NJ SDA plagued by 'inconsistent and questionable' policies besides patronage, report finds
The patronage scandal that engulfed the Schools Development Authority two years ago was not an isolated incident of failed leadership, a state watchdog agency has found, but the result of "years of inconsistent and questionable" management and policies that have led to wasteful property management, costly construction overruns and poor practices to weed out bad contractors.
If the authority does not enact further reforms, "the public cannot be confidently assured that the SDA can consistently and successfully serve as a capable and trustworthy custodian of public tax dollars" to build schools in New Jersey's poorest districts, the State Commission of Investigation said Wednesday.
It's the second scathing report by the state's independent watchdog in a year and raises fresh doubts about the future of the authority, which were first raised by political leaders after a series of reports by the Trenton bureau of the USA TODAY Network Atlantic Group detailed the unethical management by the leader chosen by Gov. Phil Murphy.
The commission's investigation last year confirmed many of the details of improper hiring by former Chief Executive Officer Lizette Delgado-Polanco. She had fired longtime employees and brought on more than two dozen friends and family members lacking qualifications and outside of the normal hiring process, and was forced to resign.
That renewed scrutiny on an authority that had already been rebuilt once from a mismanagement scandal as the Schools Construction Corporation.
The commission acknowledged that the current authority inherited many of its problems and has taken steps to move away from impractical policies and wasteful actions of the SCC, but "it has not entirely escaped its shadow."
The commission makes several recommendations:
- Establishing an outside monitor
- Improving the process to select a CEO instead of the current system of a governor nominating one and the SDA board "serving as little more than a rubber stamp"
- Strengthen the SDA board by filling vacancies and creating a personnel committee to review staffing and human resources issues
- Review construction practices through a task force created by the governor and Legislature
- Redesign contractor reviews to "ensure assessments are conducted consistently, accurately and objectively"
The authority said it was reviewing the commission's report and declined to comment.
In a formal response included in the SCI's report, Delgado-Polanco reiterated her past criticism that the agency had dramatized its findings and that she had valid reasons for reorganizing the authority.
"The SCI's obsession with the SDA does nothing to assist the people of this state and these reports are a colossal waste of money," Delgado-Polanco wrote.
Broader scope of investigation
Following up on its report from last year, the commission broadened its investigation to the foundational basis for the authority: building schools in 31 of New Jersey's designated SDA districts, which have traditionally been underserved.
It found that the authority's construction expenses over the past 10 years were 24% higher to build elementary schools and 16% higher for middle schools than in similar projects done independently by regular operating districts in the state.
High school construction costs, however, were 15% less than in other districts, the commission said.
But the authority's evaluation process for reviewing the performance of contractors it hires — a tool used to keep them accountable and ensure they perform high-quality work — was unreliable and rendered meaningless, the commission said.
As a result, contractors received satisfactory scores "despite serious safety problems," the report said.
A firm overseeing a smoke suppression system retrofit at Paterson International High School between 2012 and 2014 received marginal safety ratings in two separate evaluations, for example, but evaluators increased its score after the contractor challenged the findings.
The SDA boosted the score of another firm doing work at a school in Irvington, the commission said, even though evaluators had found its work "subpar."
Documents in the investigation "bolstered allegations Commission investigators heard from SDA personnel that contractor performance evaluations were untrustworthy, were not taken seriously, and rarely resulted in consequences for poor performing contractors," the report said.
Some of the authority's construction projects over the years have been "plagued by repeated, and sometimes avoidable," problems with essential systems like heating, cooling and fire protection, which increase costs for districts years after the work is done, the commission said.
Construction and safety problems
At Egg Harbor City Community Middle School, the heating system shut down when temperatures dropped below freezing, so the second floor never warmed above 59 degrees, the commission said.
And in the summer it opened, in 2011, there was so much humidity inside the main office that water dripped from the ceiling, doors swelled and wooden file cabinets warped, the report said. Mold grew on the linings inside instrument cases, it said.
Most of its problems, but not all of them, were connected to the schools' heating, ventilation and air-conditioning system: a "bungled" sewer drain installation that caused a backup and spewed sewage all over the gym floor and locker room; hot water in the toilets and water fountains; and an "inadequate" drainage system that brought water from the school property into a neighbor's front yard, according to the report.
That school cost $24 million, with the SDA covering $16.5 million and the district paying $7.6 million, the report said. But the "shoddy" work cost taxpayers hundreds of thousands of dollars more, and local school officials "still grapple with the fallout of the various construction deficiencies and the unexpected associated expenses," it said.
The commission found other problems at high schools in Phillipsburg and Newark.
SDA patronage scandal: Cleaning house to install family, associates: Questionable Murphy admin hires continue
At Phillipsburg High School, which took 14 years to complete and cost $127 million, staff still can't regulate heating and air conditioning because it is controlled by a proprietary software program that a certified vendor must maintain, the commission said. So the system sometimes runs when the school is empty, wasting energy.
The school district pays an outside vendor $70,000 a year, on top of its expected energy costs, to run its heating and air conditioning, according to the commission.
Plumbing is another problem. At high-use events like athletics, janitorial staff must flushwater through a neighboring sink to prevent sewage from backing up in the toilets and spilling out onto the floor, the commission said.
The fire protection system at Science Park High School in Newark hasn't operated correctly since it opened in 2006, the report said. New contractors have been hired "multiple times" in the past 15 years to rebuild the system, but, the commission said, "its functionality remains unclear because a final system-wide inspection has not yet been conducted."
The $70 million school is safe to occupy because the smoke evacuation element is one of many redundancies built into the fire safety system, the report said. Still, the inability to correct the problem "raises legitimate questions about why it has taken so long to resolve this matter and how it occurred in the first place."
Other problems happened before construction ever started. The commission found that properties purchased in the early to mid-2000s for five school projects in Asbury Park, Camden, Newark and Trenton that were never built were also not appropriately maintained by the authority beyond lessening hazardous conditions.
The properties fell into disrepair and blighted neighborhoods, according to the report. In Camden, a "dilapidated" row house crashed. In Asbury Park, the authority lost more than $4 million when it sold a two-story building in 2017. In Trenton, demolition and cleanup costs exceed the value of the land where the building the authority purchased "sat crumbling," the report said.
The commission referred its findings to the Attorney General's Office, Department of Education and Department of the Treasury "for whatever action is deemed appropriate."
The authority has enough money from the last time the state authorized borrowing to complete its remaining projects through 2025, but it must get clearance from political leaders for a new round of funding if it will exist beyond that.
Several lawmakers, including Senate President Stephen Sweeney, have proposed abolishing the authority, but there have been no known discussions about that since the COVID-19 pandemic struck.
Dustin Racioppi is a reporter in the New Jersey Statehouse. For unlimited access to his work covering New Jersey’s governor and political power structure, please subscribe or activate your digital account today.