District auditor gives Leonia a clean opinion, recommends stronger controls for student activity funds

The district auditor reported an unmodified, or “clean,” opinion on Leonia Public School District’s financial statements and on compliance with federal and state grant programs for the year ended June 30, 2024.

Auditor Thomas Bliss told the Board of Education that the independent audit produced “unmodified opinions” on both the financial statements and grant compliance, meaning the financial statements are “clearly stated” and the district complied with grant requirements "in all material respects." Bliss said auditors found no material weaknesses, no reportable conditions and no significant deficiencies in internal control related to the financial statements or grants.

The opinion matters because the district is preparing the 2025–26 budget and needs clarity about available fund balance and reserves. Bliss reviewed the district’s fund balances and restricted accounts: roughly $2.0 million in capital reserve (not earmarked as of June 30), about $1.0 million in maintenance reserve, a $182,000 unemployment compensation reserve, and approximately $550,000 characterized as excess surplus that must be applied as a revenue source in the 2025–26 budget. The auditor explained that the capital reserve may be used only for capital projects that appear in the district’s long-range facilities plan and cannot be used for operating costs such as salaries or health benefits.

Bliss summarized two audit recommendations tied to student activity accounts. First, deposits of cash and checks collected by student organizations were not always made in a timely manner; auditors prefer deposits within two business days. Second, auditors found several student-activity checks issued with only one signature; district policy requires two authorized signatures. Bliss said those instances occurred at individual schools rather than central office and recommended the district enforce timely deposits and the two-signature rule.

Board members asked follow-up questions about where the single-signature checks originated and whether the district was taking steps to reduce cash handling. Superintendent Dr. Brian P. Davies noted the district is exploring online payment options for student activities and said central office processes require two signatures on checks sent from the treasurer.

On cybersecurity insurance, Bliss recommended the district consult its risk manager about whether additional or dedicated cyber insurance would be prudent; the auditor cited an example of another district that lost access to records after a ransomware incident.

The auditor concluded that, overall, the district is in sound financial condition with reserves and planned transfers in place ahead of the 2025–26 budget process.

Board action and next steps include staff follow-up on the student-activity deposit procedures and possible adoption of online payment tools for clubs and activities to reduce cash handling.