State investigators say Murphy staff knew about SDA patronage

Report from State Commission of Investigations says Schools Development Authority ‘may cease to exist,’ cites ‘suspect hires … managerial malfeasance’ by former CEO
Credit: NJTV News
April 10, 2019: Lizette Delgado-Polanco appeared before the Assembly budget committee where she was grilled about her management of the Schools Development Authority.

Top members of Gov. Phil Murphy’s staff — “a far wider universe of individuals than had been previously disclosed” — knew about a widespread patronage scandal at the multibillion-dollar agency created to build schools in cash-strapped districts, according to a report by the State Commission of Investigations.

The investigation and the report released Wednesday raise new questions about the future of the Schools Development Authority, which has no money left to build new schools from the $12.5 billion it borrowed in 2008. Paying back that debt costs taxpayers roughly $1 billion a year. To build more schools, the agency would need to borrow more cash with backing from the Legislature.

“Despite having legislative hearings, an internal audit, and a pair of independent legal … only part of the story has been told so far,” the report states.

Attorney general’s office implicated

Among the new revelations, gathered through interviews and subpoenas, was information that placed the attorney general’s office into the mix of players.

“An inquiry conducted by a private law firm at the behest of the state Office of the Attorney General after a whistleblower complaint about irregular hiring practices failed to include interviews with individuals who worked inside the governor’s office and had direct oversight responsibilities for the SDA,” the report says.

Claiming the SDA’s very existence is in the balance, SCI officials promised to continue their investigation and issue updates until the agency submits a final report.

“The bottom line is this: the SDA may cease to exist altogether unless the state can restore lost public trust that will enable it to obtain a new round of large-scale public financing,” the SCI indicates.

“I have no comment on the SCI report,” Murphy said at his afternoon COVID-19 briefing. “I haven’t read it.”

Thus far, the central figure in what the SCI calls a “debacle,” has been Lizette Delgado-Polanco, the former union official and vice president of the Democratic State Committee appointed by Murphy to serve as the authority’s CEO in August 2018. The SCI characterizes her as “a woefully inexperienced CEO.”

Shortly after taking office, Delgado-Polanco was informed the agency was nearly broke and would need an infusion of funds to be able to continue. She told the SCI that she and the governor’s office would go to the Legislature for additional financing.

A few weeks after taking office,  Delgado-Polanco launched a dizzying succession of improper initiatives, the report details.

‘Suspect hires … managerial malfeasance’

“Delgado-Polanco’s brief tenure at the SDA featured questionable administrative actions, suspect hires and outright managerial malfeasance. These included the firing of more than a dozen long-time employees, the rewarding close friends and relatives — some with little to no qualifications — with high-paying government jobs and the exclusion of top staff and the board leader in major management decisions,” it says.

The SDA authorized more than $2.7 million in salaries for new employees during Delgado-Polanco’s short run, and most of her new hires had job duties outside the authority’s core mission, the commission stated. The commission stated it found that the termination of 15 SDA employees — including the firing of 14 workers on a single day — was orchestrated by Delgado-Polanco.

Her actions were first brought to light in a series of reports by The Record and through a whistleblower, which led to several audits and investigations, which culminated in her resignation in April 2019, after only six months on the job.

Keeping governor’s office looped in

Patricia Arcila Cabrera — Delgado-Polanco’s former deputy chief of staff and best friend — told the commission that “she didn’t take any step without calling the governor’s office.”

The commission obtained 110 text messages and phone calls between Delgado-Polanco and Murphy’s chief of staff at the time, Pete Cammarano, between October 2018 and April 2019, the month she resigned.

Cammarano testified to the SCI that “he had heard rumors — but could not recall when exactly — that Delgado-Polanco had hired individuals with whom she had close personal or professional relationships.” He said he called to Delgado-Polanco to inquire, and told the SCI:

“The answer was that the rumor was not true, that that’s not what was happening. And I assured her that it can’t happen, and then that really ended the conversation. I was satisfied at the time that that was the case.”

Cammarano did not return a voicemail seeking comment.

Delgado-Polanco said in a written response to the agency that its report is a “hit job on me, undertaken as a means to smear me, and, from what I can gather, the governor and the governor’s office regarding my appointment.”

History of waste

Mismanagement and waste dominated the Schools Development Authority’s predecessor soon after its inception in 2002, when it was called the Schools Construction Development Corp. It was created to satisfy mandates in the 1988 landmark state Supreme Court case — Abbott v. Burke. It was funded with taxpayer-backed bonds with the mandate to make every school building in the state’s poorest districts safe and educationally adequate.

Instead, “the SCC had squandered hundreds of millions of dollars on cost overruns and overpayments to contractors and had become a home for the politically connected,” the SCI recounts. “A year after its 2002 creation, it was completely out of money and unable to complete further projects — blowing through approximately $8.6 billion.”

In 2007, Gov. Jon Corzine shut the troubled agency down and created the SDA, promising to rehabilitate the program and return it to its core mission.

In August 2019, Murphy fired 30 authority employees, including 27 who were hired by Delgado-Polanco.

But “the public still does not have the full picture of both the individual and systematic breakdowns …” notes the report. “Even though reforms have been implemented … it remains to be seen if these new powers extend far enough.”