Borough attorney urges conditional release of $5.4M and asks for school cash‑flow details

Borough attorney Brown told the assembly the $5.4 million that had been sequestered under the 2023 memorandum of agreement (MOA) appears largely to be FY26 operational expenses rather than clearly offsettable MOA liabilities, and he recommended releasing funds for urgent district payroll needs while requiring reporting for each draw. "I don't believe there's a good basis for it to be offset against under the '23 MOA," Brown said, while adding that short‑term disbursements could be made if accompanied by written notice and cash‑flow evidence.

The attorney said the MOA converted prior short‑term obligations into a three‑year repayment schedule and that management released about $1.4 million recently so the district could make payroll. Brown asked the district to produce a cash‑flow projection through June 30 so borough staff can better forecast any remaining shortfalls. "It would be a great help to the borough to know what that shortfall looks like," Brown said, adding that the borough intends to offset the first local discretionary payment on July 1 to recoup amounts advanced.

Assemblymembers pressed staff on whether DEED (the state education agency) will resume foundation payments and whether the assembly should intentionally fund the district to the state cap. Finance director Barbara Smith said the MOA has been executed and that initial conversations about releasing foundation payments were positive but likely require higher‑level approval; she also confirmed the borough has not transferred money to the district when the borough's due‑from balance did not reflect sufficient funds.

After debate the assembly voted to introduce ordinance 2105, a supplemental appropriation from the FY26 Local Education Fund, with an amendment directing staff to set the district's FY26 spending authority approximately $900,000 below the state imposed cap. The amendment, offered to preserve a cushion for post‑June health‑care accruals, passed on a recorded vote and the amended ordinance was introduced for a future hearing.

The assembly also postponed the separate ordinance 2100 (FY27 school funding) to April 6 to allow time to reconcile budget details with the newly executed MOA. Staff emphasized they are continuing close coordination with district finance staff but said the district's interim business manager is still working to recreate a complete cash‑flow picture for the rest of the fiscal year.

Next steps: the borough staff will request and review the district's June 30 cash‑flow projection and the assembly will hold public hearings on ordinance 2105 as scheduled. The borough said any future draws from held funds should include written notice, a cash‑flow statement, and quarterly reporting to preserve transparency and permit timely offsets under the MOA if appropriate.