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Audit questions how millions were spent in Newark schools. GOP says it's no surprise.
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Michael Sol Warren
Published Oct 8, 2026
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By
Michael Sol Warren
Published Oct 8, 2026
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An audit that questions how millions of dollars were spent in Newark’s public schools — and resulted in a referral to state prosecutors — is giving Republicans fresh talking points as they push for changes to how the state distributes funding to school districts.
The audit, released last week, lands as New Jersey leaders are beginning a new effort to reform the state’s long-debated school aid formula — which Republican lawmakers have for years argued props up urban schools at the expense of suburban and rural districts. Newark Public Schools have been a particular target of their criticism, both as New Jersey’s largest district and the recipient of far more aid than any other school system in the state.
New Jersey’s Office of the State Auditor examined the Newark district’s finances for a four-year period that ended this spring, looking at the district’s accounting whether spending outside of payroll was reasonable. The auditors wrote that they referred “certain matters” to the state’s Division of Criminal Justice — raising the specter of a possible criminal investigation — but provided no further detail about those referrals. The state attorney general’s office, which houses that division, did not respond to a request for comment.
The auditors cited several issues, including the district could have saved $18.7 million by participating in the New Jersey School Employees’ Health Benefits Program, the district was overpaid $6.7 million in state aid because it overstated enrollment in 2023 and 2024, and the district has spent $2.5 million on a stalled project to turn a historic, closed school into a museum.
The auditors emphasized that overall the spending they analyzed was generally reasonable and related to the district’s programs, and properly recorded.
Newark Public Schools is the state’s largest school district by far, with more than 43,000 students enrolled during the 2025-2026 school year, according to state data. The second largest district is Elizabeth Public Schools, which had about 27,000 students during the same school year.
New Jersey’s current budget sent $1.3 billion to the district, according to state data. That’s roughly 10% of all the all school aid distributed statewide. The second-highest award was to Paterson Public Schools, which received $619 million.
State Sen. Declan O’Scanlon, the top Republican budget officer in the state Senate, called the audit’s findings “outrageous and distressing, but not at all surprising.”
“You have a [district] administration that has shown an inclination to overspend and spend irresponsibly, so that's a smoldering fire, and then you throw gasoline on it by throwing hundreds of millions of extra dollars in state aid at an outrageously increasing rate, and it's a recipe for economic conflagration of taxpayer dollars,” O’Scanlon said. “And that's exactly what happened.”
O’Scanlon represents a district along the Raritan Bay's shore in Monmouth County that includes Middletown, where local schools have faced severe budget distress for years. He said he wants to see the amount of state aid dedicated to Newark through the state funding formula scaled back, so that money can be redistributed to districts around the state that had seen their aid amounts cut in recent years.
“My hopes are that [the Sherrill administration is] really going to take this seriously, and really going to look outside the box, and really going to be appropriately aggressive in coming up with ways within the tax dollars we have now to solve some of these problems,” O’Scanlon said. “My expectations are that they won't, that they don't want to piss anybody off, and that they're going to drop the ball.”
Newark Public Schools leaders have strongly disputed any suggestions the auditors uncovered any wrongdoing, including a statement from the district on the day the audit was released that the 22-month-long effort found “nothing.”
“Nine state auditors spent 22 months examining Newark Public Schools, giving us an opportunity to showcase the district, our students, and our staff. Their report concludes that the district’s financial transactions were properly recorded, related to district programs, and reasonable,” Paul Brubaker, a spokesperson for the school district, said in a statement. “It also identifies areas meriting management’s attention and makes recommendations. That’s it. We are reviewing and considering all of those recommendations.”
Gov. Mikie Sherrill’s office deferred questions about the Newark schools audit and state school funding reforms to the New Jersey Department of Education, which is kicking off the work toward any reforms with a series of public forums that began last week and continue through mid-November.
Lily Laux, the commissioner of the New Jersey Department of Education, “firmly believes every student deserves access to the opportunities, resources and support they need to succeed, and that an effective public education system delivers this with a focus on strong academic foundations alongside responsible stewardship of public investment,” Cecilia Williams, a department spokesperson, said in a statement.
“That commitment is guiding the Department's statewide school funding outreach, which is bringing together stakeholders from across New Jersey to help advance a funding system that is more transparent, predictable, accountable and sustainable while putting students first,” Williams added.
Once the education department makes recommendations for possible reforms, state lawmakers will take over the process of pursuing any related legislation. Democrats hold large majorities in both houses of the state Legislature.
Assembly Speaker Craig Coughlin’s office declined to comment. Senate President Nick Scutari’s office did not respond to a request for comment.
Elisabeth Ginsburg, the executive director of the Garden State Coalition of Schools, said Newark Public Schools has long been a punching bag for lawmakers from other parts of the state because the district receives so much more state funding than any other.
“We believe there's not a direct correlation between number of dollars spent and educational attainment,” Ginsburg said. “ But that has been sort of a motif at budget time. And now I think that point of view has been amplified by the outcome of the audit.”
Brubaker said the audit should have no bearing on debate over New Jersey’s school funding formula.
“Issues are being confused and conflated by certain elected officials to tell a story other than the truth,” Brubaker said. “New Jerseyans are smarter than that.”
There are 590 operating school districts in New Jersey, and Ginsburg said the Garden State Coalition of Schools has about 100 districts as members. Ginsburg said Newark Public Schools is not a member of the coalition, but Trenton Public Schools is, giving it an urban district representative.
“ We're looking at a very, very big picture in terms of a funding formula,” Ginsburg said. “What works in Alpine, New Jersey, doesn't work in Newark, New Jersey, or Cherry Hill, New Jersey, or Middletown, New Jersey.”
Ginsburg said her organization broadly would like the state’s school funding formula to be updated to be more flexible when evaluating the needs of individual districts. And she said the funding award process should be more predictable year-to-year, so that “ you can go into budget season — as a school district — and make a reasonable budget that's explainable to your population.”
Brubaker said district leadership in Newark agrees that New Jersey’s school funding formula needs updating — but that the district should be in line for more money.
“Newark Public Schools has been funded below adequacy for decades, and under the current formula, the children of Newark are owed hundreds of millions of dollars,” Brubaker said.
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Politics
education
new jersey
public safety
Michael Sol Warren
Michael Sol Warren covers New Jersey for WNYC and Gothamist, and previously reported on issues around the Garden State for NJ Spotlight News and NJ Advance Media. He can be reached at [email protected].
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