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We kick off the program this morning with a brand new audit out of the North Carolina State Auditor's Office, Dave Bullock and his team, looking at the town of Zebulon. A lack of sufficient internal control over finances and excessive expenditures on travel expenses are just some of the issues described in a brand new rapid response special report released earlier this week by the state auditor's office, again, dealing with the town of Zebulon. The report released on Monday came about after the office received a tip alleging lack of sufficient internal controls over the town's finances, some of those excesses. Travel expenditures from town commissioners and administrators, as well as excessive and unsupported payments to consultants in connection with preparation for the town's budget. Zebulon, which has a population of just over 12,000 people, has had a high turnover of leadership in recent years, according to the auditors.
There are about eight findings in this report, some of them larger than others. We'll dive into the details. The town could not provide an executed contract supporting its payment to the former interim town manager at a rate of $250 per hour for consulting services in January of 2025. Vendor records indicate that the town paid over $4,500 to the former interim town manager. The services were billed for 18 hours of service during January of 2025 at $250 per hour.
Auditors recommended, and their recommendations said that the town should make sure that fully executed contracts or agreements support compensation rates prior to payment. Approval of invoices should not be used as a substance. Substitute for a formal contract authorization and documentation should be retained to support payments. The second finding involves not maintaining adequate documents to support the town's payments to consultants for its budget preparation activities for the fiscal year 2026. On February the 17th, 2025, the town executed a contract of $39,500 paid in eight equal semi-monthly installments of about $5,000.
Payments were contingent upon the receipt of invoices detailing the consultant's work product and approved by the town manager and assistant town manager. The town would then go on to pay over $22,630 before terminating the contract on April the 24th of the same year, following the resignation of the town manager and assistant town manager, stating that the external consultant services were no longer needed. The town was unable to produce invoices or any documentation other than the contract and its termination upon the auditor's request.
So, questions about some of the work products that were received that caused some of those payments to go out were not brought forward. Recommendations from the auditor's office include retaining invoices for professional services provided to the town that clearly describe the services performed and explain all the basics for all the charges, and ensuring that contractors have performed build services in accordance with the contract terms before payments are issued. The auditor's office also found that checks were outstanding for more than a year, were not investigated in a timely manner or reported as required by the North Carolina Unclaimed Property Act or general statute. Auditors found nine checks that have been outstanding for over a year during an investigation of the town's April 2025 ban. reconciliation.
Town officials told the auditor's office. That they had avoided and reissued all nine checks, but couldn't produce supporting documents except for one of the nine. Recommendations included a monthly stale check aging review, promptly investigating items that are outstanding for more than 90 days, and assigning responsibility for documenting the resolution of each item. Additionally, the town should file any required unclaimed property reports in the future and should remit amounts of checks meeting the one-year dormancy rule to the unclaimed property fund here in North Carolina. The fourth finding in this new report dealing with the town of Zebulon shows that the town processed duplicative and invalid payments due to insufficient invoice entry controls and the absence of effective account payables and a reconciliation process.
Auditors gave two examples in their reports, including the issuing of five checks totaling $130 to the Wake County Registrar of Deeds Office. For cemetery lot purchases that were later deemed unsuccessful and a check for $844.92 to pay a vendor invoice that had already been paid. Auditors recommended strengthening the invoice entry controls by configuring its accounting system to require the entry of an invoice number or some other sort of unique identifier before approving or paying invoices. The recommendations also include implementing an effective accounts payable reconciliation process that periodically reconciles invoices, accounts payable records, and the check register to issue to make sure that issue checks correspond to valid and currently unpaid obligations, as well as documents and assigned responsibility for accounts payable reviews and coming up with a procedure there. Auditors also discovered that the town's internal controls did not detect a financial Staff members' personal bank account, which was linked to the town's credit card account, resulting in an inadvertent use of personal funds to pay a town credit card balance and an urgent reimbursement of the town of more than $16,668.
The auditor's office recommended there that the town develop and enforce written procedures for handling payment errors or other issues requiring independent verification before processing any reimbursement. This is a big one. Prohibit self-reimbursement, ensuring that the town obligations are paid exclusively from authorized town bank and credit card accounts, and prohibit the use of personal funds to satisfy liabilities in routine operations. The sixth finding involved the lack of effective internal controls and government governance related to oversight and documentation for executive level compensation and reimbursement. An example of that is an overpayment of $6,100 to the former interim town manager that was returned, but shows, according to auditors, weakness in payment review controls, specifically the lack of adequate verification procedures prior to the spending of town dollars.
The recommendations there include strengthening prepayment review procedures for payroll and contract-related payments to verify accuracy prior to any money leaving the town, including the verification of hours worked, pay rates, and supporting documentation to reduce the risk of overpayment, as well as establishing and documenting procedures requiring independent review of contracted executive compensations, timesheets, and other sorts of expenses and reimbursements within the town. Auditors also found that the town's general funds unrestricted fund balance did not meet its minimum level required by the fund a balance policy that is described in the own in their own town's fiscal year 2025 annual comprehensive financial report which states quote the town has a fund balance policy that is to maintain an unrestricted fund balance in the general fund of no less than Than 50% of total expenditures. An unrestricted fund balance in excess of 50% is available for general appropriations during the budget year and approved by this governing body. For the fiscal year 2025, the town reported an unrestricted fund balance of just over $13,600, which represented only 48.8% of the town's final expenditure budget of $28,144,000, which is just a couple of percentage points below the 50% threshold required in the town's own policy. The auditor's office there recommended that the town maintain its unrestricted fund balance as well as making sure that they are following the threshold set out in their own documentation.
The eighth and final finding in the report is that the town's budget to actual variances were significant and reoccurring in the fiscal year. year 22, 23, 24, and 2025, reducing budget reliability in the general fund. For example, according to the report in fiscal year 2025, actual expenditures were $21,000, excuse me, when finally budgeted.
However, expenditures were over $28 million, a difference of $6.8 million or about 24%. Auditors recommendation there was that the town monitor those budget to actual revenue reports and expenditures throughout the fiscal year and investigate and resolve significant variances in a timely manner. Use things like historical trends, actual operating results, and current year conditions to develop those general fund budgets with smaller variances between budgeted and actual revenue and expenditures. The auditor's office also recommended considering requiring a town department to provide documentation explaining the significant budget to actual variances and a recommended budget amendment or other corrective action as needed, which is very common during the fiscal year. Town officials agreed with the findings and said that either new measures addressing the concerns have already been implemented or will be in the near future.
This is one of many reports that we have followed and been keeping an eye on over the last 18 months or so as state auditor Dave Bollick's office continues the work here across North Carolina. This brand new rapid response special report, 37 pages dealing with the town of Zebulon. You can read additional details of this over on our website this morning. CarolinaJournal.com. Look for the headline, State Audit Flags Financial Control Failures in Zebulon.
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A private neighborhood is getting $300,000 in public funding according to details in the state budget. The Carolina Lakes Property Owners Association received two special appropriations in the 2026 state budget: $160,000 for emergency service needs and another $144,000 for various needs, including shelter replacement, repair, and maintenance. Special appropriations, commonly called earmarks, are grants directed to specific recipients. Carolina Lakes is a gated community of 1,700 homes and seven lakes and Harnett County. It has 24 boat slips, a marina, a clubhouse, its own private beach, a nine-hole disc golf course, a one-mile fitness trail, three playgrounds, a large swimming pool, a large athletic field, basketball courts, tennis courts, two pickleball courts, and secure boat and RV storage for residents.
The association's two shelters can be rented for $60 plus a $100 deposit. The budget does not define the community's emergency service needs or other various needs, nor explains why shelters need to be repaired or replaced, how much the projects are expected to cost, or what public benefit the spending is intended to provide. The association's website does not disclose how much property owners pay in annual dues. That information is available only through a password-protected member portal. Carolina Journal asked the association manager why the association requested.
The state funding and how it plans to spend the money, which lawmakers helped it secure. The manager forwarded the request to the entire homeowners board, which declined to comment. Mitch Coke, senior political analyst over at the John Locke Foundation and frequent guest here on the Carolina Journal NewsHour, said that the lack of details in the budget raises questions about whether the earmarks are an appropriate use of state funds. Coke told the Carolina Journal: Perhaps there's some compelling reason why taxpayers across the state should be forced to bear some responsibility for what appears to be a highly localized spending on a gated community of lakeside homes, but the reason isn't obvious. Lawmakers didn't help their cause by omitting any justification for the expenditure, he went on to say.
As it is, the looks. This looks like to be one of the hundreds of local earmarks that allow favored legislators to bring home bacon, and that's not sound budgeting. Carolina Lakes is not the first gated community to receive state appropriations in recent years. Back a couple of years ago in the 2023 state budget, the Seven Lakes Landowner Association received $250,000 worth of special appropriations for quote capital costs and equipment associated with dam safety improvements. The Carolina Lakes and Seven Lakes appropriations came from the Regional Economic Development Reserve.
It was created in 2023, and it is one of 20 new reserves that lawmakers have established since the year 2020, bringing the total number of active state reserve funds to 33. Money directed through those reserves is not included in the state budget's total spending figure. Balfour, the senior vice president of research at the John Locke Foundation, has called the approach a shell game that obstructs how much lawmakers are truly spending. Balfour calculated that the 2026 budget includes $3 billion worth of, quote, hidden spending from reserves, including 664 special appropriations, totaling more than $200 million from the Regional Economic Development Reserve. And so the big question that everybody is asking is, well, who is requesting this funding?
The budget does not identify which lawmakers requested each special appropriations, including the town of Carolina, including the two of the Carolina Lakes Property Owner Association, gets in this budget. Back in 2017, then Representative Valera Osco, the Democrat from Orange County, introduced House Bill 83, the Insure Budget Transparency Act. To require every special appropriation in the budget to, quote, indicate the name of the member or members who requested the provision. The bill did not receive a hearing or a vote. The lawmaker then went on to later propose the language as an amendment to the 2017 House rules.
However, at that point, it failed, 48 to 68. House lawmakers have said that they are concerned that multiple members might try and claim credit for the same provision, while Senate leaders have said they are concerned that attributing every appropriation could be logistically complicated, which obviously does not bode well for those that are interested in transparency and spending across the state of North Carolina. Lawmakers are scheduled to return to Raleigh on July the 27th for the first time since they passed the $34.4 billion spending plan. It is important to note that that $34.4 billion budget does not include those additional dollars that I mentioned, those $3 billion of hidden spending from reserves.
So when you add those in, you're talking about a more than $37 billion spending plan. They could revise. Or rescind budget provisions, including special appropriations through what is called a budget technical correction bill. It is not immediately clear that there's going to be any movement on this Carolina Lakes and neighborhood, this gated community of more than 1,700 homes with a private beach, 24 boat slips, a bunch of sports fields, swimming pools, playgrounds, its own private disc golf course that received more than 300 or excuse me, received $300,000 in public funding throughout this state budget. We are going to continue to dive into the nitty-gritty of the state budget and try and provide as much transparency to that as possible.
You can read more on this story over on our website this morning. CarolinaJournal.com. Look for the real simple headline. Gated community gets $300,000 in North Carolina state budget. Lots of places can expose you to identity theft.
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Good morning again, and welcome back to the Carolina Journal News Hour, Charlotte's FM News Talk 107.9 FM, WBT. Earlier this week, U.S. Senator Ted Budd, one of our two senators here in North Carolina, testified at the Senate Appropriations Committee hearing about the need for additional disaster relief funding that would benefit Western North Carolina's recovery from Hurricane Helene as we get ever closer to the two-year mark of that storm. Helene caused an estimated $60 billion in damage in the state. The hearing was held to review President Donald Trump's supplemental funding request made in the month of June.
He remarked that Congress approved billions of dollars in disaster funding in December of 2024, just three months after the storm struck, and the North Carolina General Assembly's $2.4 billion in state appropriations, as well as a redirecting more than $2 billion from state agencies for constructions. But despite the response, Budd said that the mountain terrain made it difficult for federal programs to continue, resulting in delays and deficiencies, and that more work needs to be done. And with that, more funding is in fact needed. Here is Senator Ted Budd in the Senate earlier this week. More than 21 months ago, Hurricane Helene unleashed an unprecedented amount of rainfall on the Blue Ridge Mountains, causing severe flooding and devastating landslides.
The storm left behind tens of billions in damage. In December 2024, Congress responded By approving a disaster supplemental that provided billions of dollars to Western North Carolina recovery. Additionally, North Carolina's state government stepped up by committing roughly $2.4 billion in state appropriations. and redirecting more than $2 billion from state agencies for reconstruction. That's U.S.
Senator Ted Buddh in Capitol Hill earlier this week, fighting for more funding for Western North Carolina. He went on to describe some of the details as it relates to delays and funding currently as it stands right now. But the Blue Ridge Mountains' challenging terrain has made it uniquely difficult for federal programs to operate, resulting in delays and inefficiencies. and there's still work to be done. Too many projects in western North Carolina have stalled.
due to insufficient funding or because of financial shortfalls from expensive debris removal and rebuilding efforts. I greatly appreciate that President Trump and Secretary Mullen have empowered FEMA to more rapidly reimburse the state and local governments for public assistance projects.
However, FEMA is only one part of the equation. The Environmental Protection Agency, Department of Housing and Urban Development, and other federal agencies play a key role in disaster recovery. and much of the existing disaster funding for those agencies has already largely been allocated. When I visit Western North Carolina, I see the impacts the delays in recovery have caused. Debris still clogs the waterways.
Facilities that provide drinking water and manage wastewater have yet to be rebuilt. Most concerning, some homeowners are paying mortgages on properties that are still unlivable or yet to be rebuilt. Towns have been forced to embrace expensive short-term stopgap solutions just to carry out their most basic functions. for the residents. And this is not the first time that we have heard about some of these issues as it relates to delays with the federal government.
At a North Carolina Joint Legislative Government Operations Subcommittee hearing last September, which marked the one year since Helene affected North Carolina, state and local officials said at the time that the Federal Emergency Management Agency and their bureaucracy had been a hindrance, not a help, to Western North Carolina. At the time, Avery County Commissioner Dennis Aldridge said, Our biggest obstacle moving forward is the lack of clarity and the consistent guidance from FEMA. Every time we get close to the finish line, they change the goalposts. We're willing to connect the dots, just don't keep moving the dots. And every time we get close, something changes.
Allridge also said that FEMA was causing problems with what debris can and cannot be removed. Matt Calabria, the director of the governor's recovery office for Western North Carolina, that group is called Grow NC, said. at that same hearing last September that while residents have been approved for $517 million in FEMA assistance, the state has only received a little over 10% in federal funding to cover damage from the storm after requesting about 48%. He criticized the FEMA hazard mitigation grant program, which is designed to buy out damaged homes. The federal government pays 75% and then the state picks up the remaining 25%.
That hazard mitigation grant program requires authorization on the front end with former U.S. Homeland Security Secretary Christy Noam insisting a signature requirement at the time for any expenditures over $100,000, which significantly held up the process. And we have seen some big-time changes there at Homeland Security. And we have seen, in fact, since last September, more of these hazard mitigation grant programs being approved.
However, some of the delays do continue. U.S. Senator Ted Budd in Capitol Hill this week describing some of the examples of the problems here. He talked a little bit about Beach Mountain. In the small town of Beach Mountain, There is no long-term water supply.
The dam and water treatment plant were heavily damaged, forcing the town out of compliance with state safety standards. And as a result, the state could be finding. Beach Mountain, $25,000. per day. Most repairs are needed so that the water treatment plant can function long term.
If funded, this process will take at least a year and require significant diversion of utilities and or daily water trucks just so hundreds of residents will have to have clean drinking water during construction. Three years is too long to wait after a disaster, and we can't delay any longer. That's U.S. Senator Ted Budd. And unfortunately, that story is one as it relates to Beach Mountain, one of many that we have continued to track here on the Carolina Journal News Hour and over on our website, CarolinaJournal.com, over almost the last 24 months since Hurricane Helene left unimaginable amounts of devastation and destruction in western North Carolina.
Senator Budd reiterated the position he took just last month that he would not support a supplemental funding request from the president if it did not include additional Helene funding for Western North Carolina. The senator talked about some of the success stories and said, however, more funding is needed. Take a listen. Tourism, the lifeblood of much of western North Carolina, has begun to rebound. But there's still far too many areas that are unable to accommodate the travelers they once welcomed.
But I want to highlight a few examples of success stories. To show how ample funding for the last disaster supplemental, paired with exceptional planning and project execution, made an immediate impact on our mountain communities. Last July, Portions of the Blue Ridge Parkway reopened after 57 landslides struck 200 miles of the parkway. This Memorial Day weekend, Lake Lure. Reopened to the public after an incredible debris removal and refilling project.
And I want to be clear. that I fully support President Trump's request to replenish our ammunition stockpile. and strengthen our military. And I'm also appreciative of his efforts to provide economic assistance to farmers impacted by disasters and unfair trade practices.
However, to address the long-term recovery needs of Western North Carolina, more federal funds are needed. Every time I'm in Western North Carolina, people ask me to make sure that they're not forgotten. This is Congress's chance to remind them that we're serious about helping them get back on their feet. That's U.S. Senator Ted Budd in Capitol Hill, or I should say on Capitol Hill this week in front of the Senate Appropriations Committee.
A hearing taking place there as debate continues over this major appropriations package, continuing to fight for additional funding and the people in western North Carolina. We are also learning some details this week out of the North Carolina Department of Revenue. They issued a press release earlier this week regarding an important notice to provide information on additional interest relief available to certain taxpayers affected by Hurricane Helene, pursuant to a session law. The additional interest relief is available to eligible taxpayers for franchise, corporate income, individual home, including partnerships, estates, and trust taxes, and withholding taxes. The notice includes the following information: taxpayer eligibility for additional interest relief, county eligibility, descriptions of additional relief, and how to receive those additional interest reliefs.
We've got a link over on our website this morning, CarolinaJournal.com, with some additional information from the North Carolina Department of Revenue as a government continues in a variety of different forms and fashions to continue to try and provide relief to the folks in western North Carolina as this is becoming a major political topic, not only here across the state, but as you just heard also in Washington, D.C. as lawmakers at both the federal and state level continue to push for additional funding. We saw a lot of that in the state budget. We've seen that in additional appropriations that have come out of the legislature between last year and this year. We have in fact seen over the last couple of months some additional details from FEMA as well as HUD and other federal agencies as they continue to flow money into western North Carolina.
Unfortunately, many have described it as more of a trickle of federal funds than The amount that is necessarily needed and is ready to be adopted by many of those local governments and the good people of Western North Carolina. We will continue to keep a very close eye on this situation as we approach the two-year mark in the month of September. You can read a lot of coverage as we have continued to track Helene over on our website, CarolinaJournal.com. And of course, we'll keep you up to date right here on the Carolina Journal News Hour. Mm.
It's 5.52. Welcome back to the Carolina Journal News Hour, Charlotte's FM News Talk, 107.9 FM. WBT, I'm Nick Craig. A good Thursday morning to you. The North Carolina Department of Public Instruction, that is DPI, has issued its first statewide guidance on how schools should manage screen time on school-issued devices.
However, the agency's guidance avoids the hard use time limits that lawmakers imposed on students' personal cell phones in legislation that was passed last year. The document released this summer and entitled Guidance for Purposeful Screen Use in Schools recommends that educators focus on the purpose and the structure of device use rather than relying solely on strict time limits. The guidelines set no maximum screen time for any grade level, instead urging schools to distinguish between active screen use, creating, problem-solving, collaborating, and passive consumption, such as endless scrolling and background videos, which it says should be restricted. According to Matthew Mayo D. DPI's director of digital technology and learning, as well as school connectivity, said, as technology continues to play an important role in teaching and learning, this guidance encourages schools to move beyond a one-size-fits-all approach to screen time and focus instead on intentional, developmentally appropriate, and purpose-driven use of digital tools.
The guidance recommends a gradual release of responsibility by grade level, adult-guided use in elementary school, shared responsibility in middle school, and student-managed use with accountability in high school. It draws on the American Academy of Pediatrics 5 C's framework, which is children content calm crowding out and communication, and cites research linked to unstructured recreational screen use to sleep disruption, reduced attention, and mental health. health concerns. According to the executive director of North Carolina State's Friday Institute for Education Innovation, they are praising the framework's balance. As the executive director there told Carolina Journal, it does not treat technology as something it doesn't treat technology as something to embrace uncritically or avoid altogether.
Bryce Fielder, the director of the Carolina Academy Leadership Network at the John Locke Foundation, said, quote, we're reaching a stage where screen time limits look increasingly necessary. We would prefer to see districts take the initiative on their own. Horry County Schools of South Carolina is a recent good example of this. Local attention could influence whether lawmakers in Raleigh ultimately see a need. To consider statewide legislation.
The recommendations are non-biding. The document nowhere references House Bill 959, the protecting students in digital age law that Governor Josh Stein signed on July the 1st of 2025. That law requires every school board to adopt policies barring students from using personal devices, cell phones, laptops, and other things during instructional time by January the 1st of this year. But the new law left school-issued laptops and tablets untouched. That was only for private devices making their way into the classroom.
Those devices may be a bigger problem, as Carolina Journal previously reported. Finding from Chapel Hill's North Carolina Phones and Tech and Schools study saw more students reporting being distracted by classmates' school-issued devices than by personal phones. A third of the students said that they use workarounds to bypass school classes. Content filters, most commonly to reach gaming websites, and 54.5% of teachers reported stress from managing device use in the classroom.
Some lawmakers have already signaled that they want firmer rules, not frameworks. Senator Kevin Corbin, the Republican from Macon County, suggested bell-to-bell device restrictions at a March legislative oversight hearing. While Representative Hugh Blackwell, the Republican from Burke County, warned school boards could face legal exposure for lax enforcement. You can read more on this new recommendation from a DPI. It is available over on our website this morning, CarolinaJournal.com.
Look for the headline: New DPI screen guidance, stop short of time limits. That's going to do it for a Thursday edition of the Carolina Journal News Hour. WBT News is next, followed by Good Morning BT. We're back with you tomorrow morning, 5 to 6, right here on Charlotte's FM News Talk, 107.9 FM, WBT. Uh
