Forsyth County staff outline plan to reallocate capital transfers, bond earnings to cover Winston‑Salem/Forsyth Schools request

County and school officials on July 21 briefed the Forsyth County Board of Commissioners on a school district request to reclassify or reallocate roughly $8.6 million of previously appropriated capital-related funds so the school system can use the money for current operating expenses.

Deputy Chief Financial Officer Lee Plunkett told commissioners the school request is made up of two parts: about $3.87 million drawn from prior-year general fund transfers that historically supplemented school capital maintenance accounts, and up to $4.7 million of unallocated investment earnings on 2023 general obligation bond proceeds that could be used to pay debt‑service interest this fiscal year, freeing property‑tax dollars for the schools. Plunkett said the mechanics would transfer those amounts back to the general fund, increase fund balance surpluses temporarily and then appropriate the amounts to the schools as current expense transfers — an approach his office projects would have “no impact on fund balance” in the current year if done as described.

The school district’s interim superintendent, identified in the briefing as Interim Superintendent Moore, told commissioners the money would address a mounting deficit she described as the immediate funding “fire at our feet.” The district’s estimate of its total shortfall has shifted during the review: Moore said an earlier estimate of about $42 million has grown as more invoices and obligations were tallied and presented a working figure that rose toward $46.1 million. Moore and finance staff attributed the district deficit to several items, including: a $13.7 million state allotment shortfall identified in program code PRC003 (related to staffing and state funding reconciliation); a large substitute-teacher contractor obligation (ESS) and an SSC custodial contract and county vendor obligations that together account for roughly $15 million, of which the county portion was described at about $5 million; approximately $11 million of invoices that arrived after June 30 and are now counted as prior‑year payables; and other operating shortfalls.

Moore told the board the district has requested flexibility to use the $3.87 million in reimbursable prior-year transfers and the $4.7 million in bond investment earnings to be appropriated to the schools for current expenses. She said the Board of Education has also begun internal steps to reduce ongoing spending for fiscal 2026, including eliminating positions and cutting supplemental contracts; she said principals had been asked to identify additional local reductions where possible.

The briefing included details about a separate capital project tied to district long‑range plans. Ashley Elementary remains planned as a new 600‑student school. District staff gave an updated project estimate of about $46.1 million and said they expect to have a guaranteed maximum price (GMP) from a construction manager at risk around November 2025. The district said it expects the school to open in August 2027 if full funding is available; district staff estimated a potential funding gap on the project of about $2–4 million depending on final GMP and possible state lottery repair funds.

Officials also outlined several related developments that bear on the funding request and the board’s decision: the district has sent the North Carolina Department of Public Instruction a letter requesting a waiver of a DPI policy that charges 1% monthly interest on certain overpayments; the State Auditor’s Office is conducting an investigative audit into the district’s financial practices and staff said they expect findings; and the district is working to resolve several potentially mixed records with the Internal Revenue Service that relate to payroll withholding reports and several quarters of withholding where the IRS recorded cash receipts but said it did not receive the accompanying reports. Moore…