Auditor flags general-fund deficit and child-nutrition shortfall in Chatham County Schools audit

Dale Smith of Anderson, Smith and Wike presented the Chatham County Schools 2024–25 audit at the board’s Jan. 12 meeting, telling board members the financial-statement opinion was "clean and modified" while also flagging budget risks the district must address.

Smith said the district’s governmental-funds column shows the general fund with cash and cash equivalents in the neighborhood of $3 million and total liabilities that produce a reported general-fund deficit (the transcript reports the deficit as approximately $1,000,004.95). He said the deficit represents a decrease from the prior-year fund balance and that the board will need to appropriate the deficit in the current-year budget; the auditors issued a separate letter describing the fund-balance finding and recommended steps to increase reserves.

The audit presentation also described the district’s Child Nutrition Program: for the year ended June 30, 2025, the program reported a loss the auditor gave as approximately $512,000, and management explained that USDA reimbursements rose but were offset by roughly $1,000,000 in decreased food sales after districtwide implementation of universal free breakfast and lunch. Smith said the general fund transferred $592,000 to the Child Nutrition Fund during the year to maintain operations and that cash on hand for the program was about $1.3 million at year end.

Smith noted two budget-related compliance findings tied to the deficit and a state-grant funding finding; both were discussed with management and the auditor will follow up in the FY26 audit to verify corrective actions. He said compliance testing of state and federal grants found no questioned costs for the federal awards tested. The auditor also issued a standard annual letter that, according to Smith, reported no difficulties or disagreements with management and no uncorrected misstatements.

Board members asked clarifying questions about the reported figures and about steps management is taking; staff said board and administration have already discussed corrective steps since July and are working to address reserve levels and cash-flow needs. The board did not take action at the meeting; the audit was provided as an informational briefing and the auditors will follow up on the two findings in the next audit cycle.

Quoted speakers must be attributed to participants recorded in the transcript, including the auditor and district staff. Figures in this article are reported from the audit presentation and the transcript; some numeric values in the transcript display inconsistent formatting, and the district should be relied upon for formal figures in the published audit report.