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Political Favoritism Alleged in Grants to N.J. Schools

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New Jersey legislators tried in 1991 to pressure the state education commissioner to give grants to school districts on the basis of political favoritism, concludes a report by state law-enforcement officials.

But investigators with the division of criminal justice in the attorney general's office and the state police found no conclusive evidence that Commissioner of Education John Ellis, who left office last year, had inappropriately awarded grants.

"There is clear evidence that Commissioner Ellis embarked upon an independent, objective effort to evaluate the [aid] applications,'' the report states.

Nonetheless, through a series of allegedly questionable actions by other officials, at least one school district received nearly $1.5 million from a separate agency that investigators say should be returned.

A grand jury is currently hearing testimony on the scandal, which has rocked more than half a dozen political figures and school officials.

The investigation is fraught with political implications only a few weeks before the state's gubernatorial and legislative elections. The lawmakers who are said to have steered the grant money are Democrats, who controlled both legislative chambers until being swept out in a Republican landslide in November 1991.

Moreover, the report focuses on officials within the administration of Gov. James J. Florio, who is facing a strong G.O.P. challenge in November.

President of the Senate Donald T. DiFrancesco, who earlier called for a special prosecutor, now intends to await the grand jury's findings before pushing a special-prosecutor bill.

Moving a bill now would bring the matter to a head just days before the Nov. 2 balloting, explained Rae Hutton, an aide to the Republican leader.

"Mr. DiFrancesco doesn't want anything done to taint the whole issue,'' said Ms. Hutton.

A Computer Glitch

The 158-page report, released last month, offers a rare glimpse into the backroom politicking of the legislature, the Governor's office, and various state agencies.

As one Assembly aide, a central figure in the probe, told investigators: "We just don't sit down and try to think what would be the best public policy here. We were trying as we were moving this money out of education and over to municipal aid, we're thinking about how this affects our people [Assembly Democrats].''

The affair was triggered by a computer glitch.

In March 1991, the state education department erroneously reported to the Lyndhurst schools a state-aid figure that included funding for 1,860 special-education students, rather than the actual 186, resulting in a $1.7 million increase in aid.

Although Lyndhurst officials knew there was an error, they prepared their budget based on the inaccurate figure, the report found.

In stepped Sen. Gabriel M. Ambrosio, who lobbied Mr. Ellis for the funds to offset the difference.

Mr. Ellis said he told the senator, the Lyndhurst superintendent, and an aide to the Governor that the district should apply for part of a $25 million discretionary fund that had been set up to help districts through the transition to the new school-finance system established by the 1990 Quality Education Act.

On the application, however, the district misrepresented its intended use of the money, according to the investigation. Mr. Ellis subsequently rescinded the grant.

With the help of Democratic senators and an aide to Mr. Florio, Mr. Ambrosio eventually was able to secure the funds through the state community-affairs department.

Political Paybacks

Meanwhile, Speaker of the Assembly Joseph V. Doria gave Mr. Ellis a list of districts designated to receive discretionary funds as a way of bolstering Democratic political fortunes, the investigators found.

The list also contained the amount of aid the districts were to receive and the legislators who represented them, according to the report.

In part, testimony indicated, the grants were to be a payback for lawmakers who had voted for the Q.E.A., an unpopular measure that was to play a key role in the Democrats' overwhelming defeat that fall.

"That is the system,'' Mr. Ellis told investigators. "Importuning or making an appeal for something for your district is, regrettably, part of the process. But I had not encountered it quite in that raw form before.''

Mr. Ambrosio and Mr. Doria acknowledged that they had lobbied Mr. Ellis, but admitted no wrongdoing. Rather, they told investigators, they were doing their jobs.

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