The New Jersey State Auditor has referred “certain matters” uncovered during a sweeping audit of Newark Public Schools to the state Division of Criminal Justice after finding millions of dollars in questionable or avoidable spending, overstated student enrollment, missing criminal background checks, contracts that circumvented competitive bidding requirements and expenditures made without required school board approval.
The 36-page audit examines spending and management practices under Superintendent Roger León, who has led New Jersey’s largest school district since 2018. It does not accuse León or anyone else of criminal wrongdoing, and it does not identify which matters prompted the criminal referral.
State Auditor David J. Kaschak said his office does not disclose details of criminal referrals during an audit without permission from the investigating agency because doing so could interfere with a potential investigation.
The audit, covering July 2022 through May 2026, found that Newark overstated its student enrollment by 128 students in each of two years, resulting in $6.65 million in excess state aid; spent more than $300,000 constructing an employee gym without required board approval or competitive bidding; failed to ensure that more than 200 employees had completed or properly updated required criminal background checks; and spent $2.5 million on a stalled museum project under an agreement that bypassed competitive bidding requirements.
Auditors also found the district improperly used state aid for a $57,065 Central Office Staff Fun Day, could have saved $18.7 million in health insurance costs over two years, spent $711,943 on senior trips that lacked documented educational components, and failed to collect $150,619 in required health insurance contributions from employees on unpaid leave.
The findings drew a blistering response from Assemblywoman Dawn Fantasia (R-Franklin), who has spent the last year raising questions about spending and oversight in heavily state-funded school districts.
“I spent the past year making noise and being chastised by the other side that I was out of line, Fantasia said. “This’ I told you so’ doesn’t feel so good because kids, families, and taxpayers got hammered while apparently the board was dozing, elected officials deflected or buried their heads in the sand, and the superintendent ran the district like a drunk college kid on spring break with his parents’ credit card.
State Sen. Declan O’Scanlon (R-Shrewsbury), the Senate Republican budget officer, lambasted Newark schools.
“That’s on top of past waste on trips to exotic islands, balloons, parties… and future colossal waste on a half-billion-dollar lease for a new building that costs more per student than total per-pupil spending in other school districts,” he said. “State taxpayers fund about 85 percent of every dollar wasted in Newark while other schools are left grossly underfunded. It’s disgusting. State taxpayers and children in Newark deserve better. Getting state taxpayer money back and fixing the school funding formula is way overdue.”
The findings are particularly significant for state taxpayers. Newark received an average of 81% of its General Fund and Special Revenue Fund funding from the state during the audit period.
Kaschak stressed that his office conducted a performance audit, rather than a financial audit that renders an opinion on financial statements.
“We did not conduct a financial audit. This was a performance audit conducted in accordance with generally accepted government auditing standards. This type of audit differs from a financial audit in that no opinion on financial statements was expressed,” Kaschak said. “A performance audit aims to provide recommendations for operational improvement. Our findings and recommendations are based largely on the sufficiency of documentation provided by the district.”
Kaschak also pushed back on portions of Newark’s response.
“The district did request a few minor modifications be made to the draft report. We carefully considered the request and gave the district every opportunity to provide us with adequate documentation to clear any exceptions; however, no additional support was provided,” he said. “The changes we made to the draft report were done to provide better context and greater clarity to the reader, not because those statements were incorrect.”
One of the audit’s largest findings involves enrollment numbers Newark submitted to the Department of Education to calculate state school aid.
Auditors compared the district’s student information system with its official Application for State School Aid submissions and found Newark overstated resident enrollment by 128 students in 2023 and another 128 students in 2024.
The Department of Education calculated that the discrepancies resulted in $6,654,240 in excess state aid during fiscal years 2024 and 2025.
Auditors said student enrollment information was not updated in a timely fashion and found the district had no policies or procedures governing how student information should be updated in its system.
“The district’s response misstates our report. We do not take the ‘position’ that the district’s ASSA count should be reduced by the number of withdrawing students. The ASSA submission should accurately reflect the student enrollment as of the last school day prior to October 16th. This is not our ‘position’; it is dictated by statute,” Kaschak said.
Auditors also found significant gaps in Newark’s criminal-history screening of employees.
Ten of 8,043 employees covered by the requirement had never completed the required criminal background check. They had been hired between two and 27 years earlier.
Another 199 active employees who had previously been cleared to work in other New Jersey school districts had not properly updated their background checks after moving to Newark. Some had worked for the district for decades without the required update.
“Had any of the 199 individuals we cited in our report committed a disqualifying offense prior to us bringing the matter to the district’s attention and the district taking corrective action, it would not have known of the offense,” Kaschak said.
After auditors raised the issue, nine of the ten employees who had never completed the required screening subsequently did so; the tenth left the district.
Of the 199 employees requiring updated checks, 178 had been cleared or updated, 13 separated from the district, six were restricted from working pending fingerprinting, and two were awaiting action from the Department of Education.
Auditors raised another series of questions about Newark’s plan to convert the historic 15 State Street property into a district museum and administrative offices.
Newark entered into a $4.5 million settlement and construction agreement with the property’s owner in 2023 and made a $2.5 million upfront payment toward construction.
Auditors concluded that entering the agreement effectively circumvented statutory competitive bidding requirements, eliminating an opportunity to determine whether another proposal would have been cheaper or more advantageous.
Newark also missed out on a potential $750,000 state preservation grant because it did not own the property or hold a qualifying long-term lease.
By May 2026, the museum was still incomplete — one year beyond its contractual completion deadline — despite the $2.5 million payment. Auditors said Newark did not provide adequate documentation of construction progress, expenses or a new project timeline.
The report also found Newark had not obtained required Department of Education approval before pursuing the property.
The audit also examined an employee fitness center constructed in the basement of Newark’s leased administrative headquarters.
Newark spent approximately $566,000 to construct, equip and operate the gym. Auditors found that more than $300,000 in construction spending lacked adequate supporting documentation, did not receive required formal approval from the Board of Education and circumvented competitive bidding.
“Documents provided to us by the district clearly indicate the expenditures for constructing, operating, and staffing the gym came from the district’s General Fund,” Kaschak said.
The gym opened in November 2024, but sign-in records reviewed by auditors showed an average of just seven employees per day using the facility during a period examined in 2025. All worked in the administrative building.
The board separately approved a $280,440 contract to operate the fitness center, including a full-time trainer, fitness classes, personal training, wellness workshops, and nutrition services.
Another finding centered on the June 1, 2024 Central Office Staff Fun Day held outside Newark for 275 employees and 140 of their children.
The $57,065 event included admission and meals, a DJ or emcee, four inflatable carnival booths, an on-site police officer, and a rescue squad.
The board had authorized no more than $44,000 for the event, but Newark ultimately spent $57,065 without publicly advertising for bids. The district instead used two purchase orders, and auditors found that paperwork supporting the second payment was created after the services had already been provided.
“The documentation provided to us by the district indicates the expenditures for this event should not have been unanticipated,” stated Kaschak. “Dividing larger purchases into smaller ones is commonly known as bid splitting and violates procurement law.”
The Department of Education previously determined that $33,649.07 in state aid used for the first payment was impermissible and ordered Newark to repay the money. Auditors said Newark should also reimburse another $13,251 in state aid used for the second payment.
The audit found several other areas where Newark could have reduced spending or failed to comply with state rules.
Auditors calculated that the district could have saved approximately $18.7 million in fiscal years 2024 and 2025 if it had participated in the New Jersey School Employees’ Health Benefits Program. Newark was required to examine available insurance options but failed to conduct the required 2025 review.
Kaschak emphasized that his office was not telling Newark which health plan to select.
“We did not recommend that the district participate in either plan; we recommended the district examine all available group options for health insurance and select the most cost-effective plans, in accordance with the relevant statutes and administrative code,” he said.
Separately, auditors found $150,619 in required health benefit contributions that Newark failed to collect from employees during unpaid leaves and $41,602 in medical and prescription claims paid during periods when employees were ineligible.
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