Leonia audit returns clean opinion; board reviews reserves, finds five management issues and approves routine items

An external auditor told the Leonia Board of Education on June 3 that the district’s 2024–25 financial statements and federal- and state-grant compliance received unmodified opinions, commonly called a “clean” audit.

"Our opinion on your financial statement was unmodified," the auditor said, adding the grant-compliance opinion was also unmodified. He said an unmodified report means the statements are fairly stated and materially comply with generally accepted accounting principles and grant requirements.

The auditor said he found no material weaknesses or significant deficiencies in internal control, but listed five general management findings that require corrective action. Those findings included: a required calculation and disclosure of year-end compensated-absence liability; reconciliation issues between open purchase-order reports and general ledger/budget reports; an unfiled post‑year report required to reconcile teacher salaries charged to federal grants (the auditor said roughly $235,000 in teacher salaries had been charged to federal grants and that a reimbursement to the state may be due); an "excess cash resources" condition in the food-service fund (about $85,000 over nonprofit thresholds) that the district should correct; and incomplete capital-asset inventory reporting that omitted additions.

The auditor said a corrective action plan will be required and auditors will review those fixes as part of next year’s engagement.

Board members then pressed the auditor on financial risk and tuition contracts. The auditor said districts can contract for fixed tuition rates if both parties agree but noted that state-certified tuition rates can still trigger later "true-ups"; he emphasized the importance of accurate year‑end reporting and of not relying on fund balance to cover recurring operating costs.

Administrators and board members reviewed key fund-balance figures from Exhibit C‑1. The auditor reported an overall year‑to‑year increase in total fund balance of $87,008.47 but said much of that growth was in encumbrances (purchase orders not yet completed). The district’s capital reserve was reported at approximately $1,000,002.62 (set aside by board resolution for long-range facility projects) and a maintenance reserve of about $1,000,002.00. The district created a tuition-adjustment reserve of $170,000 to cover potential tuition true-ups when the state certifies tuition rates. The district’s unemployment compensation reserve was reported at $186,007.89 for its self‑insured unemployment program.

The auditor explained New Jersey’s excess-surplus rule, which limits unassigned fund balance to 2% of the budget; Leonia had $650,000 of excess surplus as of June 30, 2025, which must be used as a revenue source in the 2026–27 budget. He said the district’s available unassigned fund balance for future expenses was approximately $841,002.00, and cautioned that repeatedly using fund balance for recurring costs risks future deficits.

On the operational side, board members and administrators said they have prepared an action plan to address the audit items. The superintendent said the district’s interim/acting business administrator, Eric, is already helping to prepare filings and remedial steps.

During public comment, Arthur Jay (who identified an affiliation) asked for clarity on the tuition reserve and excess surplus, flagged numerous small-line purchase descriptions as hard to reconcile, raised an apparent water-billing variance between buildings and urged a wider search for a qualified business administrator. The superintendent replied that the district will move the community-calendar payment to the borough budget next year (the last year the district pays $4,800), noted EZ-Pass charges cover buses and special trips, explained that classroom-supply orders come through Eddata (which aggregates many small items), and said staff will investigate the water-billing differences.

Board members and administrators also discussed a change in health‑insurance coverage. Presenters said the district moved into a school-health‑insurance fund and estimated the change would yield roughly $500,000 in savings for April–December and an estimated first‑year savings on the order of $1.5 million depending on the state’s future rates; the district has locked rates through June 2027 under the new agreement.

The board approved the consent agenda by roll call, approved a one‑month sabbatical request for a staff member (Miss Kelty) for 2027, held an executive session and returned to public session to approve personnel actions before adjourning at 9:57 p.m.

What happens next: administrators will file the required post‑year reports, teams will implement the audit corrective‑action plan and auditors will review those corrections in next year’s audit cycle. The board said it will investigate the water-billing variance and continue searching for a permanent business administrator.