The fiscal year 2015-2016 audit report brought no surprises for the Beaufort County Board of Education, according to Superintendent Dr. Don Phipps.

It did, however, bring to light challenges faced by many school districts every year.

The vast majority of Beaufort County Schools’ funding comes from the state, a total around $41 million during 2016, according to data compiled by Dixon Hughes Goodman LLP.

“A lot of that money is tied in some way to what we call ADM, which is our average daily membership, which is the number of students we have in school,” Phipps said. “As there’s an ebb and flow or a downward scaling, or whatever the trend may be in the county you’re in, if you’re tied to ADM, then as you lose students, you’re also going to lose funding.”

Phipps said Beaufort County is dealing with fewer students in its school district, due to some moving to private or charter schools and an overall lower birth rate in the county.

The district’s low-wealth funding is also down by $1.3 million, totaling about $192,000 for this school year, he said.

“It’s sort of like that ADM funding is your base amount, and then there’s some other supplemental things that you may or may not qualify for,” Phipps said.

Cuts in funding often lead to cuts in personnel positions. Last year, Beaufort County Schools was forced to cut 32 positions to avoid wiping out its fund balance, which is essentially a savings account, according to Phipps.

Phipps said school officials have tried over the past few years to avoid using up the fund balance, but with the decreased funding, it’s nearly impossible not to tap into it.

According to the DHG audit report, the district’s usable fund balance dropped from around $2 million in 2013 to roughly $700,000 in 2016.

“We had built it up knowing that we were going to have hard times ahead,” Phipps said.

Turning to other funding sources to offset costs, however, offers only limited solutions.

“If we relied heavier on the federal government, then you rely on what’s going on in Washington. I just don’t believe that Washington, D.C., knows what’s best for school districts. I feel like those are local decisions that ought to be made locally,” Phipps explained. “At the local level, we can’t expect the county commissioners to fund the bill that’s the size of what the state pays, just because of the volume and the amount of dollars that we’re talking about. There’s just no way the local could fund it at that level.”

At this point in the 2016-2017 year, school officials are now looking toward the 2017-2018 fiscal year.

Phipps said school principals have already begun assessing the needs of their particular schools, and Beaufort County Schools is now waiting on the state to determine some of the fixed costs in the upcoming year.

There are funding challenges ahead, and Phipps said he views the audit process as a way for the public to see what the district has to work with and how that money is being allocated.

Although the audit brought no surprises, there are always things on which to improve from year to year, he said.

“I like the audit because it is always an opportunity for somebody from the outside to objectively come in and take a look at what’s going on — just to give the public some assurance that money is being treated the way it should be,” Phipps said. “We’ve got a strong group of highly committed and quality people that I know are going to do a good job. … We always want to learn and be better as an organization, and (the audit is) just one of the ways we can do it.”