A new report from The Office of the State Auditor (OSA) shows a dire financial situation in the Winston-Salem/Forsyth County Schools (WS/FCS) District.
Concerns submitted through the auditor’s tipline led to an investigation that revealed an estimated $46 million budget deficit for FY 2025.
“Winston-Salem/Forsyth County Schools dug itself into a deep financial hole, and it’s going to take real discipline to climb out of it. Our schools need to be focused on teaching students. That becomes a lot more difficult when you’re staring down a $46 million budget deficit,” said State Auditor Dave Boliek. “By shining a bright light on these specific problems, it is our hope that a sense of urgency will develop in Winston-Salem/Forsyth County Schools to right the ship in a hurry.”
The report uncovered multiple issues, including the use of one-time COVID funds to cover ongoing expenses like employee salaries, failure to adjust staffing levels despite a declining student population, and overall financial mismanagement.
Education funding for public school districts across North Carolina is largely determined by per-pupil spending, meaning the amount of money a district receives is tied directly to the number of students enrolled. Enrollment changes, such as population growth, decline, or shifts to private or charter schools is a major factor in shaping district budgets and resources.
Since 2018, the district’s student enrollment has fallen by more than 3,000, yet the number of full-time equivalent employees (FTE) has increased by 245.
“WS/FCS appears to have proportionally reduced staffing as a result of decreased enrollment through FY 2022, but this practice has not persisted,” reads the report. “Specifically, the number of FTEs added since FY 2022 does not reflect the general decline of student enrollment that has occurred in the District.”
WS/FCS routinely bypassed its budget limits according to the OSA report, using an override function to approve 308 purchase orders that exceeded account budgets between July 1, 2024, and May 9, 2025. While policy required the CFO to approve these overrides and the Board to adjust budgets accordingly, the district only made timely budget adjustments in 33 of the 311 cases, leaving 278 instances where overspending was not corrected on time. The uncorrected overrides left accounts inaccurate, reducing budget clarity and contributing to the deficit.
“Unless an emergency arises, the District’s CFO and Financial Services Department should consistently use the budget transfer process adopted by the District in a Budget Resolution on September 10, 2024, in place of the budget override process,” recommends the report. “The budget transfer process gives the superintendent authority to raise the amount of money appropriated to certain budgets while equivalently lowering the amount of money appropriated to other budgets.”
Superintendent Catty Moore responded to the report, acknowledging that the district must accept responsibility for its actions.
“We appreciate the time and effort taken by the Auditor’s Office in reviewing our financial records and providing recommendations for how we can continue to improve our processes and procedures,” wrote Moore. “The WS/FCS accepts responsibility for its current financial situation and acknowledges the difficult path forward in restoring the financial health of the district. We are committed to transparency, accountability, and to rebuilding the public’s trust by showing good stewardship of public dollars.”
Other highlights of the report include:
- More than $75 million in bonuses were given out as WS/FCS overspent its annual revenue during FY 2022 and FY 2023.
- WS/FCS did not reconcile budgeted and actual revenue and expenditures in a timely manner.
- WS/FCS misused suspense accounts meant to hold transactions until proper classification.
- WS/FCS was not fully reviewing all active contracts when creating the system’s annual budget.
The post Winston-Salem/Forsyth Schools facing dire $46M budget gap first appeared on Carolina Journal.