Winston-Salem/Forsyth County Schools faces a deepening financial crisis, to the tune of $46 million, that has already led to hundreds of layoffs and prompted the North Carolina State Board of Education to open a full review of the district’s finances.
On Sept. 4, the state board ordered a comprehensive financial review of WS/FCS and set a temporary 0.4% monthly interest rate on the district’s outstanding $3.4 million debt to the NC Department of Public Instruction. Officials say the move is intended to limit further penalties while longer-term oversight is arranged.
An appeal committee had recommended extending a grace period on that debt through Nov. 20 and waiving interest entirely. The full board instead approved the 0.4% rate in a 5-4 vote after State Treasurer Brad Briner argued against cancelling interest.
“There’s no such thing as free money,” Briner said during the meeting.
State board member Olivia Holmes Oxendine, one of the most vocal critics of the school district’s financial woes, said the district’s leadership had failed to protect taxpayer resources. She said the school system’s board of education “need to donate their monthly stipend to help pay off this bill, at a minimum.”
Without the board’s intervention, the debt could have carried a 1% monthly penalty, which would have added more than $900,000 to the district’s costs over a year. The $3.4 million is part of a larger $11.3 million overdraft of state funds the district recorded during the 2024-25 school year. WS/FCS officials have repaid roughly $8 million of that overdraft so far.
The state-ordered review follows an audit from State Auditor Dave Boliek’s office, which flagged multiple practices on the part of WS/FCS, including the use of temporary federal COVID-19 funds for ongoing salary obligations, approving purchase orders without sufficient budgetary authority, delayed account reconciliations, and the improper use of “suspense accounts” — temporary holding accounts that auditors found contained more than $332 million at one point and lacked clear tracking.
The audit also showed the school system handed out $75 million in bonuses during the 2022 and 2023 fiscal years.
The audit did not find evidence of fraud, but it detailed long-term mismanagement and weak internal controls and urged immediate corrective action. In an Aug. 19 letter to the State Board of Education and the Local Government Commission, Boliek urged both bodies to jointly hire an independent auditing firm to fully assess and monitor the district’s finances.
Boliek later praised the state board’s public statement on the matter in a post on X.
The state board gave WS/FCS until Nov. 4 to present a credible plan to resolve its financial shortfall and temporarily capped the interest rate on the remaining state debt at 0.4%, with repayments required to begin no later than Jan. 20. If the district fails to demonstrate sufficient corrective actions, state officials have signaled they could pursue stronger oversight options, including third-party financial management and deeper oversight by the Local Government Commission.
Dr. Robert Luebke, director of the Center for Effective Education at the John Locke Foundation, said the situation in Forsyth County shows the need for fiscal discipline on the part of school districts.
“Greater transparency is needed among public schools to ensure taxpayer dollars are not only getting to where they are needed but also having the desired outcome,” Luebke said. “State Auditor Dave Boliek’s audit of the Winston-Salem Forsyth County Public Schools underscores that need. K-12 public schools comprise the largest portion of the state budget. If they wish to continue to receive billions in state dollars, school districts should welcome the ability to show how they are spending taxpayer dollars.”