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Independent auditor warns Cabarrus Schools fund balance is low; sick-leave accounting drives $51 million net-position drop
Summary
External auditors told the Cabarrus County Board of Education on Oct. 6 that a new GASB standard added a $51 million sick‑leave liability to district net position and that the district’s available local fund balance is lower than policy targets, leaving limited flexibility for new spending.
An independent auditor told the Cabarrus County Board of Education on Monday that a new accounting rule added a $51 million liability for accrued sick leave to the district’s net position and that the district’s usable local fund balance is below the board’s target.
The auditor, presenting the fiscal year 2024–25 audit, said the Governmental Accounting Standards Board’s GASB 101 changed how sick leave is reported and “there was a $51,000,000 decrease in your net position because sick leave is now a liability,” a change that affects long‑term net position but “doesn’t mean anything to the amount of funds you have available” for operating purposes.
The presentation focused on the district’s fund balance — the cash and near‑cash amounts the district may use for operations. The auditor reported roughly $9.3 million in cash and cash equivalents and said the general fund had about $1.5 million of unassigned fund balance available to appropriate, below the board’s policy target of about 4% of the prior fiscal year’s operating budget. “If you can live within your current appropriations, you can survive on $5,500,000 of fund balance,” the auditor said, noting that the district’s combined local and special‑revenue fund balance was about $5.5 million.
Auditors and district staff identified the year’s biggest drivers of the fund‑balance decline as two broad categories: one‑time purchases and sustained expense increases. Those included a $2.3 million elementary ELA curriculum purchase, approximately $700,000 of Chromebook purchases, and a classified‑staff salary study that raised pay and benefits by several million dollars. Auditors also highlighted roughly a $10 million decline in federal ESSER pandemic funds compared with the previous year.
Board members asked whether the district was at risk of fiscal intervention similar to recent reports in other states. The auditor said the financial statements fairly present the district’s condition and that oversight and regular review are the appropriate mitigations; he recommended the board and staff continue to monitor revenues and spending closely. “You don’t have the ability to approve projects that you don’t have funding for,” he told board members.
District and audit staff said they will continue month‑by‑month variance analysis, start earlier in the fiscal year to track projected versus actual spending, and bring any budget adjustments to the board as needed. The auditor noted school nutrition and Kids Plus enterprise funds are in healthy positions, with School Nutrition reporting roughly $12.6 million in cash and the Kids Plus fund holding unrestricted reserves.
Ending: The district will present the audit documents to the Local Government Commission after federal compliance supplements are finalized; auditors said the numbers themselves are complete but some federal compliance forms remain in draft and will be finalized before filing.
