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Only Half of New Jersey School Projects May Be Completed

Wed June 29, 2005 - Northeast Edition
CEG



TRENTON, NJ (AP) Only half of the school construction work set for the state’s poorest districts will be completed with the $6-billion set aside for them, the head of the state’s school construction agency told lawmakers June 13.

John F. Spencer, CEO of the New Jersey Schools Construction Corp., testified before a state Assembly Budget Committee that his troubled agency began without the proper expertise to manage the $8.6-billion program and with unrealistic construction cost estimates.

“The money was significant, but it was never enough to deliver all the required state mandates that are needed in the Abbott districts,” Spencer said, referring to the name by which the 31 poor school districts designated by the courts for special attention are known.

The school construction agency did not have a chief financial officer or board members with construction or financial backgrounds. Nor did its program include money for tenant relocation, site cleanups, historic preservation, demolition, administrative costs, land acquisition or inflation, Spencer said.

For example, when the program began two and a half years ago construction cost the agency $125 per square foot. It now costs approximately $200 per square foot, Spencer said.

Committee Chairman Louis Greenwald, D-Camden, said the program seemed to be set up for failure without a set pool of money to buy land.

Other lawmakers also expressed their dismay.

“It’s just mind-boggling that we could have possibly adopted … this initiative with the kinds of lapses in controls that we are finding,” said Assemblyman William Payne, D-Essex.

Payne said the state will have to find more money, possibly by issuing bonds, to finish the work.

“There is a [state] Supreme Court mandate that says we must provide this,” Payne said. “We don’t have the luxury of either doing it or not doing it.”

The state Legislature allotted $8.6 billion in school construction funds. Of that total, $6 billion was allocated to meet that 2000 state Supreme Court mandate that New Jersey fix up schools in 31 of its neediest communities. Other districts were eligible to apply for the rest.

Just $1.66 billion of the $6 billion is left, but it is committed to contracts for projects ready for construction within the next 12 to 15 months, Spencer said. The corporation’s board of directors will prioritize those projects in a plan to be adopted in July. Existing construction school construction work will continue.

After all the school districts in the state file their long-range facilities plans in October, Spencer said the corporation expects to know how much money will be needed, and how many more projects remain.

Assemblyman Joseph Malone III, R-Mercer, Monmouth and Ocean, said costs could run between $18 billion and $25 billion.

The school construction program has been plagued by excessive spending. One analysis showed that the corporation spent an average of 45 percent more to build schools than local boards of education. Architects also were paid double the average rate, and project managers received up to four times the rate other districts were paying for schools built in the past two years.

State Inspector General Mary Jane Cooper issued a stinging report in April criticizing the corporation for hiring temporary workers at premium pay rates to supplement its 270-person staff, for paying local governments for school building sites that were already publicly owned and for not seeking reimbursement from architects for construction costs overruns resulting from their design errors. The report also said the agency paid thousands of dollars in inappropriate bonuses to top executives during 2003 and 2004.

Acting Gov. Richard J. Codey created the Office of Inspector General in January and asked the office to make the corporation’s operation its top priority.

Spencer outlined several changes under way or to be completed by August including a newly appointed chairman for its board of directors, two new board members with financial, legal and business experience, and a CFO.

It has eliminated employee bonuses, drafted a new policy to recoup money given out as a result of a contractor’s errors, and it has begun to terminate temporary staff with all to be eliminated by July’s end. Project change orders also will be limited to 5 percent of the initial project cost and advertising will be cut by 90 percent.

“We’re working harder than ever to restore the public’s confidence in our work,” Spencer said.

Assemblyman Kevin O’Toole, R-Bergen, Essex, Passaic, said he was disgusted by the mistakes at the agency and called it one of the worst in state history.

“There’s a significant ramp-up in expertise and skill,” Al Koeppe, the SCC’s new board chairman, responded to O’Toole. “There’s been a change there for the better.”