School agency reformers discuss goals, problems

The new board charged with overhauling or dismantling New Jersey's troubled Schools Construction Corp. convened yesterday and promised to root out waste, corruption and inefficiency at the agency accused of mismanaging an $8.6billion public school building program.

At the same time, the fallout from lingering problems continued. Board members learned yesterday that construction costs for 69 ongoing projects are running over estimates, that the program has used up all $2.6billion allotted for subsidies to suburban school districts and that it launched only $400million in building projects last year, far short of the $1.2billion projected at the start of the year.

"We need to focus the SCC on being a highly effective and efficient construction management company," said Barry Zubrow, a former Goldman Sachs & Co. executive installed by Gov. Jon Corzine as SCC chairman Tuesday. "We need state-of-the-art financial controls and accountability systems."

Zubrow said SCC employees were sent new ethics guidelines yesterday and that the Attorney General's Office is looking into possible wrongdoing by SCC workers or overbilling by contracting firms that have collected hundreds of millions of dollars from the program.

"We look forward to joining with the attorney general and her staff as we vigorously pursue this," he said.

Zubrow's installation marks the second wave of reform at the schools corporation, which was formed about three years ago to rebuild hundreds of decrepit public schools in 31 of New Jersey's neediest communities under terms of the state Supreme Court's Abbott vs. Burke ruling.

The SCC was given $6 billion for that task, and also oversees distribution of $2.6billion in state subsidies to wealthier, so-called "non-Abbott" school districts.

Yesterday, in a wide-ranging status report to the new board members and Cabinet officers who attended the SCC's regular meeting, acting chief executive officer Peter Maricondo said the funds for the suburban communities have all been committed.

"The remaining $40 to $50million has been allotted to 180 projects in 90 non-Abbott districts," he said. That means, he said, there is no grant money for school districts that approved construction projects in September, December and January.

Since last summer, when the state announced that funds for the suburban districts were dwindling, voters in 33 communities have approved school projects that would have qualified for a total of $163million in state aid. District officials were told that if the state aid ran out, they would have to cover the full costs of their projects with borrowed funds, then get reimbursement for a portion of their loan payments over the next 20 years.

Local officials have been waiting, in some cases for months, to hear whether state subsidies would be forthcoming, said Lynne Strickland, who lobbies for many of the suburban districts as executive director of the Garden State Coalition of Schools.

"Districts have been hung up, back-burnered," she said. "The credibility of the state is no longer suspect -- it has been found lacking."

As for the Abbott districts, the SCC last summer earmarked what was left of its $6billion fund for 59 projects. But Maricondo reported yesterday there might not be enough money for all of them because 69 school projects already under way are coming in over budget.

Maricondo also told board members that another 310 school projects are in line for state funding if lawmakers decide to provide new money. The Supreme Court has given the state until Feb. 15 to produce a list of those projects and the funding needed to build them.

The SCC has been in turmoil for about a year, since officials first revealed they were running low on the funds authorized by lawmakers in 2000.

A Star-Ledger analysis revealed that the first six schools built by the SCC cost, on average, 45 percent more than 19 schools built without the agency's involvement at the same time.

In response to that report and to the findings of a critical review by the inspector general, former Gov. Richard Codey retooled the agency and suspended the award of new contracts.

As a result, written updates distributed at yesterday's SCC meeting show, the program's output plummeted. The corporation awarded 73 construction contracts worth a total of $400million last year, compared to $1.2billion projected at the start of the year.

The 2005 output was the lowest since 2002, the year the agency was formed, SCC records show.

Dunstan McNichol covers state government issues. He may be reached at dmcnichol@starledger.com or (609) 989-0341.