85% Local Share

Where do these monies live?

North Carolina allocates 85% of its settlement funds directly to its participating counties and municipalities according to the percentages in Exhibit G of North Carolina’s state-local agreement.[1]

Each are required to establish separate funds to hold their opioid settlement proceeds separate from any other local funds.[2] Municipalities may direct their shares to their counties.[3]

What can this share be spent on?

With limited exceptions,[4] this share must be spent on opioid remediation uses,[5] which the state defines for local governments to include “High-Impact Opioid Abatement Strategies” (“Option A” or “Exhibit A”) and/or “Additional Opioid Remediation Activities” (“Option B” or “Exhibit B”).[6] Settlement monies may not be used to reimburse past expenditures.[7]

• Under Option A, a local government may fund one or more strategies from a shorter list of “high impact” strategies (Exhibit A).[8]

• Under Option B, a local government must implement a collaborative strategic planning process in order to fund activities from a longer and more comprehensive set of strategies (Exhibit B).[9]

Who ultimately decides how to spend this share (and how)?

Local governments decide autonomously (subject to audit and consequences for misspend). Decisionmakers for the counties and municipalities will ultimately decide for themselves how to spend their monies on the High-Impact Opioid Abatement Strategies (“Option A” or “Exhibit A”) and/or Additional Opioid Remediation Activities (“Option B” or “Exhibit B”) lists,[10] whether directly or as grants to non-profit organizations.[11]

A local government’s governing body (i.e., county board of commissioners or city council) must adopt both an authorizing resolution and a formal budget ordinance to spend the locality’s settlement dollars.[12] Additional planning is required by both Option A and Option B:

• Under Option A, a county must hold at least one annual meeting and invite its municipalities to “receive input” and to “encourage collaboration between local governments both within and beyond the county.” This meeting is all that is required for a locality to pursue the opioid remediation expenditures described in “Exhibit A.”[13]

• Under Option B, localities must additionally engage in the “collaborative strategic planning process” outlined in Exhibit C to North Carolina’s state-local agreement.[14] This process requires engagement with a diverse array of stakeholders,[15] and results in a report and non-binding recommendations to the local government’s governing body.[16] This process must occur at least every four years thereafter, regardless of whether the locality adopts additional Exhibit B strategies.[17] If a locality chooses to pursue a new strategy listed in Exhibit B, it must implement this collaborative strategic planning process anew.[18]

Local settlement funds are subject to an annual audit, and local governments must report any misspent funds to the Attorney General.[19] Localities that use their settlement funds for impermissible purposes risk reductions of future payments or even redistribution of their funds by the state’s Attorney General.[20]

Is this share attached to an explicit bar against supplantation?

No, supplantation is not prohibited. Like most states, North Carolina does not explicitly prohibit supplantation uses of its opioid settlement funds. This means that the 85% local government share may be spent in ways that replace (or “supplant”) — rather than supplement — existing resources.

Can I see how this share has been spent?

Yes (public reporting required). Local governments must annually report expenditure information for inclusion in CORE-NC’s Past Spending Dashboard.[21]

Visit OpioidSettlementTracker.com’s Expenditure Report Tracker for an updated collection of states’ and localities’ available expenditure reports.

What else should I know?

The North Carolina Department of Health and Human Services and North Carolina Association of County Commissioners offers technical assistance to local governments on planning, implementation, and evaluation of opioid settlement spend.[22]

Citations

1. Memorandum of Agreement Between the State of North Carolina and Local Governments on Proceeds Relating to the Settlement of Opioid Litigation (MOA) B.2 (“80% [shall be allocated] to abatement funds established by Local Governments (‘Local Abatement Funds’) and MOA B.3 (The Local Abatement Funds shall be allocated to counties and municipalities in such proportions as set forth in Exhibit G”). 5% of funds are allocated to a County Incentive Fund. MOA B.2 and MOA G (describing a 5% bonus “if every municipality in the Local Government's county with population of at least 30,000 [] executed th[e] MOA by October 1, 2021”). See also Supplemental Agreement for Additional Funds from Additional Settlements of Opioid Litigation (Supplemental Agreement) III.B(2) (allocating 15% to the state, 84.62% to local governments, and 0.38% to a Local Counsel Fee Fund) and III.B(3) (“The allocation of Local Additional Abatement Funds between Local Governments shall be as described in MOA section B.3. However, to the extent required by the terms of an Additional Settlement, the proportions set forth in MOA Exhibit G shall be adjusted: (i) to provide no payment from an Additional Settlement to any listed county or municipality that does not participate in the Additional Settlement; and (ii) to provide a reduced payment from an Additional Settlement to any listed county or municipality that signs onto the Additional Settlement after the deadline specified by the Additional Settlement”). ↑

2. MOA D.1-2 (“Every Local Government receiving Opioid Settlement Funds shall create a separate special revenue fund, as described below, that is designated for the receipt and expenditure of the Opioid Settlement Funds,” and “[f]unds in this special revenue fund shall not be commingled with any other money or funds of the Local Government”). See also MOA D.3 (“The funds in the special revenue fund may be invested, consistent with the investment limitations for local governments, and may be placed in an interest-bearing bank account. Any interest earned on the special revenue fund must be used in a way that is consistent with this [Agreement]”) and Supplemental Agreement III.D. ↑

3. MOA B.4(b). Supplemental Agreement III.B(4) (“ Consistent with the manner in which MOA section B.4.b has been interpreted by the parties to the MOA with respect to Opioid Settlement Funds, a municipality that directs Local Additional Abatement Funds to the county or counties in which it is located pursuant to MOA section B.4 shall be relieved of any reporting or other obligations under the MOA with respect to the redirected funds”). ↑

4. MOA B.5 (requiring all funds to be spent on opioid remediation “except as related to the payment of the Parties’ litigation expenses and the reimbursement of the United States Government”), MOA F.3 (“Reasonable audit costs that would not be required except for this Section F may be paid by the Local Government from Opioid Settlement Funds”), Supplemental Agreement III.B(2) (“0.38% to a Local Counsel Fee Fund described in section IV of this [Supplemental Agreement]”), Supplemental Agreement IV (“As soon as practicable, but in any event no later than May 1, 2023, Local Counsel shall report to the settlement administrator the proportion of the Local Counsel Fee Fund to be received by each Local Counsel”). ↑

5. MOA E.5 (“Local Governments shall spend Opioid Settlement Funds from the Local Abatement Funds on opioid remediation activities using either or both of the processes described as Option A and Option B below, unless the relevant National Settlement Agreement or Bankruptcy Resolution further limit the spending”) and Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). See also MOA B.5 and Supplemental Agreement III.B(5) (“all Opioid Settlement Funds, regardless of allocation, shall be utilized only for opioid remediation activities” and “[t]he use of Additional Funds for opioid remediation activities shall be as described i MOA section B.5”). ↑

6. MOA E.5 (“Local governments shall spend Opioid Settlement Funds from the Local Abatement Funds on opioid remediation activities using either or both of the processes described as Option A and Option B” (emphasis added; Option A and Option B are not mutually exclusive) and Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

7. MOA E.1 (“Local Governments shall expend Opioid Settlement Funds only for opioid-related expenditures consistent with the terms of this MOA and incurred after the date of the Local Government’s execution of this MOA, unless execution of the National Settlement Agreement requires a later date”) and Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

8. MOA E.5(a)(i) (“This list is a subset of the initial opioid remediation strategies listed in the National Settlement Agreement”). See also North Carolina Opioid Settlements. CORE-NC. Accessed August 12, 2024. ↑

9. MOA E.5(b)(i) (“This list contains all the initial opioid remediation strategies listed in the National Settlement Agreement), E.5(b)(ii). Unlike Option A, “[t]his list shall be automatically updated to match the list of approved strategies in the most recent National Settlement Agreement”). MOA Exhibit B. See also North Carolina Opioid Settlements. CORE-NC. Accessed August 12, 2024. ↑

10. MOA E.5 (“Local Governments shall spend Opioid Settlement Funds from the Local Abatement Funds on opioid remediation activities using either or both of the processes described as Option A and Option B below, unless the relevant National Settlement Agreement or Bankruptcy Resolution further limit the spending”) (emphasis added; Option A and Option B are not mutually exclusive) and Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

11. MOA D.2 (“counties or municipalities may make contracts with or grants to a nonprofit, charity, or other entity”). ↑

12. MOA E.6(a) (“Opioid Settlement Funds can be used for a purpose when the Governing Body includes in its budget or passes a separate resolution authorizing the expenditure of a stated amount of Opioid Settlement Funds for that purpose or those purposes during a specified period of time”) and Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). See also MOA A (defining “Governing Body” to mean “for a county, the county commissioners of the county, and … for a municipality, the elected city council, town council, board of commissioners, or board of aldermen for the municipality”). The North Carolian Department of Justice reiterated these requirements in a July 2023 memo. See Memorandum: NC local governments receiving opioid settlement funds. North Carolina Department of Justice. July 12, 2023. Accessed August 13, 2024. (“Local governments receiving opioid settlement funds must satisfy both MOA requirements and state law requirements in order to authorize the expenditure of opioid settlement funds. … For these reasons, a local government must adopt both an authorizing resolution (consistent with the MOA requirements described below) and a formal budget ordinance (consistent with NC law) in order to authorize the expenditure of opioid settlement funds”) (emphasis in original). ↑

13. MOA E.4 (“Each county receiving Opioid Settlement Funds shall hold at least one annual meeting with all municipalities in the Local Government’s county invited in order to receive input as to proposed uses of the Opioid Settlement Funds and to encourage collaboration between local governments both within and beyond the county”) and E.5(a)(i) (“Without any additional strategic planning beyond the meeting described in Section E.4 above, Local Governments may spend Opioid Settlement Funds from the list of High-Impact Opioid Abatement Strategies attached as Exhibit A”). Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

14. MOA E.5(b)(ii) (“Before spending any funds on any activity listed in Exhibit B, but not listed on Exhibit A, a Local Government must first engage in the collaborative strategic planning process described in Exhibit C”). Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

15. Frequently Asked Questions on Option A Strategies in the Memorandum of Agreement On the Allocation and Use of Opioid Settlement Funds in North Carolina. North Carolina Department of Justice. October 2023. Accessed August 13, 2024. (“To engage diverse stakeholders means to involve a wide array of individuals and organizations in the discussion and planning around opioid settlement funds, including but not limited to these groups listed and described in Exhibit C: (1) local officials, (2) healthcare providers, (3) social service providers, (4) education and employment service providers, (5) payers and funders, (6) law enforcement, (7) employers, (8) community groups, (9) stakeholders with “lived experience,” and (10) stakeholders reflecting the diversity of the community”). ↑

16. MOA E.5(b)(ii) (“This process shall result in a report and non-binding recommendations to the Local Government’s Governing Body described in Exhibit C”). Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

17. MOA E.5(b)(iii) (“A Local Government that has previously undertaken the collaborative strategic planning process described in Exhibit C and wishes to continue implementing a strategy listed in Exhibit B, but not listed in Exhibit A, shall undertake a new collaborative strategic planning process every four years (or more often if desired)”). Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

18. MOA E.5(b)(iv) (“A Local Government that has previously undertaken the collaborative strategic planning process described in Exhibit C that wishes to implement a new strategy listed in Exhibit B but not listed in Exhibit A, shall undertake a new collaborative strategic planning process”). Supplemental Agreement III.E(1) (“Local Governments shall expend Additional Funds according to the requirements for Opioid Settlement Funds stated in [the MOA’s] section E”). ↑

19. MOA F.1 (“If any such audit reveals an expenditure inconsistent with the terms of this MOA, the Local Government shall immediately report the finding to the Attorney General”). See also Supplemental Agreement III(F)(1) (“If any such audit reveals an expenditure inconsistent with the terms of this MOA, the Local Government shall immediately report the finding to the Attorney General”). ↑

20. MOA E.2 (“If a Local Government spends any Opioid Settlement Funds on an expenditure inconsistent with the terms of this [Agreement], the Local Government shall have 60 days after discovery of the expenditure to cure the inconsistent expenditure through payment of such amount for opioid remediation activities through budget amendment or repayment”) and MOA E(3) (“If a Local Government does not make the cure required by Section E.2 above within 60 days, (i) future Opioid Fund payments to that Local Government shall be reduced by an amount equal to the inconsistent expenditure, and (ii) to the extent the inconsistent expenditure is greater than the expected future stream of payments to the Local Government, the Attorney General may initiate a process up to and including litigation to recover and redistribute the overage among all eligible Local Governments. The Attorney General may recover any litigation expenses incurred to recover the funds. Any recovery or redistribution shall be distributed consistent with Sections B.3 and B.4 above”). ↑

21. MOA F.6(a)-(c). MOA Exhibit F includes the impact information that is required to be included in local government reporting. ↑

22. See North Carolina Opioid Settlements: Contact Information. CORE-NC. Accessed September 1, 2024. ↑