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Published in Print: August 10, 2005, as N.J. Facility Fund Dries Up, Scores of Plans on Hold

N.J. Facility Fund Dries Up, Scores of Plans on Hold

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Only about 20 percent of the construction and renovation projects the New Jersey Schools Construction Corp. approved for the state’s neediest districts will move forward, the state agency announced late last month, because it has run out of money.

The recent announcement follows allegations of mismanagement and misspending in the $8.6 billion program.

The corporation, which was formed in 2002 to handle construction projects mandated as part of the state’s Abbott v. Burke school finance case, revealed this spring that it would deplete its coffers before all the projects were completed.

The SCC’s board announced July 27 that 59 projects, out of the remaining 270 that had been slated and 400 planned, would proceed. Those projects would total about $1.4 billion. The remaining projects are on indefinite hold unless the state adds more money to the school construction fund.

John F. Spencer, the chief executive officer of the New Jersey Schools Construction Corp., is silhouetted as he tours construction at Mott School in Trenton, N.J., in August of 2005.
John F. Spencer, the chief executive officer of the New Jersey Schools Construction Corp., is silhouetted as he tours construction at Mott School in Trenton, N.J., in August of 2005.
—File photo by Daniel Hulshizer/AP

“The overall goal of this process was to allocate the SCC’s remaining funds in a fiscally responsible way and to build schools where they are most needed,” Alfred C. Koeppe, the chairman of the board of the SCC, said while making the announcement.

A memo explaining the board’s decision says that the members focused on several criteria when they decided which projects to approve. They placed the top priority on projects in which schools were extremely overcrowded, had severe safety and health issues, or needed early-childhood classrooms. They also favored projects that were well along in the design process, for which the SCC had already acquired property, and in districts that had not seen much Abbott money.

The announcement, even though expected, upends the plans of dozens of New Jersey school districts.

Arrested Development

In the 2,200-student Gloucester City schools, administrators received SCC board approval for a new middle school last year, and had begun tearing down classrooms at a high school, where 7th and 8th graders are now housed, to prepare for an addition.

In preparation, the U.S. Environmental Protection Agency spent $25 million to clean up a Superfund site in the center of the town. Then, the SCC spent $10 million to purchase the land and relocate 70 families, and spent another $1 million on architectural-design fees for the new school.

Nonetheless, Gloucester City’s projects did not make the SCC’s cut.

“After $36 million, we were told that they are going to scatter grass seed and leave town,” said Lynda Lathrop, a spokeswoman for the district.

She said that her district is in talks with the Education Law Center, the Newark-based advocacy group that originally filed the Abbott lawsuit, about starting another class action.

Acting Gov. Richard J. Codey, a Democrat, however, said the corporation’s plan for divvying up the remaining funds was fair and laudable, given the situation. He said he was confident that a restructuring plan put forth by the inspector general in April for the SCC would alleviate its management problems.

“One thing should be clear to New Jersey residents,” Mr. Codey said in the written statement. “There will be many more schools built in our state in the future, and it will be up to the next governor and legislature to find the necessary funding.”

Republicans, who are seeking to gain control of the governor’s office in this fall’s election, used the opportunity to blast the Democratic administration.

“The SCC has robbed taxpayers and failed our children,” charged Douglas Forrester, the Republican candidate for governor, in a statement. “It is sad that this glaring example of waste and mismanagement affects our most vulnerable citizens—our children—and creates a crisis in many low-income neighborhoods throughout the state.”

Maximizing Funds

The corporation, meanwhile, acknowledges that mistakes were made, but vows that the remaining money will be well spent.

The SCC came under fire earlier this year after statewide news media reported that its projects cost much more than the state average. New Jersey’s inspector general later found that the agency did not have controls to prevent financial mismanagement, waste, conflicts of interest, or fraud.

The agency underwent a restructuring and put in place recommendations from the inspector general’s report this spring. ("States Scrutinize School Construction Costs," May 4, 2005)

“With improved financial oversight and new internal controls under way, the SCC—to the extent possible—will take every step necessary to ensure that projects stay on-budget and that every dollar is spent wisely,” said Mr. Koeppe, its chairman.

Dominick DeMarco, a spokesman for the SCC, said the legislature could eventually provide more funding for the other projects. Right now, he added, “we’re concerning ourselves with building schools and having the most impact with the money that we have now.”

Vol. 24, Issue 44, Pages 22,26

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