By Miles Layton

GATESVILLE — Our Gates County readers know this: the County Commission wants the NC Auditor’s Office to audit the Gates Schools’ finances. 

This story outlines the details based on a letter the Commission approved for submission to the state Auditor in December.  

Read the story – if you want more detail, see the letter that’s available for download at the end of this article.  

Let’s be clear – Gates School system is facing financial difficulties. And that bottom line has affected the closure of New Beginning Daycare and the potential closure of an as-yet-unnamed elementary school.  

See our story about New Beginnings — here and here. 

See our story about the pending school closure — here.  

And here is Gates Schools’ Treasurer Steven Harrell pushing back — here.

Here’s this quote from Commissioner Dave Forsythe — who has been direct in his criticism of the school system’s finances.

“It’s time for us to ask the state auditor, and if everything’s on the up and up, if everything’s clear and wonderful, that’ll be good. It’ll vindicate them as being, ‘Oh, this is beyond their control,’ for however many years that’s been happening. But at the same time, the auditor is the one that can look in and give an independent perspective,” Forsythe said at the commission meeting, Dec. 1.

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Audit Request Follows $553,000 Fund Balance Decline

Time to put your reading glasses on — earlier this month, commissioners unanimously requested an audit and oversight review by the State Auditor into the fiscal management and governance practices of Gates County Schools, citing concerns about declining fund balances, long-term operating deficits, transparency issues, and possible violations of state law.

The decision followed the commissioners’ review of a draft independent audit report dated Oct. 13, 2025, which highlighted continued financial deterioration within the school system. County officials said the findings, combined with information learned over the past month, prompted them to seek state-level oversight.

In its formal request, commissioners asked the State Auditor’s Office to examine the fiscal management of the Gates County BOE and its compliance with the North Carolina School Budget and Fiscal Control Act, as well as the North Carolina Open Meetings Law.

According to the draft audit, Gates County Schools reported a $553,288 decrease in its General Fund balance for the fiscal year ending June 30, 2025. The auditors also advised the Board of Education to “take prompt action to preserve its fund balance reserves and balance its budget without the use of fund balance.”

County leaders say those findings demonstrate a pattern that has gone unresolved for several years.

County Cites Repeated Financial Warnings and Unresolved Deficits

In June 2023, commissioners approved a one-time, nonrecurring appropriation of $828,000 to the school system at the request of the Board of Education. The funding was intended to replenish depleted fund balance reserves and was approved based on the school system’s commitment to take immediate corrective action and maintain adequate reserves.

Despite that infusion, the October 2025 draft audit indicates the school system again experienced a significant decline in fund balance. After the reported $553,288 decrease, funds available for appropriation totaled $308,377. School administrators allocated $200,000 of that amount to balance the FY 2025–2026 budget, leaving an estimated General Fund balance of $108,377 as of June 30, 2025.

County officials say they have since learned that the school system’s General Fund reserves are now fully depleted.

During the same period, commissioners became aware that the school system’s daycare program has operated at a loss for several consecutive years. According to county records, the program ran a cumulative operating deficit of $440,394 over the past five fiscal years.

In its request to the State Auditor, commissioners described its concerns as twofold. 

First, commissioners say the BOE has failed to take the corrective action necessary to maintain an adequate fund balance. 

Second, they allege that school administrators have provided misleading financial information and arranged school board meetings in ways that undermine the intent of the state’s open meetings law.

Commissioners state they believe some decisions were not legally conducted in open meetings and that personnel-related administrative matters with significant fiscal impact have been shielded from public view. They further allege that legitimate requests for public information made by the county have been improperly denied.

Among the examples cited is a contract for a former assistant superintendent. County officials say the employment agreement does not list compensation. When the county requested salary information for the individual’s annual gross earnings for the most recent five years, the request was denied, citing state law – NCGS 115C-320(a)(8). The county maintains that the statute does not apply in this case.

The county also requested a list of central office positions with a comparison of salaries between fiscal years 2024–2025 and 2025–2026. According to the commissioners, the school finance officer provided only current-year salary information and stated that no salary increases had occurred from the prior year. County officials say the lack of historical data prevented them from verifying that statement and contributed to their decision to seek outside review.

Questions Raised About Open Meetings Compliance

Concerns about compliance with the Open Meetings Law are a significant component of the commissioners’ request.

Commissioners raised questions about the BOE’s use of remote Zoom meetings, particularly in instances where members of the public — including the Gates County Clerk to the Board — were allegedly denied access because their phone numbers were not recognized by school administration. County officials say this practice was reportedly approved by the Board of Education’s legal counsel.

Even if a public body is permitted to meet remotely, commissioners note that state law requires compliance with state law – NCGS 143-318.13(a), which mandates that the public be provided a location and means to listen to the meeting and that such information be included in meeting notices.

County officials also note that the statutory authority allowing remote meetings during the COVID-19 pandemic expired after the statewide state of emergency ended on Aug. 15, 2022. At that time, state law (NCGS 166A-19.24), which explicitly permitted remote meetings, also expired.

Commissioners cited commentary by the late Frayda Bluestein of the UNC School of Government, who wrote that once the emergency authority expired, governing boards had no clear authority to participate in remote meetings.

Daycare Program Losses a Major Concern

Additional concerns stem from how decisions regarding the school system’s daycare program were handled.

According to correspondence from then BOE Chair Sallie J. Ryan, the school board met in open session on Nov. 26, 2025, and unanimously approved a motion to decline the county’s proposal to assist with daycare funding and to close the program, with operations ending Dec. 31, 2025.

County officials say they understand that meeting was held in Elizabeth City at the office of the Board of Education’s attorney and that no public notice of the meeting was available.

On Nov. 26, County Manager Scott Sauer attempted multiple times to contact Superintendent Dr. Barry Williams via email, beginning at 5:37 a.m. His messages were copied to all school board members, the school board clerk, and the school board finance director. According to the county, no responses were received.

In a follow-up email sent at 6:55 a.m., Sauer asked for confirmation of whether the Board of Education was meeting that day and requested a copy of the public notice. He also stated the county’s position that matters related to consolidation, daycare operations, and a recent resolution should not be discussed in closed session.

Again, county officials say no response was received.

Lottery-funded Projects Also Under Review

Commissioners said they believe the current governance and fiscal administration of the school system is undermining public confidence and weakening the effectiveness of Gates County’s public schools.

The county has also raised concerns about state lottery-funded construction projects allegedly beginning without required approval from the North Carolina Department of Public Instruction. Commissioners say those actions have delayed the transfer of lottery funds and slowed payments to contractors.

Emails from DPI indicate that design documents for projects at Buckland Elementary School and T.S. Cooper Elementary School remain under review and that construction cannot proceed until certificates of review are issued.

County officials say repeated emails to the superintendent regarding these issues went unanswered.

The strained relationship between the two boards marks a departure from earlier collaboration.

Following the 2023 funding agreement, then–Board of Education Chairman Ray Felton wrote that both boards had committed to regular collaboration on budgetary needs. County officials say they attempted to continue that approach in 2025, including supporting $130,000 in universal nutrition funding to provide free breakfast and lunch for all students.

That effort also tied into broader discussions on food insecurity and a proposed local option quarter-cent sales tax referendum scheduled for March 2026.

At a joint meeting on March 4, 2025, both boards reviewed data showing a 20-year decline in student enrollment and discussed rising operating costs, state budget pressures, and inefficiencies tied to maintaining five school campuses with declining enrollment.

Superintendent Barry Williams announced plans to pursue a consolidation study, which was later presented on Nov. 5, 2025. County officials described the report as disappointing, citing its $50,000 cost and lack of actionable strategies.

Commissioners were excused from the meeting following the presentation and later learned through social media that the BOE had held additional meetings regarding the daycare program.

The official announcement of the daycare closure was made publicly for the first time at a joint meeting on Nov. 10, 2025. At that meeting, commissioners learned that the program had accumulated a $444,394 operating deficit over five years, that enrollment had dropped from 42 to 19 children, and that reduced operating hours had caused hardship for working families.

County officials say financial statements inconsistently describe the Child Care Fund and fail to adequately address the impact of sustained deficits on the General Fund.

According to the county, daycare operating deficits totaled $32,426 year-to-date in FY 2026, $93,935 in FY 2025, $84,652 in FY 2024, $97,536 in FY 2023, $135,906 in FY 2022, and $32,365 in FY 2021.

In requesting state oversight, the Board of Commissioners cited its statutory responsibility to oversee public funds and ensure fiscal accountability under state law.

Based on the information provided, commissioners formally requested that the Office of the State Auditor conduct a comprehensive review of the fiscal management, governance practices, and statutory compliance of the BOE and school administration.

Gates Commission’s Letter to NC Auditor