Winston-Salem/Forsyth County Schools adopts interim budget as district faces state audit and vendor debts

The Winston-Salem/Forsyth County Schools Board of Education on June 24 approved an interim budget resolution to allow the district to operate after the fiscal year begins while state and federal funding decisions remain pending.

Superintendent Amanda Moore told the board the resolution is a stopgap while the North Carolina General Assembly completes its budget work and while the district continues reconciling vendor payments, IRS withholding questions and an investigative audit by the North Carolina Auditor’s Office.

Moore said the district faces a multi‑million dollar shortfall traced to overspending in prior periods and late or missing reporting. “Initial review indicates that some payments may have been late, and therefore penalties, interest, fines accrued on those payments,” she said about federal withholding; she said the district was working with an assigned revenue officer at the IRS to reconcile how payments were applied.

The superintendent also described an investigative audit opened in April by the North Carolina Auditor’s Office. Moore said auditors are reviewing purchase orders, payments and other records and that she expected the report to include findings on “insufficient processes and structures,” failures to follow procedures and “lack of oversight to prevent exceeding the budget.” She added the district will publicly respond to the Auditor’s Office report when it is issued.

On vendor payments, Moore said the district has paid roughly $2.6 million in recently printed checks and expected to mail additional vendor checks by June 30, excluding three large vendors (a substitute management vendor and custodial services among them) that are being prioritized in separate discussions. She reported a wire payment of about $800,000 to the district’s substitute management vendor this week.

Moore said staff and the county manager were discussing one‑time flexibility if the board requests it: the county is holding capital outlay reimbursements and bond interest earnings that might be eligible for a one‑time transfer to operating needs. Preliminary reconciliation suggested between roughly $3 million and $6 million available in outstanding county capital reimbursements and about $4 million in bond interest earnings, she said, and added that any request would need both board and county approval.

Moore reiterated that Article 46 sales‑tax supplement payments to teacher local supplements have fluctuated and that a $1.2 million “true up” could reduce next year’s Article 46 balance. She told the board the district will begin reporting Article 46 as a separate line on pay stubs to clarify what portions of local supplements are tied to that revenue stream.

The board unanimously approved the interim budget resolution. Board Member Barr moved the motion; Board Member Watts seconded.

Discussion next steps outlined by Moore included continuing reconciliation with the IRS, ongoing work with the Auditor’s Office, establishing a monthly budget calendar for finance committee reporting and finalizing vendor payback plans where necessary. The district also plans a phased rollout of a new enterprise resource planning system (Tyler) beginning July 1 for budgeting, accounts payable and purchasing; payroll and HR modules are scheduled for a January 2026 launch.

Moore said the district is preparing to reconcile outstanding obligations to the state tied to Program Resource Code overages (PRCs) and that preliminary planning is to prepare for an amount that could be in the tens of millions; she said interest on amounts owed to the state is assessed at roughly 1 percent.

The board’s approval of the interim budget allows staff to continue paying vendors and opening operations while the district completes reconciliations and awaits legislative action on state funding.

Less urgent procedural items on the June 24 agenda — including a slate of consent items and several memorandums of understanding — were handled separately.

Looking ahead, the superintendent recommended a board budget calendar that includes monthly financial reporting and an audit of carryover and school allotments so the board and community can monitor spending during the year.