Burke school board audit shows fund deficits but no financial irregularities

Even as Burke County Public Schools (BCPS) passed its annual audit with praise for its bookkeeping practices, the numbers underneath highlighted rising expenditures, diminishing reserves, and deficits across multiple funds.

Jim Lowdermilk and Rick Hammer, of Lowdermilk, Church & Co., L.L.P., presented the numbers to the Burke County Board of Education (BOE) on Monday evening.

“Talking about the individual schools, they’re keeping excellent records in these schools,” Lowdermilk said. “I was impressed by how the records of individual schools were.”

BUDGET BREAKDOWN

The audit covers three main budgets — the General Fund, the Other Special Revenue Fund, and the Child Nutrition Fund — as well as an amalgamation of all budgets: All Funds GASB 34.

The General Fund consists of routine and recurring expenses: salaries, utilities, and supplies. This fund had total revenues of $20,586,597 and total expenditures of $21,299,771, resulting in a $713,175 deficit.

The Other Special Revenue Fund, which typically covers grants and other revenue streams not funneling from the North Carolina Department of Instruction, can fluctuate with grant cycles and reimbursement timing. The fund had total revenues of $6,832,719 and total expenditures of $8,920,919, resulting in a $2,088,200 deficit.

The Child Nutrition Fund covers school meal programs, including food, cafeteria labor, and reimbursements from federal funding. This fund stands apart because operating losses are common in North Carolina. Meal sales often don’t cover costs.

The operating revenues were $397,468 and the operating expenditures were $10,276,155, resulting in a $9,878,688 operating loss. However, nonoperating revenues balance this fund a bit, adding $9,007,696 to the pot and putting the net loss at $870,992.

Across All Funds GASB 34, which covers the district’s long-term financial position on everything from assets like buildings and buses to debts, pensions, and retiree benefits, the auditors reported a net position of negative $31,338,849.

Much of that final number is attributed to accounting standards rather than real-world operating losses.

BUDGET EXPLANATION

Just because the ledger is red doesn’t mean it’s time to jump ship, though, as many of the shortfalls were expected by finance staff.

The budget audit compares two fiscal years: July 1, 2023, through June 30, 2024, and July 1, 2024, through June 30, 2025. The most recent fiscal year audit encompasses Hurricane Helene and inflationary growth in the face of reduced federal funding.

When expenditures outpace revenues, the difference is covered by available federal funding reserves accounted for in the district’s balance, according to Keith Lawson, the financial officer at BCPS.

“This is a standard and planned budgeting practice,” Lawson said. “The fund balance exists specifically to absorb timing differences in revenue, one-time costs, or unexpected expenses. Additionally, $710K was expended in Hurricane Helene recovery efforts, with future FEMA reimbursements expected.”

Lawson reiterated that the decrease in the General Fund balance between 2024 and 2025, with the increased expenditures, were not unexpected.

“It reflects a combination of being funded in arrears at the state level, rising costs associated with unfunded mandates, and inflationary pressures on goods, services, and employee and retiree benefits,” he explained.

“For example, maintenance and transportation costs increased significantly, including higher prices for school bus parts and repairs. Like many public entities, we experienced cost growth in areas we cannot easily reduce.”

BOE Chair Tiana Beachler specifically asked the auditors if their review covered the entirety of BCPS’ budget and if it would have uncovered irregularities of any nature.

Hammer explained their statutory findings would have revealed reckless spending and mismanaged funds, and there were none.

OTHER ITEMS COVERED IN THE SCHOOL BOARD MEETING

• Burke Middle College school counselor Connie Thompson presented updates on school counselors and their roles in schools.
• GEAR UP LEAD (Leadership, Empowerment, Advocacy, and Discovery) Cohort students from East Burke High School presented during public comments as part of a homework assignment.
• BOE member Brad Camp explained the board could get board training from the North Carolina School Board Association via continuing education. The board discussed receiving the presentation during a retreat in May.
• Deputy Superintendent Dr. Karen Auton proposed a resolution to proclaim March 2026 as “Youth Art Month,” with the theme of “The World Needs Art.”
• Exceptional Children Director Jessie Gravel proposed a resolution for providing children of all abilities with support and inclusion.