The Birmingham City Board of Education exceeded spending limits on fitness training services, improperly handled payroll and student fee collections and failed to consistently follow financial procedures, according to a state audit released last week.
The Alabama Department of Examiners of Public Accounts identified 11 compliance and internal control findings in its examination of Birmingham City Schools for the fiscal year that ended September 30, 2025. Eight of the findings also appeared in the district’s previous audit.
The audit did not find the school system’s overall financial statements to be materially misstated. Auditors issued an unmodified opinion on the district’s financial statements.
Birmingham City Schools reported about $395.2 million in revenue and $400.5 million in expenditures for the fiscal year. The district had more than $237 million in cash and investments and a fund balance of about $219.9 million.
One finding involved payments to two vendors providing fitness training services.
The board had approved a maximum of $150,000 for each vendor, for a combined authorized amount of $300,000. Auditors found the district paid one vendor $241,400 and the other $313,068, for a combined $554,468.
The payments exceeded the board-approved amounts by $254,468. The district also could not provide auditors with executed contracts for either vendor.
Board policies require superintendent and board approval for purchases exceeding $50,000. Contracts must be executed by the board president after board approval. Auditors classified the finding as a significant deficiency in internal control.
In its corrective action plan, the Birmingham City Board of Education said that, going forward, “more controls will be implemented to flag invoices and purchase orders that exceed approved amounts.”
The audit also identified problems with the district’s payroll controls, which auditors classified as a material weakness.
Among the findings, an employee who was terminated in August 2022 continued receiving payments through March 2025. The district removed the former employee from its payroll system, stopped the payments and reached an agreement requiring repayment of the money paid in error.
Auditors also found problems with the approval and documentation of payroll changes, including instances in which employees were added to payroll without appropriate approval and direct deposit information was not properly documented. Testing also found supplemental compensation that lacked the required supporting personnel forms.
Separately, eight employees participating in Alabama’s Teacher Excellence and Accountability for Mathematics and Science, or TEAMS, program were paid more than allowed under the state-approved salary schedule. The audit said the district used an incorrect salary schedule when processing the payments.
At Green Acres Middle School, auditors found an employee collected athletic “spirit pack” fees through a personal Apple Pay account, despite district policy prohibiting employees from collecting school fees through personal payment applications. Auditors could not find documentation showing whether money collected through the personal account was deposited into the school’s official account.
The audit also identified problems with the district’s bank reconciliations. Some reconciliations were not completed on time and included outstanding checks dating to 2023. Auditors also found reconciling items that were not properly documented and remained unresolved for several months.
At Parker High School and Woodlawn High School, auditors found bank reconciliations were not properly prepared or reviewed and errors were not identified and corrected promptly. The finding also appeared in the district’s previous audit.
The district agreed with all 11 findings and outlined corrective actions, including monthly reviews, additional staff training, standardized bookkeeping procedures and increased monitoring of schools with recurring audit findings.
Birmingham City Schools also said some irregularities had been discovered internally and addressed before the examination. The district said it hired an internal audit officer to provide additional oversight of its financial processes.
The audit covers the district’s financial and compliance activities from October 1, 2024, through September 30, 2025. The Alabama Department of Examiners of Public Accounts released the report on September 25.
