Local school districts will have more leeway in moving money between accounts as they manage their budgets.

The local districts have to figure out a way to fold into their budgets a $225 million unspecified cut this year. At the same time, they've been told to try to save jobs for teachers in 4th through 12th grades, Lynn Bonner reports.

About 90 percent of school budgets pay for people, said state board Chairman William Harrison. School districts couldn't meet requirements without budget flexibility, he said. The State Board of Education, acting on authority granted in the new state budget, voted today to loosen money transfer rules in about a dozen line items.

Here are the programs were districts are allowed new, unrestricted transfers: Academically & Intellectually Gifted; at risk student services/alternative schools; classroom materials/ supplies/textbooks; disadvantaged student supplemental funding; limited English proficiency; low wealth school supplemental funding; small county supplemental funding; school technology, teacher assistants; high school Learn & Earn.

The board has asked state Department of Public Instruction staff for periodic reports on district spending.

William Harrison is stepping down as the CEO of the state's public schools. He will remain as chairman of the State Board of Education.

Harrison told employees of the Department of Public Instruction in an e-mail today that he will retire at the end of August, reports Lynn Bonner.

As you are aware, I have spent a great deal of time during the last two days responding to a legal dispute regarding my position as CEO. Quite frankly, I’ve wasted too many hours on this case – hours I would rather use working with you and education leaders across the state to accomplish the one thing Gov. Perdue asked of me six months ago: reforming our public education system to best serve our children. Because the 1.4 million students in this state remain my primary focus, and because I feel I can best serve them by focusing on my role as chair of the State Board, I will retire from DPI effective Aug. 31, 2009.

Harrison's retirement seemingly clears a path for June Atkinson, the state superintendent of public instruction, to take charge of the public schools.

Update: Gov. Beverly Perdue issued a statement saying that Harrison's decision "exemplifies what I’ve known all along – that his real commitment is not to a title or to a paycheck, but to securing a world class education system for our children. During this legal dispute, the focus on our kids has been lost in the courtroom. Dr. Harrison’s move today puts the focus back where it belongs – on the classroom."

Read more after the jump.

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Senate majority leader Tony Rand said he expects lawmakers will react this session to a judge's ruling reshaping the way the state runs its schools.

Judge Robert Hobgood ruled today that June Atkinson, the state superintendent of public instruction, has the constitutional authority to run the state's schools and not William Harrison, who was appointed by Democratic Gov. Beverly Perdue appointed to run the state Department of Public Instruction and chair the State Board of Education.

Rand, a Fayetteville Democrat, said he believed there would be "significant" appetite in the legislature to ensure the governor can appoint the head of the state school system.

"The convoluted system we have now doesn't appear to me to be in the interest of educational progress in North Carolina," Rand said. "This has been a continuous pain for a significant time."

Hobgood said Friday he believed it would take a constitutional amendment to grant the governor that power. Rand said he would have to take a look.

Update: Gov. Beverly Perdue released a statement about the ruling. "I am reviewing the court’s ruling. I look forward to continuing to work with Dr. Harrison and Superintendent Atkinson to achieve our goal of providing a quality education for North Carolina’s children."

June Atkinson says she is ready to go back to work on Monday, even if that means some awkward moments at the office.

Superior Court Judge Robert Hobgood ruled today that Atkinson, the state superintendent of public instruction, has the constitutional authority to run the state's schools.

The ruling was in response to a suit brought by Atkinson, a Democrat, after the State Board of Education stripped her of her powers and Democratic Gov. Beverly Perdue appointed William Harrison to run the state Department of Public Instruction and chair the State Board of Education.

The ruling means that Harrison will, in one capacity, now work for Atkinson when they show up for work on Monday, reports Kevin Kiley.

"There may be some awkward moments," Atkinson told reporters after the court ruling. "But after those awkward moments, we expect to move forward."

Atkinson said Hobgood's ruling clarifies a longstanding question about who is responsible for the governance of North Carolina's public schools.

"I did not want to bring this suit, but I thought it was time for the issue to be clarified," she said.

June Atkinson has won her court fight over who is in charge of public education in North Carolina.

Superior Court Judge Robert Hobgood ruled today that Atkinson, who was elected statewide as the state superintendent of public instruction, has the authority under North Carolina's constitution to run the state's schools.

Hobgood ruled that the State Board of Education has the authority to set policy for the state's public schools, but that the state constitution dictates that Atkinson, as the state superintendent, is responsible for implementing those policies.

Atkinson, a Democrat, had sued Democratic Gov. Beverly Perdue and the State Board of Education for improperly stripping her of her duties. Perdue has appointed William Harrison (pictured above) to run the state Department of Public Instruction and lead the State Board of Education as chairman.

That prompted Atkinson to file suit in April.

A lawyer with the state Attorney General's office had argued in court earlier this week that the state constitution gives the legislature the right to set out the superintendent's duties, and the law says the superintendent will do what the state education board says.

Update: Hobgood's order is effective immediately, although attorneys for the state attorney general said they would appeal the ruling.

A state legislator who wants graduation projects to be optional has not been swayed by the State Board of Education's decision to delay the diploma requirement for one year.

Rep. Jimmy Love Sr. said he agreed to pull his bill from an earlier committee agenda after talking to schools CEO William Harrision, reports Lynn Bonner.

But Love, a Sanford Democrat,  said Friday he doesn't see a reason to abandon the bill, because he doesn't want the state to require the projects.

The state school board voted Thursday to put off until 2011 the requirement for students to complete graduation projects to get high school diplomas.

Love said he hadn't heard that the education department was going to address his concerns that the requirement was an unfunded mandate and that it would drive up drop out rates.

Love said his idea has good support in both the House and the Senate.

Sen. David Hoyle, a Gaston County Democrat, has his own bill removing the project as a graduation requirement.