District auditors issue unmodified opinion, flag food-service surplus and state-aid cuts

TOMS RIVER, N.J. — District auditors presented an annual comprehensive financial report to the Toms River Regional School District Board on the district’s fiscal performance and controls, issuing an unmodified opinion on the financial statements and reporting no findings in the single-audit or internal-controls reviews.

The auditors, led by Jerry Convey, partner at HFA, told the board the unmodified opinion means auditors did not need to adjust the district’s financial statements to conform with generally accepted accounting principles. "We have an unmodified opinion on our financial statements," Convey said.

The auditors reported one recurring management finding involving the food-service enterprise fund, which currently holds more cash than the Department of Agriculture’s benchmarks allow. Convey described the situation as a byproduct of federal COVID-era aid and said the district has begun taking steps to reduce the surplus, including a deliberate decision to lower meal prices to draw down the fund balance. "We reduced meal prices ... in an effort to draw down what they consider to be excess cash," he said, and estimated the surplus should normalize within one to two years.

Convey also outlined larger fiscal pressures: state aid declined by roughly $7.5 million year over year, and private-school placements for students with disabilities increased undistributed expenditures. The auditors reported a net loss of just under $7 million for the year; that figure was offset in part by a one-time $15.4 million revenue from the sale of the corporate center. "If it wasn't for that sale of that building, you would have been at about a $22,000,000 loss," Convey said.

The district finished the year with about $43.6 million in fund balance, the auditors said, including roughly $6 million in capital reserve, $9 million in maintenance reserve and about $6.23 million in the allowable unassigned (maximum) balance the district may carry. Convey noted those reserves and the unassigned balance will be factors as management prepares the fiscal 2027 budget.

Board members asked for timing on the food-service correction; Convey said the combination of spending down and pricing adjustments should resolve the excess cash "either this year ('25), '26, or at latest, the year after." The auditors closed by thanking district staff for cooperation during the audit engagement.

What happens next: The auditors said a final, complete report will be delivered soon after completion of outstanding single-audit steps; the board will use the fund-balance and operating results as inputs for next year’s budget discussions.