The Hope Mills Board of Commissioners spent most of its meeting on Thursday talking about next year’s budget and a new financial policy. But the real weight in the room came from something they barely discussed: a sweeping state audit that warns the town’s finances have been pushed to the brink.
The report also points to deeper issues—a lack of transparency in how money moved through the budget, internal‑control failures in how salary increases were approved, and a town manager who told auditors he did not need documentation or additional approvals to give raises, despite clear policy requiring both.
Mayor Jessie Bellflowers didn’t hide how much the report has consumed the town’s leadership.
“I was gonna apologize to everyone a little bit earlier. If I’m a little testy tonight, my demeanor hasn’t been quite the same in the last couple weeks,” he said. “This board understands the gravity of the audit and the findings.”
The 66‑page report, released April 24 by State Auditor Dave Boliek, paints a stark picture: Hope Mills overspent its savings, relied on mid‑year budget amendments to keep departments afloat, and nearly adopted a tax cut that would have accelerated its financial decline. If the town keeps spending at the pace it did last year, auditors warned, Hope Mills could run out of cash as early as 2028.
“The people of Hope Mills deserve peace of mind knowing that their town is being managed effectively and with proper care,” Boliek said in a statement to CityView.
The town has accepted all findings and said it is already implementing corrective measures, according to a press release shared on social media.
A Financial Slide Hidden in Plain Sight
The audit began after the State Auditor’s tipline received multiple allegations that the town was misusing public funds and resources. The audit reviewed 23 allegations and substantiated two. Three other allegations were partially substantiated, while 18 were unsubstantiated.
“Many of the allegations submitted to our Tipline that sparked this report were found to be unsubstantiated,” Boliek said. “Nevertheless, our investigation did uncover notable deficiencies concerning the financial health of Hope Mills.”
Those deficiencies were significant. When auditors examined the town’s finances, they found that Hope Mills had quietly burned through its savings.
According to the audit report, then–finance director Drew Holland said Hope Mills typically budgets about $500,000 of its reserves each year for capital expenditures—one‑time purchases—not ongoing operational costs.
The rest of the reserves are meant to stay intact as the town’s emergency and financial‑stability cushion.
But in the 2025 fiscal year, which ended June 20, 2025, the town spent $1.7 million from reserves. That’s more than triple the usual amount and $1.2 million more than budgeted. That overspending caused a $1.55 million loss in the town’s fund balance, the first loss in five years.
The pattern didn’t stop there. During preparation for the 2026 budget, the town again proposed using more than $1.5 million in reserves.
In plain language: the town was using its emergency savings to pay for routine operations. That’s the municipal equivalent of paying your monthly bills with your emergency fund.
Auditors warned that if the town continued on that path, its reserves could be gone within two years.
“For Hope Mills to fix these issues, it’s going to take time, effort, and adherence to specific recommendations,” Boliek said. “Financial discipline is critical for residents to get a solid return on investment from their local government.”
Budget Amendments That Masked Overspending
One reason the overspending wasn’t obvious to the public is that much of it was pushed through mid‑year budget amendments rather than shown in the annual budget, according to the report.
As the town burned through far more reserves than it had planned, officials repeatedly used amendments to add money to departments that were running short. The process kept the budget technically “balanced” on paper while actual spending climbed far beyond what had been approved.
Budget amendments are legal, but the audit found Hope Mills used them with “little transparency,” according to the audit. Many of the amendments added operational costs—overtime, leased vehicles, insurance, fuel—expenses that normally belong in the main budget.
More than 60% of all amendments went to the police department, including:
- $466,000 for school resource officer vehicles
- $296,250 for a computer server to maintain records and evidence
- $190,000 for overtime and leased vehicles
Because these changes didn’t appear in the annual budget book, residents—and sometimes even commissioners—couldn’t easily see how much the town was actually spending.
“When over‑spending and budget amendments start to drain reserves, it creates fiscal vulnerabilities that can derail a local government’s finances,” Boliek said.
The audit laid out several steps the town must take to stabilize its reserves. Investigators recommended that Hope Mills set a minimum threshold for how much unrestricted fund balance it should keep on hand, in line with state guidance.
State auditors also said the town needs a targeted plan to rebuild the reserves it lost in 2025, limit the use of reserves strictly to budget‑approved one‑time capital projects, and ensure that any new operational costs are built into future budgets rather than covered mid‑year with savings.
A Tax Cut That Didn’t Add Up
The audit also found that the unusually high amount of reserve spending planned for the fiscal 2026 budget was tied in part to Mayor Jessie Bellflowers’ recommendation to cut the tax rate from 51 cents to 45 cents per $100 of assessed value.
To make that tax cut work on paper, the town proposed using more than $1.5 million in reserve funds—far above the typical $500,000 the town budgets for one‑time capital expenditures.
The plan relied on:
- Funds from the federal American Rescue Plan Act
- $418,187 in cash reserves
- $481,813 from a cell tower sale that never occurred
In an email to Town Manager Chancer McLaughlin, Holland, objected. Holland warned that the proposal would drain reserves even further and instead recommended a 49‑cent tax rate and a sharply reduced use of ARPA funds.
The audit said this exchange “illustrates that Town leadership lacked understanding of the impact of depleting the Town’s reserve funds.”
Had the board approved the mayor’s proposal, auditors wrote, the same pattern of over‑reliance on reserves seen in fiscal 2025 could have repeated itself in 2026. Instead, commissioners raised the tax rate to 48 cents and cut reserve spending to $442,300—a decision that reduced pressure on the town’s savings.
Holland was named finance director in January 2016. In March, McLaughlin announced Holland’s retirement. Holland told CityView at the time that his retirement was not related to the state investigation into the town’s finances.
The town introduced Brittany McLaurin as the new finance director during a special meeting on April 30.
Raises Approved Without Documentation
Beyond the financial issues, auditors substantiated that McLaughlin approved salary increases without following the town’s required process.
Some raises were far above what the board had budgeted, including:
- 12% for a human resources specialist
- 12% for a deputy clerk/public information officer
- 11% for a town planner
One interim human resources director even approved their own raise, according to the audit.
When auditors asked for the missing paperwork, McLaughlin claimed he did not need documentation or additional approvals to give raises. That position directly contradicts the town’s pay plan, which requires a Personnel Action Form, two signatures, and written justification.
Personnel files were also inconsistently maintained, with forms missing from paper files but present electronically, making it difficult to verify what actually happened.
The audit makes clear that this wasn’t just sloppy paperwork—it was a breakdown of the town’s internal controls.
The audit recommends a full overhaul of how Hope Mills handles salary changes. Investigators said the town must complete proper Personnel Action Forms for every raise or promotion, ensure the town manager follows established personnel policies, and require a second approval from the human resources director before any raise is processed.
The report also called for complete and accurate documentation, written justification for all pay increases, and safeguards to prevent conflicts of interest—especially in small departments where interim directors may be approving actions that affect themselves or their subordinates.
Other Allegations Substantiated in the Audit
The audit also addressed several smaller allegations involving how the town handled money outside its core budget. Investigators found that a commissioner used the town’s parks and recreation registration system to collect fees for a privately organized fishing derby, and that the town then acted as an intermediary by transferring the $1,150 in registration revenue to a local nonprofit.
While the event itself was publicly advertised, auditors said the town should have processed the money through a formal budget ordinance, as required by state law.
Auditors also reviewed an allegation that the town spent $18,000 on travel and training despite budgeting only $10,000, and that a single training event cost $18,000. The audit found that wasn’t true—the town’s total travel and training spending exceeded the approved budget by only $622, and the overage wasn’t tied to any single event.
Although the town overspent its overall travel and training budget by only $622, auditors found that five departments exceeded their individual travel budgets by more than $2,000 each, for a combined overage of $16,873
The report recommended tightening the travel policy, limiting advances, and reimbursing only actual expenses to prevent future overages.
Town Leaders: We’re Fixing It
In the April 25 press release, the town said it is “in agreement with the audit findings” and has already begun implementing corrective actions. Hope Mills submitted a formal Corrective Action Report outlining how it will address all 21 recommendations from the OSA.
The town has recently adopted new purchasing, travel, and credit‑card policies, and updated its procurement rules. On Thursday, commissioners approved a new Fund Balance Policy, which limits how much of the town’s reserves can be used each year.
Holland said the policy is modeled on the Local Government Commission’s standard guidance and caps reserve spending at 3% of the total budget.
To rebuild the reserves already lost, the town is considering earmarking a portion of the property tax rate over four or five years—a strategy that could restore about $1.5 million.
“This is the standard policy most towns use,” Holland said. “We just changed the name from the City of Dogwood to the Town of Hope Mills.”
This is the fourth policy adoption tied directly to the audit since the board’s last meeting on April 20.
On Thursday, commissioners also received the proposed 2026–27 budget. Holland briefly walked them through the document, and noted that it includes no tax increase. No commissioners asked questions.
Government reporter Rachel Heimann Mercader can be reached at rheimann@cityviewnc.com or 910-988-8045.
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