Audit firm flags $1.3 million shortfall in Northumberland schools; board approves state SOQ bonuses

An external advisory firm told the Board of Supervisors on Tuesday that Northumberland County Public Schools faces an estimated $1.3 million shortfall for fiscal 2025 while records and reimbursement requests were incomplete. The board separately voted to appropriate $127,727 in state funds to pay SOQ retention bonuses to eligible school staff.

The report matters because the county, school division and auditors will need to close the gaps before the fiscal year end and because the board must decide how to respond to any local funding gap.

Reagan of UHY Advisors told the board he and his team reviewed tax filings, reimbursements and outstanding purchase orders and found clerical errors and incomplete ledgers. "My best estimate is that there's going to be about a $1,300,000 shortfall against the budget for this year," Reagan said, adding that the estimate relied on incomplete records and staff estimates. UHY also identified amended tax filings that increased federal/state tax liability by roughly $30,000 and said more than $800,000 in reimbursements were submitted to the Virginia Department of Education in early June for earlier months.

Superintendent Dr. Leslie and UHY described multiple causes: purchase orders that had not been entered, invoices not recorded, and reimbursement requests that had not been filed since January. Reagan said UHY conducted data calls and weekly reconciliations to capture invoices and encumbrances and that the school division’s ledgers were "incomplete and inaccurate" when they began. "There have been additional items that we had previously asked for that were for transactions that occurred months ago that got presented to us after the initial data ask," Reagan said.

Board members asked whether the shortfall would have been detected without UHY; Reagan said it likely would have appeared later when independent auditors perform a year-end audit. He recommended straightforward policies, timely purchase-order entry and monthly budget-to-actual reporting as near-term fixes and said UHY will assist with concrete, implementable changes.

Separately, Dr. Leslie asked the board to accept $127,007.27 in state SOQ funds for retention bonuses. The schools’ calculation proposed a $150 one-time bonus for roughly 150 employees identified as SOQ-eligible. The board moved and seconded the appropriation and voted in favor. The appropriation uses state-provided funds and, per school staff, requires no local match.

The board scheduled further joint budget discussions with the school board for June 17 and asked staff to keep working with UHY to refine the final year-end numbers.

Ending: The UHY review leaves an opening on the size of the final shortfall because UHY’s estimate uses invoices and encumbrances that continued to appear during its reconciliation work. The board directed continued reconciliation and a joint meeting with the school board to consider next steps.