PRINCE FREDERICK — Calvert County Public Schools went into the 2026 fiscal year planning to pull $11.7 million out of its savings to balance the books. It ended the year having used about $5 million, leaving roughly $6.7 million more in reserve than expected, according to the school system’s independent auditors.
The audit of the year ending June 30, 2026, came back clean. Chris Lehman, the engagement partner with the accounting firm SB & Company, told the Calvert County Board of Education this month that the firm issued an unmodified opinion, the best rating auditors can give, and proposed no adjustments to the school system’s books.
The cushion matters because the school system is leaning on its reserves again. The fiscal 2027 budget now underway counts on an $11.1 million draw from fund balance, and the system’s finance office told the board that diesel fuel and utility costs are already rising.
Where the $6.7 million came from
Lehman walked the board through the budget-to-actual comparison printed at the back of the financial statements. Both revenues and spending were budgeted at about $309 million for fiscal 2026, with the $11.7 million reserve draw filling the gap.
Actual revenue came in at about $294 million. Spending came in lower, too, at about $299 million. The difference between the two, roughly $5 million, is what the school system ended up taking from fund balance.
| Fiscal 2026 general fund | Budget | Actual |
|---|---|---|
| Revenue | About $309 million | About $294 million |
| Spending | About $309 million | About $299 million |
| Draw on fund balance | $11.7 million | About $5 million |
Part of the revenue shortfall is not what it looks like, Lehman said. Federal money came in about $3 million under budget, but federal grants are paid as eligible costs are incurred, so lower federal revenue is matched by lower spending. A board member pressed the point for viewers watching at home, and Lehman agreed it was “not a negative story.”
The same board member then did the math aloud: the system used about $5 million of savings against an expected $11.7 million, or $6.7 million less than planned. Lehman confirmed it. The board member credited Superintendent Dr. Newsom and the executive team for being frugal while still getting students what they need.
How much is in the bank
Even with the smaller draw, the general fund balance shrank, from $38.3 million to $35.2 million, Lehman said. Most of it is spoken for. About $17.8 million is committed to specific future uses, and another layer is assigned to intended purposes that the board can still change.
The unassigned balance, the money not earmarked for anything, rose to $10.7 million from $9.4 million the year before. Under accounting rules, student activity funds are now reported inside the general fund rather than in a separate fund, Lehman noted.
Auditors also found the school system’s internal controls effective in all five areas they assess, from management’s risk assessment to monitoring. They tested payroll, billing, fixed assets, expenses, financial reporting, cash reconciliations and access to the ledger, and reported no difficulties getting records and no disagreements with management. Lehman said the audit is not a forensic review but found no instances of fraud.
Board member Paul Harrison asked whether the auditors checked for duplicate payments, for “ghost” employees and for conflicts of interest between school staff and contractors. Lehman said expense testing looks for duplicate payments and payroll testing confirms that employees are real people hired at the rates on file. On conflicts of interest, he said the firm is not aware of any, but its federal testing is still underway.
One report still to come
The financial statements were due to the state Sept. 30 and were filed on time. A second review, the federal single audit of programs paid for with federal grants, is not finished. Lehman said the federal government has not yet finalized the 2026 compliance supplement that auditors must follow, and the report is due to the state at the end of December. So far, he said, there are no findings.
SB & Company also helps prepare the financial statements, a service Lehman said professional standards allow and that does not impair the firm’s independence. He is required to tell the board about it.
This year’s numbers
Chris Jewitt of the school system’s finance office followed with the first-quarter report for fiscal 2027. Through Sept. 30, the system had received $67.2 million of its roughly $298.3 million revenue budget, about 23%, which she said is on target for the first quarter.
On the spending side, $195.9 million was encumbered, or committed under contracts and purchase orders. Encumbrances and spending together totaled $247.8 million, or 83% of the budget, a figure that front-loads salaries and contracts committed for the full year.
Jewitt said part of the committed fund balance is set aside for fuel and other emergencies, a reserve she called a good thing given current swings in diesel and utility prices. The system is seeing increases in both but remains within budget, she said, and she will bring any needed budget adjustment back to the board.
Asked about health insurance, which board members expected to rise sharply during budget talks, Jewitt said the system is not seeing a large uptick so far and that health insurance, transportation and utilities are all within budget for now.
The school system’s budget depends heavily on county money. Calvert County’s fiscal 2027 budget provides $169 million in local funding for the Board of Education, about $9.2 million more than the state’s maintenance-of-effort minimum, according to the Maryland Association of Counties. County leaders are also weighing a property tax cut for fiscal 2028, which would shape what the county can offer schools in the next budget cycle.
Earlier this month the school system folded its strategic plan, Blueprint plan and efficiency work into a single planning document. The next financial checkpoint is the federal single audit, due to the state by the end of December, and the fiscal 2028 budget process that follows.
