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Winston-Salem/Forsyth County Schools have released the latest update on the budget, explaining the cause behind the shortfall and updating savings and payment plans.

Budget shortfall explained

The district budget issues were caused in part because WS/FCS did not adequately plan for reductions in state funding caused by a decline in enrollment and the loss of federal funding. Interim Superintendent Catty Moore provided details this week on what led to the estimated $42 million Fiscal Year 24-25 budget shortfall:

• The district was staffed beyond what the state provides for non-instructional positions.
• WS/FCS overspent on transportation due to inefficiencies and on exceptional children’s services.
• It underbudgeted for some expenses, including charter school payments, and did not budget for substitute expenses.
• WS/FCS also failed to reduce costs after county funding came in lower than what was requested.

Reducing the deficit

In the update, the district stated that it continues to prioritize staff pay while it works to pay its bills. Moore reiterated that staff members will receive their June paychecks.  

According to the district, WS/FCS has paid down $2.8 million owed to vendors and expects to pay all but three vendors by the end of the fiscal year on June 30. WS/FCS is negotiating payment plans for $16 million owed to a company that hired substitute teachers, a custodial contractor and the county for school resource officers and other expenses.

The Board of Education granted permission at a recent meeting for the district to borrow up to $6 million from the Child Nutrition fund to further reduce the deficit. This fund will retain two months of Child Nutrition operating expenses and the loan will not affect how the program operates.

The district also recently heard that it would receive $1.8 million from the NC Department of Commerce for overpayment of unemployment security funds. This will further go toward paying debts and reducing the deficit for this fiscal year.

Balancing the 25-26 budget

Looking ahead to 2025-26, WS/FCS developed a $44.8 million cost savings plan. Two significant items approved this week are changes to bus transportation and school positions, according to the update.

Beginning in August, WS/FCS will no longer provide transportation for students enrolled in schools outside their residential zone. Transportation to residential schools and from magnet hubs will remain unchanged. This is expected to save the district $3.5 million.

Approximately 2,500 students may be affected. Those families will need to provide their own transportation to their chosen school or re-enroll in their residential school. Additional information was provided directly to affected families this week.

Instead of increasing class sizes, WS/FCS has asked principals to determine how to reduce their staff sizes to align with the funding provided by the state. Principals were asked to work with their school improvement and leadership teams to make these decisions this month. The shifts could impact 228 positions.

Moore has previously stated that personnel cuts would not affect current teachers.

As with other position reductions made this year, WS/FCS will attempt to move as many staff members as possible into other open jobs, according to the release.  

The total savings plan also includes previously announced reductions of 81 Central Office positions, travel, utility costs, cell phones and take-home cars. See the superintendent’s presentation for a full list of reductions.

Withholding review

WS/FCS has been in contact with the federal government to review discrepancies with federal withholding payments and reports sent to the IRS. There may be funds owed by WS/FCS for the withholding due and for interest penalties. WS/FCS has requested all IRS documents and statements so that leaders can be confident that they have all the information needed to determine next steps and financial impact.