State Superintendent Mo Green discusses academic gains during a Wednesday press conference at the State Board of Education meeting. (Screengrab: NCDPI video stream)
The North Carolina State Board of Education on Thursday ordered a full financial review of Winston-Salem/Forsyth County Schools and set a 0.4% monthly interest rate on the district’s $3.4 million debt to the state.
The move followed weeks of scrutiny after a state audit revealed widespread financial mismanagement. The district has been navigating a $46 million budget deficit, triggering mass layoffs and drawing criticism from the community and some state board members.
The state board will hire an outside firm to review the district’s overall financial management.
Audit reveals deeper issues
A state audit report released last month found that the district used temporary federal COVID-19 funds to cover permanent salaries, approved purchase orders without money in the budget, and delayed routine account reconciliations. Auditors also flagged misuse of “suspense accounts,” temporary accounts where money is held until it can be properly assigned. At one point, they held more than $332 million, and the funds weren’t tracked clearly.
The audit found no fraud but detailed years of financial mismanagement and weak oversight.
“The situation was a perfect financial storm,” Dionne Tunstall Jenkins, the general counsel at Winston-Salem Forsyth County Schools, told state board officials during an appeal hearing on Tuesday on the debt owed to the state.
While the appeal committee recommended extending the grace period for interest on the district’s $3.4 million debt to the N.C. Department of Public Instruction until Nov. 20, 2025, the full board on Thursday rejected the committee’s recommendation to waive interest entirely and instead approved a 0.4% monthly rate, proposed by State Treasurer Brad Briner. “There’s no such thing as free money,” Briner said. The motion passed 5-4.
Still, without the reprieve, the debt would have accrued a 1% monthly penalty, costing the district more than $900,000 over a year. The debt is part of a larger $11.3 million overdraft of state funds that the district racked up during the 2024-25 school year. The district has already repaid roughly $8 million.
Sharp criticism from state leaders
During Thursday’s meeting, board member Olivia Holmes Oxendine sharply criticized Forsyth’s leadership.
“I was appalled in reading the eight findings clearly worded,” Oxendine said. “They need to rethink if they really are in the seat they need to be in.”
“The report needs to be a case study of how not to govern the resources provided by this great state,” she said. “I do not sense that the board gave consideration to protecting the resources of the taxpayers of Forsyth County.”
She said the district’s leadership must rebuild its reputation from the ground up. She also said the Winston-Salem/Forsyth County School Board Members should, “Donate their monthly stipend to help pay off this bill at a minimum.”
Interim Superintendent Catty Moore, who took over in June, has overseen two rounds of staff reductions totaling more than 470 positions, including assistant principals, support staff and employees in the Exceptional Children’s program, she said during the appeal hearing on Tuesday. The cuts, aimed at saving more than $60 million, have drawn protests from teachers, students and parents who warned that the reductions would dismantle essential services. Moore, a state board member, recused herself from Thursday’s vote.
Looking ahead, Moore has promised more transparency, sending monthly budget reports to the district’s board members and working with consultants to align staffing with enrollment, she said during the appeal hearing Tuesday.
While acknowledging what he called “difficult decisions,” State Board Chair Eric Davis said the actions taken Thursday were necessary to help the district recover from its budget crisis. “Our goal is to return the district to a healthy financial position,” Davis said. “That is our objective.”
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