The New Jersey Office of the State Auditor’s review of Newark Public Schools points to weaknesses in student-count records, purchasing controls, employee clearances and project oversight. Auditors also said they referred certain matters to the state Division of Criminal Justice, while the district publicly characterized the review as finding “nothing.” The disagreement raises questions about what the performance audit established—and what remains unresolved.
The audit examined spending and management practices at New Jersey’s largest school district from July 2022 through May 2026. In a press release, Newark Public Schools said state auditors had spent 22 months reviewing its books and found, in the district’s words, “nothing.” The report, however, includes findings on district practices and says auditors referred “certain matters” to the Division of Criminal Justice. New Jersey Monitor reported that details were withheld to protect any potential investigations.
Auditors were careful to note what the review was not. As New Jersey Globe reported, the 36-page document states plainly, “We did not conduct a financial audit. This was a performance audit,” meaning it offered no opinion on the district's financial statements but instead scrutinized how money was managed and spent.
Enrollment Numbers and Excess State Aid
Among the most consequential findings: auditors determined Newark overstated its resident enrollment by 128 students in 2023 and another 128 students in 2024, according to New Jersey Globe. That overstatement reportedly resulted in $6,654,240 in excess state aid during fiscal years 2024 and 2025. The district maintains its enrollment reporting followed state guidelines, even though auditors found the underlying data was inaccurate and not regularly updated, per Chalkbeat Newark's reporting on the audit.
The audit also flagged how reliant Newark is on state dollars in the first place, though the two outlets diverge slightly on the exact figure. New Jersey Monitor reported that state funding accounted for an average of 88% of the district's general fund revenues over the period examined, while New Jersey Globe put the figure at an average of 81% of Newark's General Fund and Special Revenue Fund funding combined.
A $566,000 Gym and a Stalled Museum Project
Perhaps the most eyebrow-raising finding involves a gym. Auditors questioned roughly $566,000 spent to build, equip and operate an employee gym at district headquarters, New Jersey Monitor reported. New Jersey Globe added that more than $300,000 of that construction spending lacked adequate supporting documentation, never received required formal board approval, and circumvented competitive bidding requirements altogether.
Newark Public Schools said the gym services were paid for using employee wellness funds, according to the district's statement cited by Chalkbeat Newark. Auditors, however, said district records showed the money actually came from the general fund — a direct conflict the audit does not resolve in the district's favor.
A separate real-estate deal also drew scrutiny. Newark paid $2.5 million upfront in 2023 under a $4.5 million settlement and construction agreement to convert the former 15 State Street school into a museum and administrative offices, per New Jersey Globe. By May 2026, that museum project remained incomplete, a full year past its contractual completion deadline, and auditors said they received no records documenting its progress or explaining the delay.
Background Checks, Legal Spending and Other Flags
The audit also identified gaps in employee screening: 10 employees had never completed required criminal background checks, and another 199 lacked properly updated Newark clearances, according to Chalkbeat Newark. The district said it has directed those employees to complete background checks or resubmit fingerprints to come into compliance.
Beyond the gym and the enrollment numbers, auditors identified issues with legal spending, payments to preschool providers, catering expenses, senior trips and a central-office staff event, the same Chalkbeat Newark report noted. The audit recommended the district establish procedures to minimize legal costs, adjust preschool payments to reflect actual enrollment, and tighten its purchase approval and payment processes. State auditors plan to return in 2028 to review whether Newark actually followed through on those recommendations.
What the Findings—and Follow-Up Examples—Can Show
A separate New Jersey Department of Education review of Moorestown Township’s 2015 state-aid application compared reported enrollment with school registers and found that count differences affected formula-aid calculations. That example illustrates why enrollment verification matters, but does not establish which official count or verification rules applied to Newark, or Newark’s intent or repayment status, according to the department’s Office of Fiscal Accountability and Compliance.
A separate example of follow-up reporting comes from the Borough of Ramsey: its auditors’ management report for the year ended June 30, 2023, said corrective action had been taken on all prior-year recommendations. That was an annual district audit, not a Newark performance-audit follow-up, and does not establish the outcome of Newark’s planned 2028 review, according to the Ramsey report hosted by the New Jersey Department of Education.
District Defends Its Finances Amid Growing Pressure
Newark officials have defended their financial management even as the district faces rising costs and a need for more classroom space, according to Chalkbeat Newark. The dispute over the audit's findings arrives after years in which Republican lawmakers have pushed for greater state and federal oversight of the district's finances.
Newark is far from the only New Jersey district fielding tough audit findings. A 2024 state audit of the Plainfield school district identified $12.8 million in overspending, improper payments and other problems, and a follow-up compliance review released in July found that several of the most expensive and high-risk issues still had not been resolved, according to nj.com. Auditors in that case estimated Plainfield could still save roughly $3.2 million in fiscal year 2026 by switching to the state's health benefits program, and found the district could not prove it had recovered $523,315 in questioned preschool funds. Plainfield officials have said they implemented or initiated corrective actions across all identified areas.
Whether Newark's response follows a similar path of disputed compliance remains to be seen, but the district and the Office of the State Auditor are, for now, telling two very different stories about the same 22-month review — one declaring vindication, the other pointing investigators toward unanswered questions.
