Forsyth County will begin a debt-forgiveness plan with the school district, tying the amount forgiven with an anticipated private fundraising effort.
The resolution that commissioners approved on Thursday by a 5-2 vote means that for every dollar raised privately to pay the Winston-Salem/Forsyth County Schools’ debts to the state and vendors, the county will deduct the same amount from the $5 million that the school district still owes the county.
The decision by the commissioners marked a rare bit of good news for the school system, which is mired in a financial crisis that has led to mass layoffs, state scrutiny and negative media coverage from around the country. The school system’s woes also cast the county in a bad light, potentially impacting economic development.
Children’s lives on the line
Commissioner Malishai Woodbury talked about the seriousness of the school district’s financial situation.
“Children’s lives are on the line in Winston-Salem and Forsyth County if we don’t move more expeditiously to fix this issue,” Woodbury said.
Commissioners Richard Linville and Gloria Whisenhunt voted against the resolution.
The school district owes $37 million from the 2025 budget. Besides the $5 million owed to the county, the school district owes the state $3.4 million and three vendors around $11 million. The district must also replenish up to $20 million that school officials overspent.
The school district does not have the authority to raise revenue on its own, getting its funding from the federal, state and local governments, as well as some grants. So, the only way the school district can pay its debt is to cut its budget, setting up the possibility of more job cuts.
Private dinner to raise money
Commissioner Don Martin said earlier this week that a dinner among potential private donors is scheduled for later this month. Martin said he was approached about whether the county could contribute to the effort.
He proposed the idea of forgiving the debt under certain conditions, which was subsequently crafted into a resolution and voted on by the commissioners. Under the resolution, the school district will contact the county to report on the amount of money raised and how it’s being directed.
“It’s important for us to move beyond this heavy cloud and try to find a way out,” Martin said.
The debt-forgiveness plan will not impact the tax rate, he said. The county used $5 million from its savings to cover what the school district owed. That drop in the county fund balance will result in a negative finding on the county’s annual audit.
There is some urgency with the private fundraising effort and the debt-forgiveness plan.
On Nov. 4, school leaders must present a repayment plan to the State Board of Education. This will bolster that report.
The state began charging the school district a monthly interest fee of 0.4% on its $3.4 million debt in October, with payment due in January. In addition, the school district must pay for a state-mandated audit of its finances. The cost of that hasn’t been determined.
Commissioner Dan Besse talked about the financial pressures facing the school district, including the challenge of raising money to pay off debt.
“What we are trying to do with this proposed resolution is to help avoid the situation where the school board and the school system are required to make additional cuts this year,” he said.
lodonnell@wsjournal.com
336-727-7420
@lisaodonnellWSJ
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