Winston‑Salem/Forsyth County Schools officials told the board the district faces legacy debts and current obligations that created a multi‑million‑dollar shortfall for fiscal year 2024–25 and that those items drove the need for reductions in the 2025–26 budget.

Interim Superintendent Kathy Moore said the district owes roughly $16.1 million to vendors for late payments on contracts, $11.3 million to the Department of Public Instruction (DPI) for staffing categories (with $3.375 million anticipated to remain after a county appropriation), and $2 million already appropriated from child‑nutrition funds. Moore described an additional estimated $15–20 million of internal over‑appropriations that will be confirmed after the year‑end audit.

County response and deadlines: on Aug. 14 the Forsyth County commissioners approved $8.5 million of additional funds to be applied to the DPI debt; a portion of that must be distributed to charter schools. Moore said DPI granted a grace period until Sept. 20, 2025 for payment; amounts unpaid after that date would incur an interest penalty of 1% per month unless the State Board of Education waives it. The district has requested a waiver; a hearing with a State Board committee is scheduled for Sept. 2 and a full‑board decision may follow Sept. 4 (as presented during the meeting).

Audits and oversight: the Office of the State Auditor released investigative findings Aug. 14. State Auditor Dave Bullock requested that the State Board of Education and the Local Government Commission jointly hire an outside audit firm to review the district's internal control procedures; district staff expected the state board and LGC to discuss next steps at their September meetings.

Why it matters: district leaders said those liabilities, combined with reduced state allotments and lower federal carryover funds, created the need to reduce recurring expenditures to produce a balanced 2025–26 budget. The board is seeking legislative relief and other funding options while implementing immediate reductions.

Numbers and funding sources: Moore said some funds for capital projects are restricted — bond proceeds and certain lottery‑funded school construction monies cannot be used for operating expenses — and identified possible capital funding sources for the Ashley Elementary project (2023–25 two‑thirds bond proceeds, sale of surplus land and lottery repair‑and‑restoration funds). She warned the board that operating needs cannot be addressed by those restricted capital sources without additional approvals.