Auditor follow-up finds more issues in Winston-Salem/Forsyth Schools

A follow-up report from the North Carolina Office of the State Auditor has uncovered additional alleged financial management failures in Winston-Salem/Forsyth County Schools, including roughly $15 million in expenditures that were kept off the district’s books for months.

The Rapid Response Special Report was released after an earlier investigation into the district’s estimated $46 million budget deficit. The new report focuses on the district’s financial activity during fiscal year 2025. The auditor’s office stated that in this period, the district delayed recording millions in costs and failed to follow basic financial oversight practices.

“Winston-Salem/Forsyth County Schools remains far from having healthy budgeting practices in place,” state Auditor Dave Boliek said in a statement. “Approximately $15 million in expenditures were not properly recorded for months, and the school system yet again failed to complete monthly reconciliations.”

During the fiscal year that ended June 30, 2025, auditors found the district incurred approximately $15 million in expenses. These expenses were not recorded until September 2025, a few months after the fiscal year ended, and then were retroactively assigned to June 30.

The report also identified a problematic budget transfer that resulted in a subsequent financial shortfall.

On Sept. 20, 2024, the district’s finance office transferred $16.99 million from the Non-Instructional Support Program to the Restart Schools Program. At the time, the source account held just $13.92 million, resulting in an overdraft. By April 30, 2025, the overdraft had grown to $11.34 million.

Auditors also found that the district failed to complete required monthly reconciliations comparing budgeted revenue and expenditures with actual figures, a basic financial control designed to detect problems early.

In another finding, the district’s Board of Education approved a zero-interest internal loan of up to $6 million from the Child Nutrition Fund to cover cash shortfalls. The agreement lacked clear provisions outlining repayment terms, interest or penalties, raising concerns about the integrity of the fund and whether program guidelines were properly followed.

Winston-Salem/Forsyth County Schools acknowledged each of the auditor’s findings in its response and outlined corrective actions and projected completion dates.

This follow-up report was released after the State Board of Education voted unanimously to declare “incidents of management failure” within the district following the initial discovery of the $46 million budget gap.

Boliek said the new findings suggest broader issues with financial oversight in one of North Carolina’s largest school systems.

“The additional findings of financial misconduct the team uncovered in our follow-up show a failure to keep their books straight,” Boliek said. “Winston-Salem/Forsyth County Schools owes parents, teachers, and students accountability.”

Winston-Salem/Forsyth County Schools is among the largest districts in North Carolina, serving tens of thousands of students across Forsyth County.

The latest findings build on financial problems in the district previously reported by the Carolina Journal. Earlier reporting highlighted a state auditor investigation that uncovered an estimated $46 million budget deficit for fiscal year 2025 in Winston-Salem/Forsyth County Schools. The deficit stemmed from multiple management issues, including the use of one-time COVID-19 relief funds to pay for ongoing expenses, such as employee salaries, according to the auditor’s report.

The earlier investigation also found structural budget pressures tied to declining enrollment. Since 2018, the district’s student population has dropped by more than 3,000 students, yet the number of full-time equivalent employees increased by 245 positions, creating a mismatch between staffing levels and funding tied to per-pupil enrollment.

“Auditor follow-up finds more issues in Winston-Salem/Forsyth Schools” was originally published on www.carolinajournal.com.