Nutley auditor: district posted fund‑balance gains but faces a roughly $2 million shortfall next year

Ray Cerinelli, the district’s external auditor, presented the Nutley Public School District’s 2025 audit and told the board the district finished the year with improved reserves but faces steep near‑term budget pressure.

Cerinelli said the district began the year with a $3,380,000 fund balance and ended with $5,000,006.79 — an increase of roughly $2.3 million — reflecting a balanced approach to budgeting and restrained spending. He told the board the largest local revenue source is the tax levy, which he identified as $65,400,000 for Nutley.

The auditor flagged three revenue notes: state aid is largely formula‑driven (with extraordinary aid available by application), Medicaid reimbursements were underfunded by about $68,000, and the district is receiving enterprise‑fund rent that was retained to help that fund’s stability.

Cerinelli said the district’s expense side showed some line‑item surpluses that can be carried forward — including $147,000 in general supplies and about $330,000 in tuition — but he emphasized that the overall financial picture is tight.

“The state aid loan payments are going to begin,” Cerinelli said, and Nutley is constrained by a state statutory cap that typically limits the tax levy increase to 2 percent. He estimated the district could realize roughly $1,300,000 more in revenue from a 2 percent levy increase while projecting health‑benefit costs could rise by about $3,300,000 — creating roughly a $2,000,000 budget gap that will need to be addressed through expenditure reductions, referendum action or other limited exceptions allowed by the state.

Cerinelli reviewed single‑audit follow‑ups and internal‑control recommendations. He described one repeat finding involving national cooperative purchasing: the district used a vendor under a national cooperative but did not publish the required notice of intent to award after the contract was made. He also recommended maintaining a payroll‑agency ledger reconciled to bank statements, using the position‑control roster to support salary charges, documenting standard operating procedures for the business office, and submitting preschool grant transfers to the County Superintendent or the Department of Education for written approval.

The auditor concluded by urging the board and administration to continue rigorous expense management and to factor in the timing challenges if a public referendum to exceed the levy cap is considered. He said that while 2025 showed financial recovery, sustaining and improving the district’s long‑term adequacy will require careful planning.

The board placed acceptance of the audit and a corrective‑action plan on the meeting agenda for formal approval later in the session.