The North Carolina State Auditor has released a second report on Winston-Salem/Forsyth County Schools’ financial management, revealing “severe weakness” in the district’s finances for fiscal year 2025, which ended last June.The new report first addresses overspending from 2024 to 2025, specifically the $11.3 million the district owed to the State Department of Public Instruction. This overspending happened under the leadership of former Superintendent Tricia McManus and former Chief Financial Officer Thomas Kranz, both of whom left the district last year. The $11.3 million debt has since been paid. The report also highlights the district’s lack of “budget to actual” statements, which tracks how much money the district has spent on a monthly basis and how it aligns with the approved budget. Former interim superintendent Catty Moore implemented a monthly budget to actual updates to the Board of Education during her six-month tenure, and the board will receive such an update tonight during its Finance Committee meeting.Auditors also found that the district kept a substantial amount of money off its books. It recorded about $15 million for FY 2025 in September, months after the fiscal year ended. The district then backdated these expenditures. The auditors write, “Because the District failed to record these expenditures, WS/FCS was largely unaware of its depleted financial resources and continued to run up expenditures.”In an interview Thursday, State Auditor Dave Boliek stated about this finding, “that is such bad management of finances.” Another significant issue identified in the report is the district’s loan from its Child Nutrition Fund. The Board approved a loan of up to $6 million to help the district pay down some of its debt. The report indicates that the loan “lacked clear terms.” It wasn’t until January 2026 that the Board adopted an addendum to the loan. The loan was initially intended to be a zero-interest loan; however, under the addendum, it began accruing interest in July 2025. The report focuses heavily on the state of the district’s financial practices prior to new leadership coming to the helm. When asked about his thoughts on the current state of the district, Boliek cited a recent meeting with WS/FCS leaders as a part of the “exit interview” process of this report.“The superintendent—who hasn’t been there very long—has the right intention to move the school system forward. My personal assessment is they’re not there yet, and they’ve got a lot more work to do,” Boliek said. “And they owe additional transparency to the people in Forsyth County and the City of Winston-Salem on exactly what’s going on with the school system.”Boliek says the biggest thing the district can do to right the ship is ensure the budgeting basics are sound.“The overall recommendation is, let’s get the foundational building blocks of the financial, day-to-day accounting correct at the fourth largest school system in the state.”Superintendent Don Phipps responded to the report in a statement: “We remain committed to rebuilding the community’s trust through sound fiscal management, transparency and accountability. The district has taken corrective action to address the issues that led to last year’s deficit, including regular reconciliation of budgets to ensure that we are not overspending. In January, the Board of Education adopted an addendum to the Child Nutrition Fund loan to ensure it will be repaid this fiscal year with appropriate interest – satisfying issues raised by the Auditor in this follow-up report. “WS/FCS is in a new era of fiscal responsibility. We have a balanced budget. We have practices in place to ensure it stays that way. We are on the path to recovery and long-term stability. “The community is invited to review the district’s progress by reviewing the documents and presentations on our Community Budget Update web portal, www.wsfcs.k12.nc.us/o/wsfcs/page/community-budget-updates.” The Office of the State Auditor released its first report on the deficit in August 2025. The 39-page report detailed nearly a decade of financial mismanagement that caused the huge budget deficit the district is still dealing with today. The district has $6.4 million in remaining debt.Get the latest news stories of interest by clicking hereThe first report released in August 2025 revealed that WS/FCS overspent money, had poor accounting, and repeatedly failed to make necessary corrections. The report summarized the key missteps made by district leaders:1. The District failed to adjust its full-time equivalent (FTE) staffing despite a decrease in its student population.2. The District used temporary COVID-era funds to pay staff salaries and did not remove positions when the temporary aid ended.3. The District regularly approved purchase orders that exceeded its account budgets and did not later revise these budgets.4. The District did not reconcile budgeted and actual revenue and expenditures in a timely manner. As a result, no corrective action was taken when there was a material difference in budgeted and actual revenue and expenditures during the fiscal period.5. The District did not reassess COVID-era bonus payments to ensure alignment with current financial conditions and fund availability.6. The District inappropriately uses suspense accounts — temporary holding accounts intended for transactions that could not be immediately classified — as fund equity or fund balance accounts across multiple funds.7. The District did not adequately consider its contracts when creating its budget.The assessment also discovered the WS/FCS Financial Services Department failed to correct prior audit findings, which contributed to poor accounting procedures, budgetary practices, and the FY 2025 budget shortfall, according to the audit report. NAVIGATE: Home | Weather | Watch NOWCAST TV | Local News | National | News We Love |
The North Carolina State Auditor has released a second report on Winston-Salem/Forsyth County Schools’ financial management, revealing “severe weakness” in the district’s finances for fiscal year 2025, which ended last June.
The new report first addresses overspending from 2024 to 2025, specifically the $11.3 million the district owed to the State Department of Public Instruction. This overspending happened under the leadership of former Superintendent Tricia McManus and former Chief Financial Officer Thomas Kranz, both of whom left the district last year. The $11.3 million debt has since been paid.
The report also highlights the district’s lack of “budget to actual” statements, which tracks how much money the district has spent on a monthly basis and how it aligns with the approved budget. Former interim superintendent Catty Moore implemented a monthly budget to actual updates to the Board of Education during her six-month tenure, and the board will receive such an update tonight during its Finance Committee meeting.
Auditors also found that the district kept a substantial amount of money off its books. It recorded about $15 million for FY 2025 in September, months after the fiscal year ended. The district then backdated these expenditures. The auditors write, “Because the District failed to record these expenditures, WS/FCS was largely unaware of its depleted financial resources and continued to run up expenditures.”
In an interview Thursday, State Auditor Dave Boliek stated about this finding, “that is such bad management of finances.”
Another significant issue identified in the report is the district’s loan from its Child Nutrition Fund. The Board approved a loan of up to $6 million to help the district pay down some of its debt. The report indicates that the loan “lacked clear terms.” It wasn’t until January 2026 that the Board adopted an addendum to the loan. The loan was initially intended to be a zero-interest loan; however, under the addendum, it began accruing interest in July 2025.
The report focuses heavily on the state of the district’s financial practices prior to new leadership coming to the helm. When asked about his thoughts on the current state of the district, Boliek cited a recent meeting with WS/FCS leaders as a part of the “exit interview” process of this report.
“The superintendent—who hasn’t been there very long—has the right intention to move the school system forward. My personal assessment is they’re not there yet, and they’ve got a lot more work to do,” Boliek said. “And they owe additional transparency to the people in Forsyth County and the City of Winston-Salem on exactly what’s going on with the school system.”
Boliek says the biggest thing the district can do to right the ship is ensure the budgeting basics are sound.
“The overall recommendation is, let’s get the foundational building blocks of the financial, day-to-day accounting correct at the fourth largest school system in the state.”
Superintendent Don Phipps responded to the report in a statement:
“We remain committed to rebuilding the community’s trust through sound fiscal management, transparency and accountability. The district has taken corrective action to address the issues that led to last year’s deficit, including regular reconciliation of budgets to ensure that we are not overspending. In January, the Board of Education adopted an addendum to the Child Nutrition Fund loan to ensure it will be repaid this fiscal year with appropriate interest – satisfying issues raised by the Auditor in this follow-up report.
“WS/FCS is in a new era of fiscal responsibility. We have a balanced budget. We have practices in place to ensure it stays that way. We are on the path to recovery and long-term stability.
“The community is invited to review the district’s progress by reviewing the documents and presentations on our Community Budget Update web portal, www.wsfcs.k12.nc.us/o/wsfcs/page/community-budget-updates.”
The Office of the State Auditor released its first report on the deficit in August 2025. The 39-page report detailed nearly a decade of financial mismanagement that caused the huge budget deficit the district is still dealing with today. The district has $6.4 million in remaining debt.
Get the latest news stories of interest by clicking here
The first report released in August 2025 revealed that WS/FCS overspent money, had poor accounting, and repeatedly failed to make necessary corrections. The report summarized the key missteps made by district leaders:
1. The District failed to adjust its full-time equivalent (FTE) staffing despite a decrease in its student population.
2. The District used temporary COVID-era funds to pay staff salaries and did not re[1]move positions when the temporary aid ended.
3. The District regularly approved purchase orders that exceeded its account budgets and did not later revise these budgets.
4. The District did not reconcile budgeted and actual revenue and expenditures in a timely manner. As a result, no corrective action was taken when there was a material difference in budgeted and actual revenue and expenditures during the fiscal period.
5. The District did not reassess COVID-era bonus payments to ensure alignment with current financial conditions and fund availability.
6. The District inappropriately uses suspense accounts — temporary holding accounts intended for transactions that could not be immediately classified — as fund equity or fund balance accounts across multiple funds.
7. The District did not adequately consider its contracts when creating its budget.
The assessment also discovered the WS/FCS Financial Services Department failed to correct prior audit findings, which contributed to poor accounting procedures, budgetary practices, and the FY 2025 budget shortfall, according to the audit report.
NAVIGATE: Home | Weather | Watch NOWCAST TV | Local News | National | News We Love |