RCS Audit: 'Budget Amendments Do Not Match Budget Amounts'

The Rutherford County Board of Education unanimously approved more than $2.7 million in budget adjustments, received an independent audit, and praised student and staff achievements at its first meeting of 2026 — a session that also highlighted how much of the district’s financial and operational detail remains unavailable to the public without a formal records request. The board also discussed the future use of artificial intelligence with the first reading of a 17-page new proposed policy on AI.

The board voted without discussion to adopt the fourth budget amendment of the 2025–26 fiscal year, which includes more than $701,000 in additional state public school funds, $143,595 in federal instructional grants, and hundreds of thousands more in capital outlay and other restricted revenue funds, according to figures presented by Chief Financial Officer John Morris.

Capital outlay adjustments alone totaled more than $1.8 million, including funds tied to instructional support and systemwide operations. Morris said the changes reflect updated allotments and reallocations rather than new spending initiatives.

The board also approved an unmodified, independent audit for the fiscal year ending June 30, 2025. Auditor Shannon Dennison said the district complied with state and federal spending requirements and received the highest audit opinion available.

But the audit identified a significant deficiency — a lower-level finding — related to incomplete bank reconciliations. Dennison said some administrative accounting entries were not consistently reconciled to bank records, creating uncertainty about certain transactions until after the fact. She recommended tighter monthly review procedures.

“It was noted during the audit that the budget amounts included in the board-approved budget amendments do not match the budget amounts in the general ledger for the Federal Grants Fund. Management should implement procedures to ensure that budget amounts per the resolution and amendments are accurately keyed into the general ledger,” the letter said.

The audit showed the district’s general fund balance increased from just under $2.1 million to about $4.4 million, an improvement Dennison attributed in part to the final year of federal ESSER COVID-19 pandemic relief funds. She noted many districts across North Carolina experienced declining balances as those funds expired.

Despite the “clean” opinion, much of the financial detail discussed at the meeting — including budget amendments, expenditure breakdowns, and supporting documents — was not publicly posted ahead of time. Unlike county commissioners, the school board does not routinely publish full board packets online, requiring residents to submit formal public records requests to review many materials referenced during meetings. State law allows the public to request school district records, including budgets, audits, contracts, and expenditure reports, but those documents are not automatically disclosed unless requested, according to information provided on the district’s website and referenced during the meeting.

Beyond finances, the board recognized student leaders from Chase Middle School, who reported raising more than $500 for local breast cancer support organizations. Superintendent David Sutton also announced that Jennifer McBrayer was named Rutherford County Schools Principal of the Year and later selected as a regional principal of the year for Western North Carolina. The board additionally recognized several schools for meeting or exceeding academic growth targets, with Chase High School cited for exceeding expected growth during the 2024–25 school year.

No members of the public spoke during the meeting. After routine votes on financial items and the audit, the board entered closed session for attorney-client matters as permitted under state law. The next board meeting is scheduled for Feb. 3.

You may review meeting materials here and watch the meeting here.