By Miles Layton

GATESVILLE – Gates County’s school system has just $107,577 in available reserves for the General Fund, the auditor’s correspondence also reported a negative fund balance of ($449,550) for the Other Specific Revenue Fund (nutrition and day care enterprise operations), for a combined negative fund balance for the school district of ($341,973).

To put that General Fund balance in layman’s terms, that’s a thing- not quite broke, but sort of like having $10 to live on til payday at the end of the week and hoping nothing breaks. Or maybe this song by Tennessee Ernie Ford fits a lot of rural school systems in debt, scrapping to survive — “Sixteen Tons.”

The auditing firm of Anderson, Smith, & Wike PLLC correspondence quoted, “N.C. State law G.S. 115C-432(b)(2) states that the full amount of any lawful deficit from the prior year fiscal year — June 30, 2026 — shall be appropriated in the budget resolution.” Furthermore, the auditors suggested, “The Board should immediately review its fiscal year 2026-2027 budget to ensure that it has made an appropriation to cover this deficit.”

The auditors further advised, “Given that the Board’s unassigned fund balance is at such a critically low level, we recommend that the Board take prompt action to replenish its fund balance reserves.”

This is the part where Scooby says, “Ruh-roh!”

See the receipts — county documents — at the end of the story.

The school system is losing students and must cover a deficit in next year’s budget. County commissioners, who say they are facing their own financial squeeze, told school board members Tuesday night that it will take both boards to find a way through.

The two boards met Oct. 20 at the historic Courthouse for a joint session that opened with a meal and ended with warm words about their working relationship. They spent most of the evening on the school system’s thin finances, a shrinking student population and the future of the closed Buckland Elementary building. One more note: that’s a file photo from a previous joint meeting.

Let’s put this news up front too — The meeting also recognized longtime school board member Leslie Byrum, who will be leaving the board after more than two decades of service. Members said it was likely Byrum’s last joint meeting. The BOE will formally recognize his service at their Nov. 16 meeting at 6 p.m., and school board members are invited to attend.

I’ll give Byrum some praise — he knows his stuff, and the BOE is very transparent under his leadership. Good guy to work with.

Back to finances — Both boards head into what members called a hard budget season. The county funds about 18 percent of the school system’s budget, and commissioners said they may have to cut things they would like to fund to pay for things they must fund. They pointed to a critical situation at Gates EMS and Rescue as one example. The schools’ auditor has urged the school board to act promptly to rebuild its reserves, and any money the county adds will have to come out of a budget that is already stretched.

The pressure is also structural. Gates County has about 10,000 residents, a number officials said has held steady for a long time while the population ages, leaving fewer school-age children. State funding follows enrollment, and the schools are projected to lose about $200,000 next year because of this year’s drop in students. Officials said the county’s Tier 2 economic ranking under the state formula works against them and is unlikely to change soon.

Interim School Finance Officer Crystal Jacox told commissioners the system’s draft audit for last school year carries an unmodified opinion, the best an auditor can give. Auditors found no material weaknesses in the district’s books or internal controls.

The fund balance is another matter. It stood at about $1.3 million in 2024, fell to $775,000 in 2025 and now sits at $541,000. Of that, $433,000 is restricted state money, leaving only $17,577 available to the district.

“We have a very extremely low fund balance,” Jacox said.

About $204,000 of this year’s $234,000 drawdown came from closing the school system’s daycare in December, including buyouts of employee sick leave. The auditor did not set a target for the fund balance but urged the school board to take “prompt action” to rebuild it.

County Manager Scott Sauer pointed out that state law requires any lawful deficit to be appropriated in the following year’s budget. He said the board should review its 2026-27 spending plan to make sure the deficit is covered, a figure he put at about $341,000.

Jacox said the state provides roughly 72 percent of school funding, the county about 18 percent and the federal government the rest. Teacher salaries take up about 57 percent of the budget. Recent state pay raises also raise the district’s share of retirement and health insurance costs. Commissioners noted the employer retirement contribution has climbed from about 4 percent two decades ago to 28 percent today, while health insurance is 8.5 percent.

Child nutrition, the district’s only remaining enterprise fund, drew attention as well. Jacox said it ended last year with roughly $42,000 to $45,000 in the black, after the general fund covered negative balances in 2024 and 2025. The program must pay for itself, and the return this year to income-based eligibility for free and reduced-price meals makes the numbers harder to predict.

Where did 92 students go?

Superintendent Dr. Chante Jordan walked the boards through enrollment figures. Average daily membership, the number that drives state and federal funding, is 1,305, not counting 35 pre-kindergarten students. Gatesville Elementary has 312 students, T.S. Cooper Elementary 267 and the high school 414.

Since July 1, 92 students have withdrawn or failed to return. Jordan said the district sorted them by destination and found the losses are not just a matter of homeschooling. Students are moving to online schools, other North Carolina schools and private schools, and some are listed as no-shows from last year. One student left to complete a GED.

The departures are spread across grade levels. Ninth grade lost the most, 13 students, while second grade lost eight. Because the losses are scattered, Jordan said, the district still needs the same number of teachers in each grade.

One commissioner said he appreciated the breakdown because it answers a common question about why the district still pays for so many teachers.

The district is being funded this year for 1,323 students based on last year’s count, so the current 1,305 means about $200,000 less next year. Board members also suggested surveying families who have left. Jordan said she plans to call them personally in the coming weeks.

Buckland building

School officials asked commissioners to consider letting the school system use part of the Buckland Elementary building, which the county now controls after the school’s closure. They proposed a district training center, storage space, a home for central office staff and a data center for enrollment and records, along with a place to hold board meetings.

School leaders said the central office has outgrown its space, with departments scattered across the district. They also said the current data center sits in a separate building at the high school, where visitors can wander campus unescorted.

Commissioners said working with the school board is a priority but that no decisions can be made until the county completes an inventory of its buildings. That work is funded by two $250,000 grants, and language in one of them needs a technical correction from the General Assembly. Sauer said he expects it to move smoothly, but probably not until the long session begins in January.

No one is going to leave Buckland empty and the county wants the school board in the conversation. In the meantime, officials said storage space might be arranged sooner and that the commissioners’ meeting room in the Courthouse is open to the school board.

The school board suggested the two boards alternate hosting their joint quarterly meetings. School officials also said they would like to see utility costs for the empty building. They reported that Buckland utility bills have not yet been sent to the county, and a commissioner asked for quarterly comparisons with costs from when the school was open, saying the public deserves to know what it costs to keep the building running.

School board outlines its path

Board members said the school year has started smoothly. The board has hired Teams Consulting Group to support its finance staff, with Crystal Cox serving as interim chief financial officer. A search firm has been retained for a national superintendent search. The position should be posted by the end of December or early January, with a permanent superintendent starting next summer.

The board also reported that the Navy has approved a Junior ROTC program at the high school and that Gates is next in line for federal funding after a five-year wait. The Navy will pay half the salaries of two required instructors, leaving the district to cover the rest. A new instructor, Senior Chief Adam Wadell, a Gates County resident, was due to start the next day. Enrollment in the program stands at 55, and the goal is more than 80.

Other issues included a nationwide bus driver shortage, which is forcing the district to rethink routes and scheduling. A moratorium on accepting students from other counties runs through April 2027, and the board will decide whether to extend it.

School leaders also said they did not apply this year for a state needs-based building grant, citing too little time to prepare a strong application and the possibility that a past award could count against them. Commissioners recommended forming committees in December if the board pursues the grant next year.

The system will use its repair and renovation fund to buy spare parts for aging air conditioning units at Gatesville Elementary. That fund held about $1.8 million, and roughly $900,000 will go toward finishing the high school science labs after a construction grant came up short, leaving about $1 million.

Commissioners also heard a report on the consolidation. Of the $325,600 the county provided, about $2,100 remains. Members praised county staff for work on the Gatesville parking lot and fencing.

Commissioners said state lawmakers have shifted costs such as transportation, custodial services and utilities to counties. They also noted that the share of lottery profits going to schools has dropped from 25 percent to 23 percent.

Rather than relying on the state, members of both boards agreed that solutions have to be found locally.