Audit flags, federal funding cliff and payroll overruns put district budget under pressure; board hears options including central-office reductions

An unmodified audit opinion accompanied a detailed briefing to the Winston-Salem/Forsyth County Board of Education on the district's fiscal year 2024 finances, but auditors and staff told the board that a steep fall in pandemic-era federal money and payroll overruns left the district drawing down fund balance and facing near-term savings choices.

Auditor Tyler Beatty, the engagement partner, said the district's federal funding dropped about $40 million between fiscal 2023 and fiscal 2024, largely because education-stabilization (ESSER) money declined; ESSER spending fell by about $44 million. "We are issuing an unmodified opinion on the financial statements," Beatty said, while noting three findings in the governmental audit: a deficit in a special revenue fund, budget violations and reconciling adjustments identified during the audit.

Why it matters: the district used fund balance to offset federal revenue declines, driving total fund balance from about $25.2 million at 7/1/2023 to $12.7 million at 6/30/2024, with roughly $5.4 million unassigned. Thomas Krantz, chief financial officer, told the board payroll (object 100) exceeded budget by roughly $9.6 million in fiscal 2024 ($93.0 million spent vs. $83.7 million budgeted) and benefits were likewise higher than planned. District and auditor presentations attributed the overrun to the carry-through of positions added during ESSER and to compensation increases and other personnel costs.

Board members pressed for detail and process changes. Vice Chair Bohannon and others asked why the board had not seen clearer monthly signals earlier; Krantz and the superintendent said the finance team will standardize reports and deliver monthly budget-to-actual dashboards to the full board going forward. Beatty and district staff recommended more frequent reconciliations and a "soft close" monthly routine so issues are caught before year end.

Public commenters and several board members urged protecting school-based instruction and special education supports. Rhonda Mays and Michelle Jordan particularly urged the board to avoid cuts in classroom services and special education case managers. Several classroom teachers who spoke during public comment asked the board not to cut school-based positions and to prioritize direct services to students.

District plan and possible actions: Superintendent Tricia McManus and staff described a package of immediate spending freezes and operational changes intended to yield about $8 million in one-time savings by 6/30/2025 (examples: freezing nonessential travel, curbing summer-program local spending, reducing building-based long-term substitute use). For 2025-26 the superintendent outlined a longer plan to reduce central-office personnel costs, take targeted furlough days at senior levels and consolidate facilities (for example, merging Kingswood and Main Street alternative programs). McManus said the district is targeting roughly $16 million in personnel-related savings next year, combining attrition, position eliminations and other measures; the board would need to approve any reductions in force.

Board process and timeline: staff said the board could consider RIF action April 8; the superintendent said any displaced employees would be given placement opportunities consistent with district transfer and surplus procedures.

What remains unresolved: auditors reported recurring audit items that must be corrected (special revenue fund deficit and budget violations), and the board and superintendent said they would continue to refine the savings package. Krantz and Beatty told the board that additional monitoring and an upgraded financial system conversion (underway) should improve forecasting and month-to-month transparency.

Ending: Board members said they wanted regular, clearer monthly reports. The superintendent reiterated a priority to shield direct student services while restoring a healthier fund balance and long-term fiscal stability.