State auditors found Newark Public Schools overstated enrollment, spent hundreds of thousands on an employee gym and entertainment, missed millions in potential savings and failed to ensure hundreds of employees had properly completed criminal-background requirements.

NEWARK, N.J. — Everything everyone in New Jersey has suspected about the Newark School District might be true. Investigators have confirmed much of what GOP politicians in Trenton have claimed for years.

While suburban property tax dollars are being funneled to the Newark school district, Newark school officials are wasting a large amount of money, and perhaps even criminally.

A sweeping state audit of Newark Public Schools has uncovered a costly pattern of weak financial controls, questionable spending decisions and employee-screening failures stretching across nearly four years.

The New Jersey Office of the State Auditor examined district operations from July 1, 2022, through May 31, 2026. Auditors identified approximately $6.7 million in excess state aid, an estimated $18.7 million in potential health-insurance savings, a $566,000 employee gym, an unfinished $2.5 million museum project and hundreds of thousands of dollars spent on catering, staff entertainment and student trips without sufficient documentation.

The audit also said “certain matters” were referred to the New Jersey Division of Criminal Justice. The report did not identify those matters or accuse any district official of committing a crime.

Newark Received $6.7 Million in Excess State Aid

Among the most significant findings, auditors said Newark overstated student enrollment by 128 students in both its 2023 and 2024 state-aid submissions.

Those inaccurate enrollment counts resulted in approximately $6.7 million in excess state aid, according to the audit.

The finding matters well beyond Newark. State funding accounted for roughly 88% of the district’s general-fund revenues during the three fiscal years examined.

The district disputed the auditor’s conclusion and maintained that its enrollment reporting followed state requirements.

Auditors Say Newark Could Have Saved $18.7 Million on Health Insurance

The largest dollar figure in the report involved employee health coverage.

Auditors concluded Newark could have saved an estimated $18.7 million during fiscal years 2024 and 2025 by participating in the New Jersey School Employees’ Health Benefits Program.

The district strongly disputes that comparison.

Superintendent Roger León said Newark’s self-funded health plan was designed to provide stability for employees and protect public resources.

“The district made a commitment to creating a sustainable benefits program that would protect both employees and public resources,” León said.

Newark says its self-insured program has shielded employees from some of the steep premium increases facing participants in the state program.

But the audit separately identified money the district should have collected or should not have paid.

Auditors found $150,619 in required employee health-benefit contributions went uncollected.

Another $41,602 in medical and prescription claims was paid for employees during periods when they were on unpaid leave.

$566,000 Employee Gym Averaged Seven Users Per Day

One of the audit’s most striking findings involved an employee fitness center.

Newark spent approximately $566,000 to construct, equip and operate a gym inside a leased administrative building.

Auditors said the facility averaged only about seven employee visits per day, despite having a full-time trainer.

The audit also found the construction expenses did not receive formal board approval and raised concerns about procurement and competitive bidding.

Newark maintained that the fitness center was an employee-wellness initiative and said wellness funds supported the program.

Auditors responded that the district’s own financial records showed the expenses were paid from its general fund.

$2.5 Million Paid Upfront for Museum Project Still Behind Schedule

Auditors also scrutinized Newark’s plan to transform the historic State Street School into a museum and administrative facility.

The district paid $2.5 million upfront in May 2023 under an agreement totaling approximately $4.5 million.

By May 2026, auditors said the project was more than a year beyond its expected completion date.

The district had not provided auditors with sufficient documentation showing construction progress, expenses or an updated completion schedule.

Auditors also questioned whether required Department of Education approval and competitive procurement procedures had been followed.

The district additionally lost an opportunity to receive a $750,000 historic-preservation grant because it did not own the property or maintain the long-term lease required for eligibility.

Newark has defended the museum project as an effort to preserve an important part of the city’s Black educational history.

$1.3 Million in Preschool Payments Could Have Been Avoided

The audit found Newark could have saved another approximately $1.3 million during the 2023-24 school year by adjusting payments to preschool providers when actual enrollment fell below contractual thresholds.

Auditors said the district had previously reduced payments when enrollment fell but later stopped making those adjustments.

That meant providers continued receiving payments based on enrollment levels that were not being met.

Legal Spending Ran Millions Above Statewide Average

The district’s legal bills also drew scrutiny.

Auditors found Newark spent approximately $1.6 million more per year than the statewide per-student average for legal services.

That was approximately 184% above the statewide average, according to the audit.

Over three years, the difference amounted to roughly $4.7 million.

Auditors said Newark had not implemented required cost-control procedures or documented why those procedures would not reduce expenses.

Newark Spent $1.14 Million on Catering

Auditors found the district spent approximately $1.14 million on catering over two years.

In fiscal 2024 transactions examined by auditors, approximately $184,000 lacked adequate documentation demonstrating that the expenses aligned with district goals.

Another approximately $49,000 exceeded applicable meal-price limits, although auditors said some of those amounts may overlap.

Perhaps the clearest example involved Board of Education meetings.

Auditors found 16 of the 19 catered board meetings reviewed exceeded a $10-per-person meal limit.

Nearly $712,000 Spent on Senior Day Trips

Newark also spent $711,943 during fiscal years 2023 through 2025 on Senior Day trips.

Activities included carnival booths, DJs, karaoke and entertainment.

Auditors said the district did not provide documentation establishing an educational component for those trips.

The money came from the school district’s general fund.

Newark has defended Senior Day as a longstanding celebration of graduating students and their accomplishments.

Central Office ‘Fun Day’ Cost More Than Board Authorized

Another finding centered on a $57,065 Central Office Staff “Fun Day.”

The Board of Education had authorized $44,000.

Auditors said the district ultimately used two purchase orders and concluded the arrangement circumvented bidding requirements.

The New Jersey Department of Education previously directed Newark to reimburse $33,649.07 in disallowed state aid tied to the first payment.

Auditors recommended the district repay another $13,251 related to the second.

10 Employees Never Completed Required Criminal Background Checks

The audit’s findings extended beyond spending.

Auditors discovered 10 Newark Public Schools employees had never completed required criminal-history background checks.

Another 199 employees had not properly updated their clearances to identify Newark as their employer.

According to auditors, that gap could prevent Newark from receiving notification if one of those workers later committed a crime that would disqualify the employee from working in a school.

The district moved to correct the deficiencies after auditors identified them.

Most affected employees subsequently obtained proper clearances. Others left the district or were prevented from working until they satisfied the requirement.

Fantasia Says Taxpayers ‘Got Hammered’

Assemblywoman Dawn Fantasia, who had repeatedly called for greater scrutiny of Newark school spending, seized on the findings after the audit became public.

“I spent the past year making noise and being chastised by the other side that I was out of line,” Fantasia said.

But she said the findings offered little satisfaction.

“This ‘I told you so’ doesn’t feel so good because kids, families, & taxpayers got hammered,” Fantasia said.

She accused district leadership and the school board of failing to properly safeguard public money and highlighted the gym, museum, catering, legal bills, Senior Day spending and employee-screening failures.

Newark Says Audit Shows Its Finances Are Sound

Newark Public Schools offered a dramatically different interpretation.

The district issued a statement titled “Newark Public Schools Comes Through State Audit with Flying Colors,” emphasizing the auditor’s broader conclusion that the transactions tested were generally properly recorded, related to district programs and reasonable.

“The state auditors went far beyond financial records,” former longtime School Business Administrator Valerie Wilson said. “We opened all our books, systems, and databases, and we answered all their questions.”

Wilson said the district “spend[s] wisely and strategically, and this audit proves that.”

León described the review as “an exercise in due diligence and transparency.”

“As a reflective organization, the Newark Public Schools takes seriously every recommendation that can advance our progress and incorporates that feedback into meaningful, continuous improvement,” León said.

Board President Hasani K. Council likewise defended the district’s record.

“We are proud of our results under local control and we will work tirelessly to continue to deliver excellence for our students,” Council said.

The Numbers Tell a More Complicated Story

The district is correct that auditors did not declare Newark’s entire financial operation improper.

But the audit’s individual findings are substantial.

The review documented $6.7 million in excess state aid, $18.7 million in estimated foregone health-care savings, $1.3 million in potentially avoidable preschool payments, roughly $4.7 million in legal expenses above the statewide benchmark, a $566,000 employee gym, $711,943 in Senior Day spending, more than $1.1 million in catering expenses, a $57,065 staff Fun Day and a $2.5 million upfront museum payment for a project already behind schedule.

It also found failures to collect employee health contributions and more than 200 problems involving criminal-history clearances.

And hanging over all of it is the auditor’s disclosure that unspecified matters were referred to state criminal investigators.

That referral does not establish criminal wrongdoing. But it ensures the Newark school audit will not end with a debate over accounting practices and competing press releases.

The spending, oversight failures and unresolved questions documented in the report will now face scrutiny well beyond the district’s own boardroom.