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May 11, 2016, 12:47 AM UTC / Updated May 11, 2016, 12:47 AM UTC

The president of the University of North Carolina said Tuesday that she is looking to hire lawyers to defend the school against a federal lawsuit over the state's new bathroom law.

"We can't operate this place without federal funding," said University President Margaret Spellings after a meeting with the school's board of governors.

Last week, the Justice Department notified the state that its recently enacted bathroom bill violated federal civil rights laws and gave the state until May 9 to respond.

The state instead sued the federal government, asking a judge to rule that it was not violating federal law. The Justice Department responded with a lawsuit of its own, asking a judge to block enforcement of the state law.

Related: DOJ Files Lawsuit Challenging North Carolina Bathroom Law

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Known as HB2, the new law forbids people to use the bathrooms of their gender identity, instead of the sex on their birth certificates. It also restricts the ability of LGBT people to sue for discrimination.

More than $4 billion is at state in federal funds for education in the Tar Heel State. The University of North Carolina serves 220,000 students on 16 separate campuses.

The university was named as a defendant in the Justice Department lawsuit, along with the state and the governor.

A graduate looks up from a sea of caps during the University of North Carolina at Chapel Hill spring commencement ceremony at Kenan Memorial Stadium on Sunday, May 8, 2016 in Chapel Hill, NC. Kaitlin McKeown / AP

But Spellings and W. Louis Bissette, Jr., chairman of the board of governors, suggested after a day-long meeting Tuesday that the university would pursue a separate legal course.

"These institutions have been supportive, welcoming places for every type of individual. And we will continue to be," Spellings said.

The bathroom law does not contain an enforcement provision, she said.

"We have not changed any of our policies," since the law was enacted, she noted. "We do not discriminate against anybody, and that will continue to be our stance."

Bisette said the board supports "all the actions President Spelling has taken so far. We're in a difficult position, caught between the state and federal governments."

Attorney General Loretta Lynch said Monday, in announcing the lawsuit against the state, that federal laws give the government power to cut off federal funding for education when civil rights laws are violated.

"We remain open to discussions with the state," Lynch said. "We are deferring on requesting the curtailment of funding now, but we do retain that right."

Lynch said the Justice Department was waiting, in part, to hear what position would be taken by the university's board of governors.