Waste Plagues NJ School Construction

Published October 1, 2005

Many of New Jersey’s poorest students, who have been looking forward to leaving dilapidated school buildings and going to sparkling new ones, could be facing disappointment as a corporation created to build their new schools seems to be falling apart.

In August, John F. Spencer, chief executive officer of the Schools Construction Corporation (SCC), the state entity charged with building the new schools, resigned amid charges of fiscal malfeasance. In April, the state Inspector General had issued a report saying the SCC has been plagued by waste and mismanagement since its inception in 2002. In June, Spencer told the General Assembly the corporation could complete only half the 135 projects it had undertaken with the $6 billion it had been allocated, and would need a fresh infusion of cash to do any more.

The SCC was created by an executive order of former Gov. James McGreevey to comply with a 1998 state supreme court ruling requiring New Jersey to improve the physical condition of schools in so-called Abbott districts–31 of the state’s poorest school districts. The order stemmed from one of many Abbott v. Burke cases decided since 1985, in which the court ruled the state had failed to provide a constitutionally mandated “thorough and efficient education” for all students.

Spending Excessive

According to Inspector General Mary Jane Cooper’s April 2005 report, the SCC had overseen such waste as:

  • paying local governments more than $67 million to buy land already owned by the public, on which to build schools;
  • selecting sites requiring extensive cleaning because of environmental contamination;
  • paying for non-essential items such as parking facilities and synthetic turf for athletic fields; and
  • paying “Project Management Firms” (PMFs)–essentially, private contractors–more than $217.8 million above originally contracted amounts.

Cooper also identified questionable practices in the operation of the corporation itself, including:

  • paying bonuses to several employees, “a highly unusual perk for governmental entities”;
  • hiring at least 22 contract workers, who were paid approximately triple the amount of comparable state workers; and
  • maintaining three northern New Jersey “regional offices” within 20 miles of each other, but only one for central and southern New Jersey.

Some Decry Budget Constraints

In explaining to the General Assembly in June why the SCC could complete only half the work it had undertaken, Spencer said the funding “was significant, but it was never enough to deliver all the required state mandates that are needed in the Abbott districts,” according to the June 14 edition of the Philadelphia Inquirer.

David Sciarra, executive director of the Newark-based Education Law Center, which was involved in much of the Abbott litigation, agreed. “Everybody knew in 2000 that that [$6 billion] was a down payment,” Sciarra said.

Legislators Not Convinced

Some legislators, however, blamed the corporation for much of the funding shortfall. According to a June 14 report from The Associated Press, Assemblyman William Payne (D-Essex) said, in response to Spencer’s testimony, “it’s just mind-boggling that we could have possibly adopted this initiative with the kind of lapses in controls that we are finding.”

In response to Cooper’s report, the SCC adopted a self-imposed reform plan. Among its goals were to alter its audit schedule and reduce the PMFs’ responsibilities. On August 15, the SCC announced it was close to meeting those goals but had missed its self-imposed deadline for doing so. Three days later, Spencer resigned.

Devolution Suggested

In light of the revelations of mismanagement and Spencer’s departure, the SCC’s future is uncertain at best. Sciarra noted that while there clearly were some problems to be fixed, “this is an agency that has accomplished a lot.” One useful reform, he said, might be to “decentralize the program a little,” giving the Abbott districts more control over their projects.

Gregg Edwards, president of the Center for Policy Research of New Jersey and former executive director of the New Jersey Senate, agreed that devolving responsibility, as well as some of the construction costs, to local districts would be a move in the right direction.

“There ought to be some local contributions,” he said.

Neal McCluskey ([email protected]) is a policy analyst at the Cato Institute’s Center for Educational Freedom.