Investigative Report Reveals Misuse of Law Enforcement Trust Funds in North Carolina Counties

RALEIGH, NC — A new investigative report reveals that several North Carolina law enforcement agencies have been improperly using or withholding funds that should be legally distributed to public school systems, raising questions about transparency and financial accountability at the county level.

Audit reveals over $3 million in discrepancies

The analysis, reviewed by state officials and public watchdog groups, found that counties across North Carolina collectively misallocated or failed to properly distribute millions of dollars in criminal fines, fees, and forfeitures — money that is constitutionally designated for local public schools.

The issue stems from how law enforcement trust accounts are managed. These accounts are meant to temporarily hold seized or court-ordered funds until properly disbursed. However, as reported in the State Analysis Report, several sheriffs’ offices held balances far beyond normal processing timeframes, while others used trust accounts for unapproved internal purchases.

In one documented case, a sheriff’s office in eastern North Carolina used part of its trust account to purchase equipment, without any documentation of court approval or school fund transfer.

Legal background: North Carolina Constitution mandates school funding

Under Article IX, Section 7 of the North Carolina Constitution, all funds “arising from fines, penalties, and forfeitures” must be exclusively appropriated to the public schools in the county where the case originated. The law is meant to ensure that these monies — often resulting from traffic citations, asset seizures, or misdemeanor cases — directly benefit local education.

However, the new findings suggest that lack of oversight and inconsistent reporting practices have allowed these funds to be redirected or delayed without consequence.

Experts cite need for uniform standards and digital transparency

Policy advocates are now urging the North Carolina General Assembly to adopt clearer uniform accounting standards across counties. Rebecca Allen, a fiscal policy analyst with a Raleigh-based government watchdog group, noted: “This isn’t just about paperwork — it’s about constitutional funding for schools being diverted for years.”

The report recommends:

• Mandatory quarterly audits of all law enforcement trust accounts

• Public dashboards showing balances and disbursement timelines

• Automatic digital alerts for funds held beyond statutory deadlines

Without reforms, Allen warned that “county residents may never know how much of their court fees actually reach their schools.”

Legislators expected to propose trust account legislation

Several state lawmakers are reportedly preparing to introduce legislation that would close the gaps exposed by this investigation. A draft bill under review would mandate automatic fund transfers to local school districts every 60 days and bar the use of trust account funds for non-court-ordered purchases.

Meanwhile, some county officials argue that ambiguous language in current statutes has led to honest mistakes rather than deliberate misuse. Still, State Treasurer Dale Folwell emphasized that “clarity must lead to compliance.”

The full investigation, which includes detailed trust account data by county, is available via the State Treasurer’s Office.

Do you think North Carolina counties should face penalties for diverting school funds?

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