Superintendent says district is implementing audit fixes as community funds and county forgiveness cut school debt

Superintendent Dr. Phipps told the Winston Salem Forsyth County Schools Board of Education on March 5 that the district has responded to an Office of the State Auditor follow-up report with process changes and is on track to restore financial stability.

"This is not a process that you start at some point and then you hit an ending point and say we've done what needed to be done and now we're finished," Phipps said, describing ongoing corrective work and new controls. He said staff now produce monthly budget-to-actual reports and are implementing the Tyler financial system to improve internal controls.

Phipps recapped relief and fundraising that reduced the district's liabilities. He said the Education Foundation distributed about $1.4 million in January to fully fund school supply budgets and that community efforts raised more than $6.8 million to help address district debt. That fundraising, together with a $5 million forgiveness from the Forsyth County Board of Commissioners, produced "an impact of over $11,000,000," Phipps said.

Using figures from the district's February 2026 audit, Phipps said the district's deficit is just over $43 million but that the revised debt the district holds is now "just over $4,700,000," a total that excludes child nutrition loan obligations. He said the child nutrition loan adds about $1,400,000 to the overall picture and that the district aims to retire that debt before students leave for summer.

Phipps emphasized the difference between paying down debt and fixing the processes that led to the shortfall. "Paying off the debt doesn't mean that we're in a different place," he said, adding that long-term stability requires both tougher budget decisions and alternative funding strategies, including grants and county requests. He also said the district will provide a 120-day update to the board, the state Department of Public Instruction and the Office of the State Auditor documenting corrective steps taken since the rapid-response report.

The superintendent highlighted the district's teacher residency program as a retention strategy, noting a reported 100% pass rate on the state exam for cohort 3 and that 93% of those residents remain teaching in the district. He encouraged families to register for kindergarten and for school bus service before the posted deadline to avoid delays.

The board did not take formal action on the audit update at the meeting; Phipps said staff will continue process implementation and reporting and will follow a two-year action plan informed by external internal-controls reviews.