authority to issue rules and regulations having the force of law governing procedures for the disbursement of money allocated to the administrative unit by or through the State. The Local Government Commission has authority to issue rules and regulations having the force of law governing procedures for the disbursement of all other moneys allocated or accruing to the administrative unit. The State Board of Education and the Local Government Commission may inquire into and investigate the internal control procedures of an administrative unit with respect to moneys under their respective jurisdictions, and may require any modifications in internal control procedures which may be necessary or desirable to prevent embezzlements or mishandling of public moneys.

"§ 115-97. Allocation of revenues to the administrative unit by the county. — Revenues accruing to the administrative unit by virtue of Article IX, Section 7 of the Constitution and taxes levied by or on behalf of the administrative unit pursuant to a local act or Article 14 of this Chapter shall be remitted to the school finance officer by the officer having custody thereof within 10 days after the close of the calendar month in which the revenues were received or collected. Revenues appropriated to the administrative unit by the board of county commissioners from general county revenues shall be made available to the school finance officer by such procedures as may be mutually agreeable to the board of education and the board of county commissioners, but if no such agreement is reached, these funds shall be remitted to the school finance officer by the county finance officer in monthly installments sufficient to meet its lawful expenditures from the county appropriation until the county appropriation to the administrative unit is exhausted. Each installment shall be paid not later than 10 days after the close of each calendar month. When revenue has been appropriated to the administrative unit by the board of county commissioners from funds which carry specific restrictions binding upon the county as recipient, the board of commissioners must inform the administrative unit in writing of those restrictions.

"§ 115-98. Provision for disbursement of State money. — The deposit of money in the State Treasury to the credit of administrative units shall be made in monthly installments and additionally as necessary, at such time and in such a manner as may be most convenient for the operation of the public school system. Before an installment is credited, the school finance officer shall certify to the Controller of the State Board of Education the expenditures to be made by the administrative unit from the State Public School Fund during the month. This certification shall be filed on or before the fifth day following the end of the month preceding the period in which the expenditures will be made. The Controller shall determine whether the moneys requisitioned are due the administrative unit, and upon determining the amount due, shall cause the requisite amount to be credited to the administrative unit. Upon receiving notice from the State Treasurer of the amount placed to the credit of the administrative unit, the finance officer may issue State warrants up to the amount so certified.

The Controller may withhold money for payment of salaries for administrative officers of administrative units if any report required to be filed with State school authorities is more than 30 days overdue.

Money in the State Public School Fund and State bond moneys shall be released only on warrants drawn on the State Treasurer, signed by such local official as may be required by the Controller of the State Board of Education.

"§ 115-99. Facsimile signatures. — The board of education may provide by appropriate resolution for the use of facsimile signature machines, signature stamps, or similar devices in signing checks and drafts and in signing the preaudit certificate on contracts or purchase orders. The board shall charge the finance officer or some other bonded officer or employee with the custody of the necessary machines, stamps, plates, or other devices, and that person and the sureties on his official bond are liable for any illegal, improper, or unauthorized use of them.

"§ 115-99.1. Accounting system. — (a) System required. Each administrative unit shall establish and maintain an accounting system designed to show in detail its assets, liabilities, equities, revenues, and expenditures. The system shall also be designed to show appropriations and estimated revenues as established in the budget resolution as originally adopted and subsequently amended.

(b) Basis of accounting. Administrative units shall use the modified accrual basis of accounting in recording transactions.

(c) Encumbrance systems. Except as otherwise provided in this subsection, no administrative unit is required to record or show encumbrances in its accounting system. The Local Government Commission, in consultation with the State Board of Education, shall establish regulations, based on total membership of the administrative unit or some other appropriate criterion, setting forth which units are required to maintain an accounting system that records and shows the encumbrances outstanding against each category of expenditure appropriated in the budget resolution. Any other administrative unit may record and show encumbrances in its accounting system.

(d) Commission regulations. The Local Government Commission, in consultation with the State Board of Education, may prescribe rules and regulations having the force of law as to:

(1) Features of accounting systems to be maintained by administrative units.

(2) Bases of accounting, including identifying in detail the characteristics of a modified accrual basis and identifying what revenues are susceptible to accrual.

(3) Definitions of terms not clearly defined in this Article.

These rules and regulations may be varied according to the size of the administrative unit, or according to any other criteria reasonably related to the purpose or complexity of the financial operations involved.

"§ 115-99.2. Budgetary accounting for appropriations. — (a) Incurring obligations. No obligation may be incurred by an administrative unit unless the budget resolution includes an appropriation authorizing the obligation and an unencumbered balance remains in the appropriation sufficient to pay in the current fiscal year the sums obligated by the transaction for the current fiscal year. If an obligation is evidenced by a contract or agreement requiring the payment of money or by a purchase order for supplies and materials, the contract, agreement, or purchase order shall include on its face a certificate stating that the instrument has been preaudited to assure compliance with this subsection. The certificate, which shall be signed by the finance officer, shall take substantially the following form:

'This instrument has been preaudited in the manner required

by the School Budget and Fiscal Control Act. (date)

(Signature of finance officer).'

An obligation incurred in violation of this subsection is invalid and may not be enforced. The finance officer shall establish procedures to assure compliance with this subsection.

(b) Disbursements. When a bill, invoice, or other claim against an administrative unit is presented, the finance officer shall either approve or disapprove the necessary disbursement. The finance officer may approve the claim only if (1) he determines the amount to be payable and (2) the budget resolution includes an appropriation authorizing the expenditure and either (i) an encumbrance has been previously created for the transaction or (ii) an unencumbered balance remains in the appropriation sufficient to pay the amount to be disbursed. A bill, invoice, or other claim may not be paid unless it has been approved by the finance officer or, under subsection (c) of this section, by the board of education.

(c) Board of education approval of bills, invoices, or claims. The board of education may, as permitted by this subsection, approve a bill, invoice, or other claim against the administrative unit that has been disapproved by the finance officer. It may not approve a claim for which no appropriation appears in the budget resolution, or for which the appropriation contains no encumbrance and the unencumbered balance is less than the amount to be paid. The board of education shall approve payment by formal resolution stating the board's reasons for allowing the bill, invoice, or other claim. The resolution shall be entered in the minutes together with the names of those voting in the affirmative. The chairman of the board or some other member designated for this purpose shall sign the certificate on the check or draft given in payment of the bill, invoice, or other claim. If payment results in a violation of law, each member of the board voting to allow payment is jointly and severally liable for the full amount of the check or draft given in payment.

(d) Payment. An administrative unit may not pay a bill, invoice, salary, or other claim except by a check or draft on an official depository, by a bank wire transfer from an official depository, or by a warrant on the State Treasurer. Except as provided in this subsection each check or draft on an official depository shall bear on its face a certificate signed by the finance officer (or signed by the chairman or some other member of the board pursuant to subsection (c) of this section). The certificate shall take substantially the following form:

'This disbursement has been approved as required by the

School Budget and Fiscal Control Act.

(Signature of finance officer).'

No certificate is required on payroll checks or drafts or on State warrants.

(e) Penalties. If an officer or employee of an administrative unit incurs an obligation or pays out or causes to be paid out any funds in violation of this section, he and the sureties on his official bond are liable for any sums so committed or disbursed. If the finance officer gives a false certificate to any contract, agreement, purchase order, check, draft, or other document, he and the sureties on his official bond are liable for any sums illegally committed or disbursed thereby.

"§ 115-99.3. Fidelity bonds. — (a) The finance officer shall give a true accounting and faithful performance bond with sufficient sureties in an amount to be fixed by the board of education, not less than ten thousand dollars($10,000) nor more than two hundred fifty thousand dollars ($250,000). This bond shall cover (i) the faithful performance of all duties placed on the finance officer by or pursuant to law and (ii) the faithful accounting for all funds in his custody except State funds placed to the credit of the administrative unit by the State Treasurer. The premium on the bond shall be paid by the administrative unit.

(b) The State Board of Education shall provide for adequate and appropriate bonding of school finance officers and such other employees as it deems appropriate with respect to the disbursement of State funds. When it requires such bonds, the State Board of Education is authorized to place the bonds and pay the premiums thereon.

(c) The treasurer of each individual school and all other officers, employees and agents of each administrative unit who have custody of public school money in the normal course of their employment or agency shall give a true accounting bond with sufficient sureties in an amount to be fixed by the board of education.

The premiums on these bonds shall be paid by the administrative unit. Instead of individual bonds, an administrative unit may provide for a blanket bond to cover all officers, employees, and agents of the administrative unit required to be bonded, except the finance officer. The finance officer may be included within the blanket bond, if the blanket bond protects against risks not protected against by the individual bond.

"§ 115-99.4. Investment of idle cash. — (a) An administrative unit may deposit at interest or invest all or part of the cash balance of any fund. The finance officer shall manage investments subject to whatever restrictions and directions the board of education may impose. The finance officer shall have the power to purchase, sell, and exchange securities on behalf of the board of education. The investment program shall be so managed that investments and deposits can be converted into cash when needed.

(b) Moneys may be deposited at interest in any bank or trust company in this State in the form of certificates of deposit or such other forms of time deposit as the Local Government Commission may approve. Investment deposits shall be secured as provided in G.S. 115-99. 5(b).

(1) Obligations of the United States of America.

(2) Obligations of any agency or instrumentality of the United States of America if the payment of interest and principal of such obligations is fully guaranteed by the United States of America.

(3) Obligations of the State of North Carolina.

(4) Bonds and notes of any North Carolina local government or public authority, subject to such restrictions as the Secretary of the Local Government Commission may impose.

(5) Shares of any savings and loan association organized under the laws of this State and shares of any federal savings and loan association having its principal office in this State, to the extent that the investment in such shares is fully insured by the United States of America or an agency thereof or by any mutual deposit guaranty association authorized by the Commissioner of Insurance of North Carolina to do business in North Carolina pursuant to Article 7 A of Chapter 54 of the General Statutes.

(6) Obligations maturing no later than 18 months after the date of purchase of the Federal Intermediate Credit Banks, the Federal Home Loan Banks, the Federal National Mortgage Association, the Banks for Cooperatives, and the Federal Land Banks.

(7) Any form of investment allowed by law to the State Treasurer.

(8) Any form of investment allowed by G.S. 159-30 to local governments and public authorities.

(d) Investment securities may be bought, sold, and traded by private negotiation, and administrative units may pay all incidental costs thereof and all reasonable costs of administering the investment and deposit program. Securities and deposit certificates shall be in the custody of the finance officer who shall be responsible for their safekeeping and for keeping accurate investment accounts and records.

(e) Interest earned on deposits and investments shall be credited to the fund whose cash is deposited or invested. Cash of several funds may be combined for deposit or investment if not otherwise prohibited by law; and when such joint deposits or investments are made, interest earned shall be prorated and credited to the various funds on the basis of the amounts thereof invested, figured according to an average periodic balance or some other sound accounting principle. Interest earned on the deposit or investment of bond funds shall be deemed a part of the bond proceeds.

(f) Registered securities acquired for investment may be released from registration and transferred by signature of the finance officer.

(g) It is the intent of this act that the foregoing provisions of this section shall apply only to those funds received by the school administrative unit as required by G.S. 115-97. The county finance officer shall be responsible for the investment of all county funds allocated to the school administrative unit prior to such county funds actually being remitted to the school finance officer as provided by G.S. 115-97.

"§ 115-99.5. Selection of depository, deposits to be secured. — (a) Each board of education shall designate as the official depositories of the administrative unit one or more banks or trust companies in this State. It shall be unlawful for any money belonging to an administrative unit or an individual school to be deposited in any place, bank, or trust company other than an official depository, except as permitted by G.S. 11599.4(b).

(b) Money on deposit in an official depository or deposited at interest pursuant to G.S. 115-99.4(b) shall be fully secured by deposit insurance, surety bonds, or investment securities of such nature, in such amounts, and in such manner, as may be prescribed by rule or regulation of the Local Government Commission. When deposits are secured in accordance with this subsection, no public officer or employee may be held liable for any losses sustained by an administrative unit because of the default or insolvency of the depository.

"§ 115-99.6. Daily deposits. — Except as otherwise provided by law, all moneys collected or received by an officer, employee or agent of an administrative unit or an individual school shall be deposited in accordance with this section. Each officer, employee and agent of an administrative unit or individual school whose duty it is to collect or receive any taxes or other moneys shall deposit his collections and receipts daily. If the board of education gives its approval, deposits shall be required only when the moneys on hand amount to as much as two hundred fifty dollars ($250.00), but in any event a deposit shall be made on the last business day of the month. All deposits shall be made with the finance officer or in an official depository. Deposits in an official depository shall be immediately reported to the finance officer or individual school treasurer by means of a duplicate deposit ticket. The finance officer may at any time audit the accounts of any officer, employee or agent collecting or receiving any taxes or other moneys, and may prescribe the form and detail of these accounts. The accounts of such an officer, employee or agent shall be audited at least annually.

"§ 115-99.7. Semiannual reports on status of deposits and investments. — Each school finance officer shall report to the Secretary of the Local Government Commission on January 1 and July 1 of each year (or such other dates as the Secretary may prescribe) the amounts of money then in his custody and in the custody of treasurers of individual schools within the unit, the amount of deposits of such money in depositories, a list of all investment securities and time deposits held by the administrative unit and individual schools therein, and a description of the surety bonds or investment securities securing demand and time deposits. If the Secretary finds at any time that any moneys of an administrative unit or an individual school are not properly deposited or secured, or are invested in securities not eligible for investment, he shall notify the officer in charge of the moneys of the failure to comply with law. Upon such notification, the officer shall comply with the law within 30 days, except as to the sale of securities not eligible for investment which shall be sold within nine months at a price to be approved by the Secretary. The Local Government Commission may extend the time for sale of ineligible securities, but no one extension may cover a period of more than one year.

"§ 115-99.8. Annual independent audit. — Each administrative unit shall have its accounts and the accounts of individual schools therein audited as soon as possible after the close of each fiscal year by a certified public accountant or by an accountant certified by the Local Government Commission as qualified to audit local government accounts. The auditor who audits the accounts of an administrative unit shall also audit the accounts of its individual schools. The auditor shall be selected by and shall report directly to the board of education. The audit contract shall be in writing, shall include all its terms and conditions, and shall be submitted to the Secretary of the Local Government Commission for his approval as to form, terms and conditions. The terms and conditions of the audit contract shall include the scope of the audit, and the requirement that upon completion of the examination the auditor shall prepare a typewritten or printed report embodying financial statements and his opinion and comments relating thereto. The financial statements accompanying the auditor's report shall be prepared in conformity with generally accepted accounting principles. The auditor shall file a copy of the audit report with the Secretary of the Local Government Commission, the Controller of the State Board of Education, the board of education and the board of county commissioners, and shall submit all bills or claims for audit fees and costs to the Secretary of the Local Government Commission for his approval. It shall be unlawful for any administrative unit to pay or permit the payment of such bills or claims without this approval. Each officer, employee and agent of the administrative unit having custody of public money or responsibility for keeping records of public financial or fiscal affairs shall produce all books and records requested by the auditor and shall divulge such information relating to fiscal affairs as he may request. If any member of a board of education or any other public officer, employee or agent shall conceal, falsify, or refuse to deliver or divulge any books, records, or information, with an intent thereby to mislead the auditor or impede or interfere with the audit, he is guilty of a misdemeanor and upon conviction thereof may be fined not more than one thousand dollars ($1,000), or imprisoned for not more than one year, or both, in the discretion of the court.

The State Auditor, in consultation with the State Board of Education, shall have authority to prescribe the manner in which funds disbursed by administrative units by warrants on the State Treasurer shall be audited.

"§ 115-99.9. Special funds of individual schools. — (a) The board of education shall appoint a treasurer for each school within the administrative unit that handles special funds. The treasurer shall keep a complete record of all moneys in his charge in such form and detail as may be prescribed by the finance officer of the administrative unit, and shall make such reports to the superintendent and finance officer of the administrative unit as they or the board of education may prescribe. Special funds of individual schools shall be deposited in an official depository of the administrative unit in special accounts to the credit of the individual school, and shall be paid only on checks or drafts signed by the principal of the school and the treasurer. The board of education may, in its discretion, waive the requirements of this section for any school which handles less than three hundred dollars ($300.00) in any school year.

(b) Nothing in this section shall prevent the board of education from requiring that all funds of individual schools be deposited with and accounted for by the school finance officer. If this is done, these moneys shall be disbursed and accounted for in the same manner as other school funds except that the check or draft shall not bear the certificate of preaudit.

(c) For the purposes of this section, 'special funds of individual schools' includes by way of illustration and not limitation funds realized from gate receipts of interscholastic athletic competition, sale of school annuals and newspapers, and dues of student organizations.

"§ 115-99.10. Proceeds of insurance claims. — Moneys paid to an administrative unit pursuant to contracts of insurance against loss of capital assets through fire or casualty shall be used to repair or replace the damaged asset, or if the asset is not repaired or replaced, placed to the credit of the Capital Outlay Fund for appropriation at some future time.

"§ 115-99.11. School food services. — Until July 1, 1978, an administrative unit may, in the discretion of the board of education, treat receipts and disbursements associated with school food services as special funds of individual schools or as part of the budget of the administrative unit. Effective July 1, 1978, school food services shall be included in the budget of each administrative unit and the State Board of Education shall provide for school food services in the uniform budget format required by G.S. 115-83.

"§ 115-99.12. Reports to State Board of Education. — The State Board of Education shall have authority to require administrative units to make such reports as it may deem advisable with respect to the financial operation of the public schools.

"§ 115-99.13. Fines and forfeitures. — The clear proceeds of all penalties and forfeitures and of all fines collected in the General Court of Justice in each county shall be remitted by the clerk of the superior court to the county finance officer, who shall forthwith determine what portion of the total is due to each administrative unit in the county and remit the appropriate portion of the amount to the finance officer of each administrative unit. Fines and forfeitures shall be apportioned according to the projected average daily membership of each administrative unit as determined by and certified to the administrative units and the board of county commissioners by the State Board of Education pursuant to G.S. 115-87."

Sec. 2. G.S. 115-116(a) is hereby rewritten to read as follows:

"§ 115-116(a). To vote a supplemental tax. — Elections may be called by the local tax levying authority to ascertain the will of the voters as to whether there shall be levied and collected a special tax in the several administrative units, districts, and other school areas, including districts formed from contiguous counties to supplement the funds from State and county allotments and hereby operate schools of a higher standard by supplementing any item of expenditure in the school budget. When supplementary funds are authorized by the carrying of such an election, such funds may be used to employ additional teachers, other than those allotted by the State, to teach any grades or subjects or for kindergarten instruction, to establish and maintain approved summer schools, and for making the contribution to the Teachers' and State Employees' Retirement System of North Carolina for such teachers, or for any object of expenditure: Provided, that elections may be called to ascertain the will of the voters of an entire county, as to whether there shall be levied and collected a special tax on all the taxable property within the county for the purposes enumerated in this subsection. In such event, the supplemental tax shall be apportioned among the administrative units in the county pursuant to G.S. 115-87."

Sec. 3. G.S. 115-1 16(g) is amended by striking out the words "current expense" in the fourth line thereof.

Sec. 4. The last sentence of G.S. 115-116(h) is rewritten to read as follows:

"If such election carries, the said special or supplemental tax shall be collected pursuant to G.S. 115-124 and remitted to the administrative unit on whose behalf such special or supplemental tax is already levied; provided, that notwithstanding the provisions of G.S. 115-122.1 if the notice of election clearly so states, and the election shall be held prior to August 1, the annexation or consolidation shall be effective and the tax so authorized shall be levied and collected beginning with the fiscal year commencing July 1 next preceding such elections."

Sec. 5. G.S. 115-117 is rewritten to read as follows:

"§ 115-117. Maximum rate and frequency of elections. — (a) A tax for supplementing the public school budget shall not exceed fifty cents (50¢) on the one hundred dollar ($100.00) value of property subject to taxation by the administrative unit; provided, that in any school administrative unit, district, or other school area having a total population of not less than 100,000 said local annual tax that may be levied shall not exceed sixty cents (60¢) on one hundred dollar ($100.00) valuation of said property.

(b) If a majority of those who vote in any election called pursuant to the provisions of this Article do not vote in favor of the purpose for which such election is called, another election for the same purpose shall not be called for and held in the same unit, district, or area until the lapse of six months after the prior election. However, the foregoing time limitation shall not apply to any election held in a unit, district, or other school area which is larger or smaller than the unit, district, or area in which the prior election was held, or to any election held for a different purpose than the prior election."

Sec. 6. G.S. 115-124 is rewritten to read as follows:

"§ 115-124. Levy and collection of taxes. — (a) If an administrative unit or district has voted a tax to operate schools of a higher standard than that provided by State and county support, the board of county commissioners of each county in which the administrative unit is located is authorized to levy a tax on all property having a situs in the administrative unit for the purpose of supplementing the Local Current Expense Fund, the Capital Outlay Fund, or both.

(b) Before April 15 of each year, the tax supervisor of each county in which the administrative unit is located shall certify to the superintendent of schools an estimate of the total assessed value of property in the county subject to taxation on behalf of the administrative unit and any districts therein pursuant to this Article. The board of education, in the budget it submits to the board of county commissioners, shall request the rate of ad valorem tax it wishes to have levied on its behalf as a school supplemental tax, not in excess of the rate approved by the voters. The board of county commissioners may approve or disapprove this request in whole or in part, and may levy such rate of supplemental tax as it may find to be in the best interests of the taxpayers and the public schools, not in excess of the rate requested by the board of education. Upon approving a supplemental tax levy pursuant to this section, the board of county commissioners shall cause the school supplemental tax to be computed for all property subject thereto. The taxes thus computed shall be shown separately on the county tax receipts for the fiscal year, and the county shall collect the school supplemental tax in the same manner that county taxes are collected. Collections shall be remitted to the administrative unit within 10 days after the close of each calendar month. Partial payments shall be proportionately divided between the county and the administrative unit. The board of county commissioners may, in its discretion, deduct from the proceeds of the school supplemental tax the actual additional cost to the county of levying, computing, billing, and collecting the tax.

(c) It shall be unlawful for any part of a tax levied pursuant to this Article to be used for any purpose other than those purposes authorized by the election in the unit or district."

Sec. 7. G.S. 115-48, 115-60, 115-61, 115-62, 115-65, the last sentence of G.S. 115‑133.2 and the last paragraph of G.S. 115-155 are repealed.

Sec. 8. G.S. 1 15-64 is rewritten to read as follows:

"§ 115-64. Teachers must be certified to be paid. — No teacher shall be placed on the payroll of an administrative unit unless he holds a certificate as required by law, and unless a copy of the teacher's contract has been filed with the superintendent. No teacher may be paid more than he is due under the salary schedule in force in the administrative unit or special taxing district. Substitute and interim teachers may be paid under rules of the State Board of Education."

Sec. 9. G.S. 115-66 is rewritten to read as follows:

"§ 115-66. When teachers' pay may be withheld. — The board of education may withhold the salary of any supervisor, principal or teacher who delays or refuses to render such reports as are required by law. But whenever the reports are delivered in accordance with law, the salary shall be paid forthwith."

Sec. 10. G.S. 115-9 is rewritten to read as follows:

"§ 115-9. Tax levying authorities defined. — As used in this Chapter, the term 'tax levying authorities' shall mean the board of county commissioners of the county or counties in which an administrative unit is located or such other unit of local government as may be granted by local act authority to levy taxes on behalf of a school administrative unit."

Sec. 11. Chapter 115 of the General Statutes is amended by inserting a new section therein, to be appropriately numbered by the Revisor of Statutes, as follows:

"§ 115. Summer schools. — Each county and city administrative unit may establish and maintain summer schools. Such summer schools as may be established shall be administered by county and city boards of education and shall be conducted in accordance with standards developed by the State Board of Education. The standards so developed shall specify the requirements for approved curriculum, the qualifications of the personnel, the length of the session, and the conditions under which students may be granted credit for courses pursued during a summer school. In determining the eligibility of students for admission to summer schools, boards of education shall be governed by the provisions of Article 21 of this Chapter.

Boards of education of county and city administrative units may provide for summer schools from funds made available for that purpose by the State Board of Education, funds appropriated to the administrative unit by the tax-levying authority, and from any other revenues available for the purpose."

Sec. 12. G.S. 159-7 is amended by adding a new subsection as follows:

"(d) Except as expressly provided herein, this Article does not apply to school administrative units. The adoption and administration of budgets for the public school system and the management of the fiscal affairs of school administrative units are governed by the School Budget and Fiscal Control Act, Chapter 115, Article 9. However, this Article and the School Budget and Fiscal Control Act shall be construed together to the end that the administration of the fiscal affairs of counties and school administrative units may be most effectively and efficiently administered."

Sec. 13. G.S. 159-13(a) is amended by striking out paragraph (3) in the list of funds to be maintained, and by renumbering the succeeding paragraphs accordingly.

G.S. 159-13(a) is further amended by rewriting paragraph (8), renumbered(7) by this section, to read as follows:

"(7) A fund for each special district, school administrative unit, or public authority whose taxes or special assessments are collected by the unit."

G.S. 159-13(a) is further amended by rewriting the second unnumbered paragraph to read as follows:

"Portions of the budget ordinance applicable to community colleges and technical institutes shall be organized as provided in Chapter 115A of the General Statutes."

Sec. 14. G.S. 159-13(b)(11), as enacted by Section 1 of Chapter 780 of the 1971 Session Laws and amended by Chapter 474 of the 1973 Session Laws, is rewritten to read as follows:

"(11) Appropriations made to a school administrative unit by a county may not be reduced after the budget ordinance is adopted, unless the board of education of the administrative unit agrees by resolution to a reduction, or unless a general reduction in county expenditures is required because of prevailing economic conditions."

Sec. 15. G.S. 159-27 is amended by inserting a new subsection at the end thereof as follows:

"(d) This section applies to taxes levied by a unit of local government on behalf of another unit, including school administrative units."

Sec. 15.1. G.S. 115-17(7), is hereby amended to read as follows:

"§ 115-17(7). He shall, in cooperation with the State Auditor, cause to be made an annual audit of the State school funds disbursed by county and city administrative units and all other funds which by law are committed to the administration of the board."

Sec. 16. Each school administrative unit shall prepare its budget for the fiscal year 1976-77 in accordance with the provisions of this act, but shall not adopt its budget resolution before July 1, 1976.

Sec. 17. (a) Section 11 of Chapter 656 of the Session Laws of 1949, to the extent the same may have been repealed by G.S. 115-80, is hereby reenacted; it being expressly intended and provided hereby that to the extent the same conflicts with G.S. 115-80, G.S. 115‑87 or any other section of the School Budget and Fiscal Control Act, Chapter 115, Article 9, said Section 11 of Chapter 656 of the Session Laws of 1949 shall control, and the particular sections of Chapter 115, Article 9 shall be deemed modified accordingly.

(b) Sections 2(c) and 5(d) of Chapter 707 of the Session Laws of 1963, to the extent the same may have been repealed by G.S. 115-80, are hereby reenacted; it being expressly intended and provided hereby that to the extent the same conflict with G.S. 115-80, G.S. 115‑87 or any other section of the School Budget and Fiscal Control Act, Chapter 115, Article 9, said Sections 2(c) and 5(d) of Chapter 707 of the Session Laws of 1963 shall control, and the particular sections of Chapter 115, Article 9 shall be deemed modified accordingly.

(c) Sections 2 and 6 of Chapter 386 of the Session Laws of 1891, to the extent the same may have been repealed by G.S. 115-80, are hereby reenacted; it being expressly intended and provided hereby that to the extent the same conflict with G.S. 115-80, G.S. 115-87 or any other section of the School Budget and Fiscal Control Act, Chapter 115, Article 9, said Sections 2 and 6 of Chapter 386 of the Session Laws of 1891 shall control, and the particular sections of Chapter 115, Article 9 shall be deemed modified accordingly.

(d) Sections 12 and 13 of Chapter 131 of the Session Laws of 1921, to the extent the same may have been repealed by G.S. 115-80, are hereby reenacted; it being expressly intended and provided hereby that to the extent the same conflict with G.S. 115-80, G.S. 115-87 or any other section of the School Budget and Fiscal Control Act, Chapter 115, Article 9, said Sections 12 and 13 of Chapter 131 of the Session Laws of 1921 shall control, and the particular sections of Chapter 115, Article 9 shall be deemed modified accordingly.

(e) This section shall take effect upon the effective date of the School Budget and Fiscal Control Act, Chapter 115, Article 9.

Sec. 18. (a) If any section of this act or any part of any section, or the application thereof is held invalid, the invalidity shall not affect any other section or the remaining part of such section or the application thereof which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.

(b) This act shall apply to pending litigation where such application is feasible and would not work an injustice.

(c) This section shall take effect upon the effective date of the School Budget and Fiscal Control Act, Chapter 115, Article 9.

Sec. 19. Sections 15 and 16 of this act shall take effect upon ratification. Sections 17 and 18 shall take effect as therein specified. Sections 1 through 14 and 15.1 of this act shall take effect on July 1, 1976.

In the General Assembly read three times and ratified, this the 29th day of May, 1975.