Amid
probe, agency to cut school costs
Construction chief trims tasks
Thursday, February 24, 2005 • BY DUNSTAN McNICHOL
• Star-Ledger Staff
Facing an inspector general's review of cost overruns
and potential conflicts of interest, officials in charge of
New Jersey's $8.6 billion school construction program
yesterday announced plans to reduce project oversight costs
and eliminate a $2 million advertising campaign.
In addition, Schools Construction Corp. Chairman Jack
Kocsis said he would no longer serve as head of the
corporation's audit committee and would remove himself from
any role in the inspector general's review.
The changes, announced by Kocsis and CEO Jack Spencer at
the regular monthly meeting of the corporation, came after a
recent Star-Ledger report that found the six schools erected
by the SCC since 2002 have cost, on average, 46 percent more
than 19 schools built by local districts at the same
time.
The report showed the SCC has accepted $526 million in
change orders, is paying its architects and construction
managers more than double the standard rate, and has awarded
$1 billion in work to firms that are members of the Building
Contractors Association of New Jersey, where Kocsis serves
as executive director, lobbyist and political
fund-raiser.
In a prepared statement he read at yesterday's board
meeting, Kocsis defended the SCC.
"To say we are dispirited by the sketchy allegations
outlined in one newspaper, and how the insinuations are
attacking the credibility of the board, and myself, is an
understatement," he said. "There is no doubt that the board
members and the hard-working employees of the NJSCC will
emerge vindicated, both as individuals, and as an
organization, in our mission and our decisions."
Kocsis said he would not step down as chairman but
announced he would no longer head the corporation's audit
committee, saying it "needs to be a vital and reliable
conduit to the authorities who will need to assess our
performance and evaluate our decisions to see if proper
procedures and protocols were followed."
He said he would not play any role in the Inspector
General Mary Jane Cooper's review, but he would set up a
special committee to work with her.
At yesterday's meeting, the board adopted a 2005
operating budget of $34.6 million -- a reduction of $5
million from the budget adopted for 2004.
The new budget includes only $200,000 for advertising --
down from $2 million included in last year's spending
plan.
"Our intent here is to rely on local school districts,"
said Spencer. "We'll rely on their Web sites and on them
stuffing things into kids' knapsacks."
Lawmakers last year criticized the corporation for
spending hundreds of thousands of dollars on glossy
newsletters that featured numerous pictures and references
to then-Gov. James E. McGreevey.
"It's clear Governor Codey is not using the SCC as a
political slush fund, both to his credit and the SCC's
credit," said Assemblyman Bill Baroni (R-Mercer), who
criticized the mailers last year. "I'm glad the SCC is
focusing on schools and not on politics."
Kevin McElroy, a spokesman for the SCC, said that of the
$2 million budgeted for advertising last year, the
corporation spent $500,000.
Spencer said the corporation also has decided to scale
back the role of the agency's hired Project Management
Firms. The firms, which include 13 of the region's largest
contracting companies, have been paid more than $216 million
to help coordinate the schools construction program and
monitor construction work.
Spencer said that from now on, the Project Management
Firms will work only on the preliminary stages of a
construction project, helping local school boards choose
sites for new schools, evaluate architects and solicit bids.
Once the construction begins, Spencer said, the SCC will
replace the Project Management Firms with construction
managers to oversee the actual work and manage change orders
and other scheduling matters.
Until now, the SCC has paid its Project Management Firms
fees equal to 9.5 percent of the value of the work they have
overseen. Local school boards, meanwhile, paid their
construction managers fees that generally were less than 3
percent.
"We have made the decision to move forward where we will
make more construction management services available, and
concentrate the Project Management Firms' tasks on the
upfront work," said Spencer.
Spencer said the SCC, which has spent just over $3
billion in its first two years of existence, is on track to
spend $2 billion more in 2005. By early next year, he said,
the corporation will have earmarked the entire $8.6 billion
lawmakers authorized it to spend. He has asked lawmakers for
an additional $2 billion to continue designing and building
new schools through 2006.
Assemblyman Joseph Malone (R-Burlington), a sponsor of
the original legislation that set up the corporation, said
he wants a statewide referendum on any new school
construction financing.
"It's gotten to the point where the whole thing is a
runaway train," said Malone. "And someone has to put the
brakes on."
Dunstan McNichol covers state government issues. He may
be reached at dmcnichol@starledger.com or (609) 989-0341.
© 2005 The Star-Ledger. Used by NJ.com with
permission.
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