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State House reporter Dustin Racioppi's reporting sheds light on SDA nepotism Asbury Park Press

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The Schools Development Authority, responsible for billions of taxpayer dollars in New Jersey's poorest areas, will be restructured or moved under state control after a political patronage scandal led to mass firings and internal reforms as well as costly lawsuits in the fallout, Gov. Phil Murphy and legislative leaders announced Tuesday. 

The unexpected announcement means it could be the second time the authority has been broken up and reconstituted in its two-decade existence.

The first time, under Gov. Jon Corzine, followed news reports showing that what was then the Schools Construction Corporation had mismanaged millions of dollars through poor planning, excessive professional fees and lax oversight. 

But extensive reporting by the Trenton bureau of the USA TODAY Network Atlantic Group detailed political patronage and improper hiring under Murphy's chosen leader at the reconstituted Schools Development Authority, Lizette Delgado-Polanco

A powerful political figure at the time, Delgado-Polanco had fired about two dozen longtime employees and hired three dozen friends and associates and at least one family member who had been forced to resign from another public job because of a sexual harassment allegation, the Network found. 

The new hires bloated the payroll by more than $2 million at a time when the authority was supposed to be focused on securing state support for a new round of borrowing for it to continue its mission. 

In some instances the authority bypassed its normal hiring process for the new hires. In others, the new employees did not meet the requirements for their jobs. And, the Network found, the authority manipulated job descriptions after the hiring spree.

Exclusive: Cleaning house to install family, associates: Questionable Murphy admin hires continue

What the scandal entailed 

Lawyers hired by the Murphy administration and the State Commission of Investigation, an independent agency, confirmed much of the Network's reporting. But the state commission also took a wider view of the authority's spending and oversight, finding "years of inconsistent and questionable" management in a report issued this month

Murphy and the state's top Democratic leaders cited "recent independent reports" in their announcement, which lacked key details about the future of the organization. 

"We will act to effectuate change and look to restructure the organization or move it under another state entity to improve the state’s ability to deliver and effectively manage public school construction projects," Murphy said in a joint statement with Assembly Speaker Craig Coughlin and Senate President Stephen Sweeney, all Democrats. 

"As we work toward funding reauthorization, we will also review the organizational structure of the SDA and consider all possible alternatives to the current structure in the months ahead," the statement said. 

The announcement marks another turn for an agency that in many ways had been held up as example of efficiency and good governance in the wake of the first scandal but then imploded with the patronage hiring. 

For its financial problems and oversight gaps, the investigative commission's report noted the many positive changes the authority has made over the years to carry out its court-ordered mission of building schools in the state's 31 so-called SDA districts, which are mostly poor and lacking resources. 

The authority initiated several reforms after the patronage scandal, and about two dozen of the improperly hired employees were fired. Delgado-Polanco resigned and was replaced with a longtime construction official, not a political connection. 

But Sweeney has been adamant that he would not support reauthorizing another round of borrowing for an agency that already costs taxpayers about $1 billion a year and which has been plagued by scandal.

"I'm not giving that organization another nickel," Sweeney, D-Gloucester, said earlier this month. 

He has proposed abolishing the authority and moving it under another state agency. Murphy has not publicly committed to any proposal but has praised the agency for "doing an outstanding job."

Report: NJ SDA plagued by 'inconsistent and questionable' policies besides patronage

Authority responds 

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Edythe Maier, a spokeswoman for the authority, said in a statement that its board and executive leadership "remain open, as always, to working with our legislative, executive, local, and community partners to further our vital mission." 

It's uncertain how soon New Jersey's leaders could decide exactly how to reorganize or move the schools authority. In one respect, they have plenty of time: The authority has enough funding left from its last round of borrowing to fund the rest of its planned projects the next four years. 

But in other ways, time is running out. That prior borrowing covers projects that were approved a decade ago, and many other schools need repair or replacement throughout the state. 

The need for repairs to systems such as cooling and ventilation have taken on much greater urgency since the COVID-19 pandemic began.

In the meantime, the state must deal with a handful of lawsuits stemming from the patronage scandal.

It has already settled, for more than half a million dollars, a lawsuit brought by its former human resources director. Several other longtime employees who were fired have lawsuits pending.

The authority also faces a legal challenge from the Education Law Center, which is arguing state leaders have not lived up to their legal obligations by not funding priority school repair projects in the state budget. 

The center's executive director, David Sciarra, was not optimistic in a statement Wednesday morning about the planned action for the schools authority. 

"The statement confirms that Governor Murphy, Senator Sweeney and Assemblyman Coughlin will continue their political shenanigans over school construction for another year, extending the consignment of thousands of students in segregated communities to dilapidated, unsafe and overcrowded schools," he said. 

More: How obscure state agency became 'toxic' workplace and then NJ's biggest patronage scandal

Past coverage: $1 billion in taxpayer money has purchased schools — and scandal

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.

Email: racioppi@northjersey.com 

Twitter: @dracioppi 

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