Two reports from the North Carolina Office of the State Auditor detail financial distress within the City of Rocky Mount and raise concerns about governance, oversight and contracting practices.
In a performance audit titled City of Rocky Mount Financial Distress, the auditor’s office found the city experienced severe financial strain between fiscal years 2023 and 2025, driven by increased employee compensation and capital spending alongside declining revenues.
According to the audit, city employee compensation increased by 27% and capital purchases rose by 153% in fiscal year 2024, while revenues declined by 2%. During that same period, the city’s cash and investment balances dropped from approximately $100 million in August 2023 to $21.8 million by August 2025 — a 78% decrease.
The audit states total annual purchases and other payments rose to more than $300 million. The report attributes the financial distress to “a combination of poor personnel decisions and egregious overspending,” which led to increased property taxes and utility rates, pauses in capital improvement projects and the elimination of city jobs.
Governance and hiring concerns
The performance audit cites breakdowns in governance shared by the City Council and City Manager. It found that increased spending occurred without thorough feasibility analyses, with limited council oversight and instability in financial leadership.
Since fiscal year 2021, the city’s Finance Department cycled through five directors, including individuals with limited local government finance experience, according to the report.
The audit also examined the hiring of the former city manager. The city paid an executive search firm $38,000 to recruit the manager. The firm described the candidate as a “stretch candidate,” and the audit found no evidence that the city conducted reference checks or other due diligence.
The report states the former manager previously served as town manager in Dumfries, Virginia, where issues included unqualified hires, questionable salary increases without council approval, inadequate segregation of duties and a $1 million budget overspend.
The state auditor’s office concluded the hiring decision, approved unanimously by the City Council, directly contributed to the overspending.
The report says the city “remains far from full financial recovery.”
Recommendations for recovery
The performance audit includes several recommendations, including:
- Requiring comprehensive financial impact analyses for major compensation changes and capital projects.
- Hiring a finance director with demonstrated local government finance experience through a competitive process.
- Implementing timely monthly bank reconciliations.
- Developing a formal governance and oversight framework, including annual performance evaluations for the city manager.
- Establishing transparent and competitive recruitment processes for executive roles.
- Creating clear severance policies and ensuring compliance with state retirement limits.
- Providing governance and financial oversight training for council members.
- Digitizing financial and accounting records with appropriate security safeguards.
Investigative report on comprehensive plan contract
In a separate investigative special report dated March 9, 2026, the Office of the State Auditor examined the city’s handling of a $795,500 contract with AECOM Technical Services of North Carolina for development of the city’s 2050 Comprehensive Plan.
The investigation was launched after an allegation that during a Jan. 27, 2025 City Council meeting, the interim city manager announced termination of the contract even though the council had not voted to terminate it.
According to the report, former City Manager Keith Rogers entered into the AECOM contract on Jan. 12, 2024.
The contract was valued at $795,500, and by the time it was terminated, the city had paid AECOM $385,610.
The city’s procurement policy requires City Council approval and a formal procurement process for service contracts exceeding $90,000. The AECOM contract exceeded that threshold and was not approved by the City Council nor executed by the mayor, according to the report.
During meetings in September and October 2024, council members raised concerns that the contract had been executed without a formal request for proposals, without council approval and without council involvement in selecting stakeholders for the project’s steering committee.
On Nov. 15, 2024, the interim city manager formally notified AECOM that the contract would terminate effective Dec. 15, 2024.
The city later posted a new bid for the comprehensive plan in April 2025, and on July 14, 2025, the council approved awarding the contract to Benchmark CMR Inc., doing business as Benchmark Planning, for a total cost not to exceed $180,250.
The investigative report recommends that the city ensure all future contracts — from procurement to termination — comply with the city’s procurement policy and applicable state procurement laws and are handled in a transparent manner.
Together, the two reports outline financial and procedural challenges facing the City of Rocky Mount and provide recommendations aimed at strengthening fiscal management, oversight and transparency.