Auditor issues clean opinion; Carteret reports modest fund-balance gains, CEP eases school lunch losses

An external auditor told the Carteret County Board of Education on Nov. 5 that the district’s financial statements for the year ending June 30, 2025, received a clean, unmodified opinion and that several one-time and structural items shaped the results.

“The financial statements presented here … accurately reflects the position and the year activity for 06/30/2025,” the auditor said, summarizing the audit and the firm’s unmodified opinion.

Why it matters: The report shows the district added $620,000 to its general fund balance and an $801,000 increase in other special revenue, while the capital outlay fund fell by roughly $2 million largely because of hurricane Florence project spending and reimbursements. Those fund-balance changes affect how long the district can absorb funding volatility if state revenues fall.

Key findings

- Audit status and compliance: The auditor said the statements are in draft only because federal compliance supplements from the Office of Management and Budget were not yet finalized; he expects only the report date to change after supplements are issued. He told the board he will submit the drafts to the North Carolina Department of Public Instruction for monitoring.

- Fund balances: The general fund ended the year at $4,379,000 (up $620,000). The auditor said the other special revenue fund rose to about $3.8 million (an $800,000 increase). The capital outlay fund declined by $2 million as reimbursements and project spending for hurricane Florence projects were applied.

- Revenue makeup and ESSER decline: The auditor reported $61.7 million in the state public school fund (a $2.3 million increase) and $6 million in federal grants, down $5 million as ESSER funds unwind. He said the last COVID-related stabilization funds in the awards schedule total about $1,003,000.

- Child nutrition and CEP: The child nutrition (business-type) fund still shows a negative net position on paper but had about $641,000 in cash on hand. The district’s move to Community Eligibility Provision (CEP) increased federal reimbursements and, together with a state CEP initiative, produced roughly $240,000 in additional revenue that helped improve the fund’s bottom line.

- Internal controls and compliance letters: The auditor reported no internal control deficiencies or material weaknesses and said the district complied, in all material respects, with the audited state and federal programs.

What board members asked: Directors pressed the auditor about how Carteret compares to other districts and about the DPI account reconciliation process that creates a temporary “bank overdraft” line on the state public school fund. The auditor explained the timing differences when local funds are moved into DPI’s consolidated account and how year‑end reconciliations can show overdraft lines even when cash is available.

Next steps: The auditor will finalize the report once federal compliance supplements are issued and will provide clean bound copies if requested. Board members did not take formal action on the audit at the Nov. 5 meeting.

The auditor concluded, “Happy to discuss school finance anytime,” and provided contact information for follow-up questions.