Assembly orders internal audit of central treasury after discovery of $5.4M owed by school district

The assembly voted on Dec. 15 to introduce an ordinance appropriating $30,000 from the general fund to pay for an independent internal audit of the borough’s central treasury processes related to education funding, and directed the borough attorney to research and report any violations of law, school-board policy or misleading communications by the school district over the prior seven years.

Manager’s memo (Nov. 20) and staff presentations summarized a short-term payable of about $5,441,339 that the borough asserts is owed by the school district to the borough’s central treasury, a number derived from accumulated overspending across multiple funds. Borough staff said the figure includes general overspending and that health-insurance costs are a major component but do not fully explain the shortfall. Finance staff reported the district had been operating near its health-care budget (99% as of November) and that district financial statements show negative balances across multiple line items.

Assemblymember Dial sought assurance the borough would understand the sequence of events and whether restricted program funds were used inappropriately; staff said the BDO scope is limited to the central treasury account (covering transfers and internal controls back to January 2023) and will not be a comprehensive forensic audit of all program grants or a multi-year probe. Dial moved (and the assembly approved) an amendment directing the borough attorney to research and report suspected violations of state/federal law, school-board policies and instances of false or misleading information to borough staff or the assembly for the previous seven years. That amendment passed 6–0.

The assembly then voted to introduce the $30,000 appropriation and set a public hearing on Jan. 5, 2026 for the internal audit funding; the divided motion passed 6–0. The separate divided appropriation from FTA 5339 funds ($1,124,800) for transit land acquisition was also introduced and set for the same hearing.