*This story was updated at 2:45 p.m.
The State Auditor’s Office investigation of Winston-Salem/Forsyth County Schools reveals years of overspending, incorrect budgeting practices and a lack of internal controls— but no embezzlement or fraud.
The audit was released Thursday morning. It’s a 39-page deep dive into the district’s finances that mostly confirms what officials have said caused its $46 million deficit.
The report has seven primary findings. Those include failing to reduce staffing in alignment with declining enrollment, as well as keeping positions funded by federal COVID relief, even after it expired.
In terms of financial mismanagement, the report shows former Chief Financial Officer Thomas Kranz regularly approved purchase orders exceeding the budget. That amounted to 311 budget overrides between July of last year and May 9, 2025 — his last day.
Of those overrides, Kranz only adjusted the budget to reflect the spending increases for 33 of them.
Additionally, the report states that previous financial audits for multiple years, going back to 2017, identified overspending and poor accounting practices. The district has had four different CFOs and superintendents since then, and the issues were never corrected.
In a written statement on the matter, State Auditor Dave Boliek said it's going to take "real discipline" to climb out of the district's "deep financial hole."
"Our schools need to be focused on teaching students. That becomes a lot more difficult when you’re staring down a $46 million budget deficit,” he said. “By shining a bright light on these specific problems, it is our hope that a sense of urgency will develop in Winston-Salem/Forsyth County Schools to right the ship in a hurry.”
The school district agreed with all of the findings in the audit. In a message to the WS/FCS community, Interim Superintendent Catty Moore said the district is committed to "transparency, accountability, and to rebuilding the public’s trust by showing good stewardship of public dollars."
"WS/FCS concurs with the Auditor’s findings and recognizes the need for stronger internal processes and succession planning to address the systemic inefficiencies and lack of controls that have existed for nearly a decade or more," the statement reads. "Without the federal pandemic-relief funds, there is every indication we would have been in this spot five years ago."
At a press conference Thursday afternoon, Moore announced several strategies to rectify the district's poor budgeting practices, including the creation of an external audit committee. It will include members appointed by the school board, superintendent and county commissioners.
“So that we can have external stakeholders that are partnering with us as we rebuild back from the financial problems that we've had, the deficit that we're in, and making sure that we move forward in good stewardship of our public dollars," Moore said.
She said the district is also working with the State Auditor’s Office to launch a community-facing budget dashboard.
In terms of internal practices, Moore says the option to override a budget is gone — that used to be a regular occurrence according to the state’s audit.
Succession planning, staff training and new budgeting software are also expected to help.
Moore will provide a presentation on the audit findings at the next school board meeting on Aug. 19.