Troubled school construction agency needs supervision, report says

Schools Development Authority needs a series of reforms to guard against possible abuses, investigative panel says. Murphy and lawmakers must also act, it concluded
Credit: (NJSDA from Instagram)
One recent SDA project: a new high school in Camden

An outside monitor should oversee the Schools Development Authority and its $2 billion portfolio of active projects, a state watchdog agency said after investigating the authority in the wake of a patronage scandal.

The authority needs to implement a series of reforms to improve efficiency and protect against “wasteful and neglectful management,” the State Commission of Investigation said Wednesday. Other recommendations include reforming the hiring process for the chief executive officer to ensure only well-qualified candidates are considered to lead the agency.

The SDA should also overhaul its contractor-review policies to improve the quality of work performed for school districts and foster better relationships with officials from the districts in which it works, the SCI said in a nearly 50-page report.

“Without further reform, the public cannot be confidently assured that the SDA can consistently and successfully serve as a capable and trustworthy custodian of public tax dollars and deliver high-quality, professionally designed and constructed schools that enrich the academic learning environment for New Jersey public school students,” the report said.

Need for ‘far-reaching’ reforms

The SCI report scrutinized years of operations and did credit agency officials for recent “good faith efforts” to improve administrative shortcomings. But it also said more formal and “far-reaching” reforms are needed, some of which would have to be enacted by Gov. Phil Murphy and lawmakers through statute.

The report also said the SCI’s findings have been turned over to the state attorney general’s office and other state agencies for “whatever action is deemed appropriate.”

A spokeswoman for the SDA said the report is under review but offered no additional comment Wednesday. Murphy’s office declined comment.

This is the second report on the SDA’s administration of New Jersey’s school construction program to be issued by the SCI within the past year. The reports stem from an investigation that was launched in the wake of a patronage scandal that rocked the Murphy administration several years ago.

READ: State investigators say Murphy staff knew about SDA patronage

READ: State Commission of Investigation Report — Schools Development Authority, Part II

 SDA running low on cash

The SCI reports come at key time for the SDA, which will soon run out of cash unless the governor and lawmakers renew the bonding capacity needed to continue its mission of upgrading school facilities in some of New Jersey’s neediest communities. A predecessor agency, the Schools Construction Corp., was disbanded over a decade ago in the wake of a prior scandal, and some lawmakers have proposed folding the SDA into another state agency.

The SCI’s first report on the SDA was issued last September. It faulted the tenure of former chief executive officer Lizette Delgado-Polanco, who was picked by Murphy, a Democrat, to lead the agency after he became governor in early 2018.

Among other questionable moves, the initial SCI report alleged Delgado-Polanco fired more than a dozen longtime employees and hired what the SCI said were “unqualified friends and relatives” to fill positions at the SDA. Her actions were first brought to light in a series of reports by The Record and through a whistleblower.

Delgado-Polanco, who resigned less than a year into her tenure, defended her time at the SDA in a statement provided along with the latest SCI report. She also accused the SCI of having an “obsession with the SDA” that is wasting taxpayer money, according to the statement.

Reviewing records back to 2005

In addition to including a series of recommendations, the SCI’s latest report on the school construction program offers a close review of the SDA’s core mission of real-estate acquisition and school building, including by reviewing nearly 140 contractor evaluations going back to 2005.

The report highlighted several problematic construction projects and real-estate deals from across the state and detailed problems with inadequate sewers and plumbing, faulty concrete installation and substandard heating and cooling systems, among other concerns.

“Numerous shoddy school construction projects and costly construction errors scattered around the state have left long-running legacy impacts for local districts, students, and local and state taxpayers,” the report said.

While the SDA has taken action, including in the courts, in response to problems, the report suggests many of the issues that have often left local taxpayers on the hook for recurring maintenance charges could have been avoided with better monitoring and oversight policies.

“To its credit, the SDA has worked with local school personnel and contractors to address faulty construction, streamlined some parts of the building process — particularly in the design phase — and eliminated the use of certain building practices or systems deemed inefficient or no longer appropriate,” the report said.

“But it must act and do more in a consistent and rudimentary way to ensure that in the future negligent contractors are held accountable, working relationships with the local school districts it serves are improved, and project costs remain contained,” the report said.

Calling for outside monitor

The SCI’s top recommendation calls for bringing on a full-time outside monitor to ensure the SDA complies with reforms that have already been implemented by the agency board and the others called for in the latest SCI report.

The outside monitor should provide periodic updates and reports to the governor and Legislature and could eventually evolve into an autonomous internal inspector general working within the SDA itself. Ongoing, statutorily required cost comparisons should also be expanded to ensure taxpayers are getting bang for their buck, the report said.

Another key recommendation calls for upgrading the process used to select and appoint someone to fill the SDA’s chief executive officer position. More responsibility should be given to the SDA board itself to ensure the position is filled by a well-qualified candidate, including by having them nominate individuals for gubernatorial appointment, the report said.

“Without additional legal language specifically assigning the responsibility for this process to the Board, the risk remains that a candidate for this key role could be chosen based on political considerations rather than the individual’s professional qualifications,” the report said.

The board itself should also be strengthened to improve accountability and oversight, according to the SCI.  Reforms proposed for contractor evaluations and construction oversight include mandating real-time reviews of architectural design work and establishing a new task force of industry experts to further scrutinize why, in some cases, the costs of SDA projects are higher than those conducted by school districts without SDA involvement.

Forging better relationships with local school officials could also save money, the report suggested.

“On some projects reviewed by the Commission, contractors used inappropriate materials or installation methods despite concerns raised by school personnel that later malfunctioned and sometimes required the district to fund the repairs,” the report said.

READ: Funding for school buildings gets traction amid pressing need

READ: Explainer: How the SDA Was Built — and Became Scandal-Ridden