State Board of Education warns Winston-Salem/Forsyth County Schools to fix budget or face sanctions

Yahoo

06-05-2025

FORSYTH COUNTY, N.C. (WGHP) — The North Carolina State Board of Education warned Winston-Salem/Forsyth County Schools that legal and fiscal obligations must be met as school leaders continue to deal with a budget shortfall in a letter sent on Thursday.
'We have recently read press reports related to the overspent budget and overall negative financial health of your school district. In addition, we have received correspondence from concerned citizens in your community about your looming budget shortfall for the fiscal year 2024-25 in the amount of approximately $16,000,000,' the letter reads.
'Buck stops with me': Winston-Salem/Forsyth County Schools superintendent discusses budget deficit
During the April 8 board meeting, WS/FCS's chief financial officer, Tony Kranz, announced his resignation. His last day with the district will be June 30.
During the April 22 board meeting, WS/FCS Superintendent Tricia McManus announced her resignation. Her last day with the district will also be June 30.
According to the letter, the North Carolina Department of Public Instruction reviewed the district's financial statement audit for the year ending June 30, 2024. The audit was reportedly submitted more than four months after the Nov. 30, 2024, deadline.
'The audit reflects material findings related to a reduction in fund balance, expenditure over budgeted revenues, and other items,' the letter reads.
The 2024 audit reportedly showed:
A decline in the unassigned fund balance of $17.7 million, leaving a balance of $5.39 million, which equates to only 0.7% of total expenditures
A decline in student membership of about 1% from fiscal year 2023, but an increase in the total general fund expenditures of $48.8 million or 7%
Over $16.2 million in expenditures that were not included in the budget, including: $9.6 million more spent from the general fund than had been appropriated, $1.6 million more spent from federal funds than had been appropriated and $5 million more spent from the Child Nutrition Fund than had been appropriated
NCDPI also reviewed the state and federal allotments given to WS/FCS for the current fiscal year that ends June 30, 2025.
The following items were noted in the letter from the district's year-to-date financial data as of the end of March 2025:
Expenditures exceed the allotments in state non-instructional support by $10.3 million. The NCDPI is not authorized to provide funding for these expenditures.
Expenditures exceed the federal ESSER III grant by $3.7 million.
The district is projected to exceed the state-funded position allotments unless the district transfers the positions to another funding source until the end of the year.
The State Board of Education is required by law to ensure that local boards of education comply with state laws and regulations regarding budgeting, management and the spending of funds.
According to the letter, the State Board of Education is directing WS/FCS to provide a detailed explanation of actions taken to mitigate the budget shortfall. WS/FCS must provide a summary of what they have done to employ or contract officials who can help them take action to correct the fiscal year 2025 and fiscal year 2026 budgets. The information must be submitted to the State Board of Education no later than May 15.
'This communication serves as a warning that you must meet your legal and fiscal oversight obligations to avoid financial sanctions and additional oversight of the district by the State Board of Education and DPI,' the letter states.
Winston-Salem/Forsyth County Schools budget shortfall draws questions with few answers
WS/FCS announced in March that they were experiencing a multi-million-dollar budget shortfall for the coming school year.
McManus sat down with FOX8 in March to discuss the financial situation. At the time, McManus said the district faced dissolving vacant positions, demoting people or offering to reassign them, affecting over 100 jobs. The district was actively seeking someone to fill a director of finance role at the time of that interview.
However, according to McManus, if positions are eliminated at the school level, that is not because of the budget. It's because of the state algorithm involving enrollment, which determines how many positions are funded.
The superintendent said that finances will be reviewed every two weeks by both the superintendent and the school board.
'The buck stops with me, and I take everything personally. I absorb everything, and I take it on my shoulders because I do believe … if something goes wrong anywhere, it is my responsibility,' McManus told FOX8.
Winston-Salem/Forsyth County Schools has $5 million budget deficit, could cut jobs, superintendent says
Parents, educators and staff members at the district are bracing for the impact while many are left wondering how this could happen.
McManus pointed to inflation, declining enrollment and other revenue challenges as reasons for the overspending.
School districts across the country were given a portion of ESSER funds, which were three rounds of emergency funds relating to the pandemic. The funds were always going to be temporary, but many school districts used them to pay for programs and salaries with no plan for how they would continue funding them when the well dried up.
'I think what it showed is that the federal funding we received that has gone away was really imperative to support our students post-pandemic, and we're still supporting our students post-pandemic,' McManus said in March.
She cited the end of ESSER funding as one of the reasons the district has a $5 million budget deficit, which was revealed after an audit. She also pointed to reduced federal and state funding.
'The funding we're getting from the state has decreased, but if you look at the needs of our students, that has not decreased. That has increased. Even though enrollment has decreased, some of the needs are greater,' she said.
North Carolina is historically at the bottom of the list in terms of funding per student, and only 8% of the district's entire budget was funded by the state in the fiscal year 2023.
With no more money coming in from the federal or state level, the district has to make immediate cuts before June 30.
It will no longer allow take-home cars, cut travel, hold off on hiring new people in the central office and more.
The next fiscal year, which starts July 1, is more ambitious: save $16 million.
The proposal would change 116 positions. Some are vacant, so they would just be dissolved. Some people would get demoted, some would be reassigned and others would lose a month of employment, saving $7.2 million.
'This will never be something easy or that I would want to do, but it's something … to have that fiscal sustainability for our school district,' McManus said.
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