The North Carolina Office of the State Auditor (OSA) has released a follow-up report on Winston-Salem/Forsyth County Schools (WS/FCS), detailing how the school system’s off-the-books budgeting and accounting practices contributed to financial misconduct.
The new Rapid Response Special Report comes after an initial report that analyzed WS/FCS’s estimated $46 million budget deficit. The follow-up report found a series of problematic financial management decisions by WS/FCS, including approximately $15 million in expenditures incurred during the fiscal year ended June 30, 2025, that were not recorded until September 2025.
“Winston-Salem/Forsyth County Schools remains far from having healthy budgeting practices in place. Approximately $15 million in expenditures were not properly recorded for months, and the school system yet again failed to complete monthly reconciliations,” said State Auditor Dave Boliek. “Winston-Salem/Forsyth County Schools is one of the largest school districts in North Carolina. The additional findings of financial misconduct the team uncovered in our follow-up show a failure to keep their books straight. Winston-Salem/Forsyth County Schools owes parents, teachers, and students accountability.”
Findings of the follow-up report include:
- On September 20, 2024, WS/FCS’s Finance Office executed a budget transfer of $16.99 million from the Non-Instructional Support Program to the Restart Schools Program. The transfer exceeded the Non-Instructional Support Program’s available balance of $13.92 million, creating an immediate overdraft. By April 30, 2025, the overdraft reached $11.34 million.
- WS/FCS’s Finance Office failed to complete monthly reconciliations of budgeted versus actual revenue and expenditures.
- Throughout Fiscal Year 2025, WS/FCS kept substantial costs off-the-books. Such costs were not recorded until September 2025, at which point the Finance Office backdated the costs to June 30, 2025.
- WS/FCS’s Board of Education authorized a zero-interest internal loan from the Child Nutrition Fund for up to $6 million to cover WS/FCS’s cash shortfalls. The loan agreement lacked clear terms for interest, repayment, and penalties, raising concerns about the integrity of the funds and compliance with program guidelines.
WS/FCS acknowledged each finding in its response and provided corrective actions and completion dates. The follow-up report comes after OSA’s original report, which resulted in the State Board of Education voting unanimously to make a finding of incidents of management failures within the school system. To view the previous WS/FCS Special Report, click here.