The Henry County Board of Supervisors approved fiscal year 2026-27 budget amendments Aug. 25 that include using $532,239 in fiscal year 2024-25 local carryover funds to help meet the county’s increased required local contribution for public education.
The decision came after several residents, including Henry County Public Schools Superintendent Dr. Amy Blake-Lewis, asked the board to return the carryover funds to the school division.
County Administrator Dale Wagoner said the budget passed by the General Assembly earlier this year includes $2,152,791 for public education, resulting in an increase of $615,261 in required local matching funds.
To balance the FY27 budget, Wagoner said county staff recommended using $532,239 from FY25 local carryover funds to help meet the local requirement for public education.
“In addition it was suggested that the county delay hiring for several positions and utilize vacancy savings in order to cover the budget gap,” Wagoner said.
Garrett Dillard, of the Iriswood District, asked County Attorney George Lyle whether retaining the $532,239 was legal.
Lyle said that, based on his review of the county’s audit, local funds that were unencumbered or unexpended at the end of the previous fiscal year could be returned to the county.
“My understanding is this same question came up at the end of the 2024 budget year, and the independent auditor made the same conclusion. When they prepared this budget they specifically asked the school board for documentation of unexpended state funds and there were some grants that were carried over, but they found that the money in question at the end of June 30, 2025 was local funds,” Lyle said.
Lyle said auditors have traditionally marked unexpended funds as local funds because unexpended state funds would have to be returned to the state.
“But in recent years, I think in part because of the budget bill, the state has said if there’s unexpended state education money the school boards can keep it. I think it still has to be reappropriated by this board, but you don’t have to send it back to Richmond,” he said.
Lyle said the school system identified some of the unexpended funds as state funds in 2024, but the auditor did not agree.
“The auditor has said all of the money is local tax dollars. You always have the discretion to reappropriate it, but according to the auditor, there are no unexpended state funds outside of some grant situations to be carried over specifically for school use,” Lyle said.
Dillard asked what other options county staff considered besides using the $532,239 to meet the increased required local match for education.
Wagoner said that without changing the county’s tax rate, which was set at 50 cents, the funds would have to come from somewhere.
“On the county side, we delayed hiring several positions and used vacancy savings to fill the gaps. It was staff’s recommendation to move these funds to meet that budget gap without changing the tax rate or dipping into the savings account. We’ve done that these last couple of years and we didn’t think it was prudent to continue to dip into the savings account,” Wagoner said.
Before the board voted, speakers addressed the decision not to return the carryover funds to the school division.
Mary Martin said she believes the $532,239 should have been returned to the school system.
“It is not intended to plug your budget holes this year, and if you check the reading of the law on that you’ll see the school is correct in asking it not be used for that. This is not a way to educate our children, and this is not the way to keep up good schools,” she said.
Martin said she believes the school board should consider legal action if the issue cannot be resolved.
“And we’ll take it in front of a judge and let him explain the law to you because apparently, it’s not being explained right, you don’t understand it, or you just disregard it,” she said.
Blake-Lewis said she recognizes that both boards have significant responsibilities to Henry County residents and will not always agree, “but our students and taxpayers deserve a relationship grounded in mutual respect, transparency, and a shared commitment to the future of this community.”
Blake-Lewis said the school system takes its responsibility for taxpayer dollars seriously.
“Ending a fiscal year with unspent funds should not automatically be evidence that a school division was overfunded – it is evidence of careful management. We have previously requested that unspent funds be reappropriated for identified needs including significant capital needs,” she said, noting that Virginia Code provides a mechanism for unspent funds to be placed in a capital reserve fund specifically for capital needs.
Blake-Lewis said the division’s repeated experience has been that carryforward requests are not supported.
“I have heard questions in the past suggesting that as a fiscal closeout approaches, the school division is simply ‘finding something to spend money on.’ We do not spend money simply for the sake of spending it, we work hard to be responsible stewards of public funds. But when a school division knows that dollars responsibly saved at year end are unlikely to be reappropriated at year end for legitimate school needs, the system is unintentionally creating an incentive to spend rather than to save. That is not good public policy, it is not the behavior we should be encouraging from any publicly funded organization,” Blake-Lewis said.
The board ultimately approved the budget amendments as presented.
In other business, the board:
*Heard from Daryl Holland, who requested that the board consider phasing out the local tax on farm equipment.
*Heard from Gordon Metz, who spoke about cattle and grain prices.
*Heard from Lillian Turner about the need for an ordinance for battery energy storage systems.
*Heard from Melody Cartwright, who spoke against data centers.
*Heard from Linda Smith, who said she appreciates the data center ordinance and believes anyone who wants to build a data center in the county should have to hold a meeting to answer questions from county residents.
*Heard from Sherry Mitchell about the need for battery energy storage site protections. Mitchell also spoke against data centers.
*Heard from Naomi Hodge-Muse, who thanked the board for listening to residents and adding provisions to the county’s data center ordinance.
*Heard from school board member Ben Gravely, of the Iriswood District, about the relationship between the school board and Board of Supervisors and the decision not to return the FY25 carryover funds to the school system.
*Approved an additional appropriation of $54,672 received from the Virginia Department of Health’s Return to Locality Fund. The funds will be used to purchase standardized medical supplies and maintain the EMS pharmacy for all EMS agencies in Henry County.
*Approved an additional appropriation of $15,958 received from the Virginia Department of Criminal Justice Services to cover overtime pay for deputies in the Sheriff’s Office providing high-impact law enforcement activities in areas experiencing an increase in crime.
*Awarded a $111,600 contract to Sarver Cleaning Services for custodial cleaning services at the courthouse. Funding for the project is included in the FY27 courthouse maintenance budget.
*Approved an additional appropriation of $235,425 received from the Virginia Department of Education to fund the fresh fruit and vegetable program in the county’s elementary schools.
*Approved the consent agenda.
*Heard the monthly report on delinquent tax collection efforts.
*Heard the Piedmont Community Services’ 2025 annual report.
*Heard an update on the Blue Ridge Regional Library from Director Melissa Chapman.
*Heard an update on the West Piedmont Higher Education Center, formerly the New College Institute, from Board of Directors Chairman Dr. Eric Jones.
*Approved allocating $6,000 in district impact funds to A&J Lawncare to mow areas along Business 220.
*Heard an update on general highway matters from Virginia Department of Transportation Residency Administrator Robin Keeler.
