A Republican lawmaker wants to fold the embattled Schools Development Authority into the state Treasury “to make it more accountable,” rather than into the Economic Development Authority, which itself has come under scrutiny over its handling of tax incentive programs.
Assemblywoman BettyLou DeCroce, R-26th District, plans to formally introduce a measure dissolving the SDA and transferring its functions, the financing of facilities and construction in the state’s 31 most impoverished school districts, into the Treasury’s Division of Property Management and Construction, according to a statement issued May 3.
“The SDA and EDA are already in shambles independently,” DeCroce wrote in a letter to Assembly Speaker Craig Coughlin, D-19th District, Senate President Stephen Sweeney, D-3rd District and Assembly Appropriations Chair John Burzichelli, D-3rd District.
The proposal comes as lawmakers consider the fate of the SDA – dubbed a “patronage pit” under the watch of former CEO Lizette Delgado-Polanco – now that the agency has run out of money and must receive legislative approval before it can issue more bonds.
Sweeney and Burzichelli are both the sponsors of a measure, Assembly Bill 4908, that would place the SDA’s functions under the purview of the EDA.
The EDA is tasked with overseeing the multi-billion dollar Grow New Jersey tax break program, but DeCroce said in a Friday statement that she had doubts the agency would be equipped to take on the functions of the SDA.
Regarding DeCroce’s proposals Sweeney said, “There is a growing recognition that the current operational structure of the SDA is not working and needs to be changed. I’ll keep an open mind, but I believe the best way to accomplish that is to fold the SDA into the EDA, which already handles the financial bonding for school construction. This consolidation will eliminate the problems that have plagued the SDA and produce savings and efficiencies by combining the responsibilities under one roof. We can then return the focus to the important mission of building schools in communities of need in a fiscally responsible way.”
Meanwhile, Burzichelli said the EDA proposal might be just a “placeholder” at this point, and that any conclusions on what to do with the SDA are premature.
“This is now essentially the third generation of how New Jersey has attempted to put in place mechanisms to build schools, post-district. Now we’re going to have to reform it again,” Burzichelli told NJBIZ. “They have no more money, and we have no confidence, in that present structure, that we would let them borrow more money and let them run it through that same mechanism again.”
Liza Acevedo, a spokesperson for Coughlin, also said it is too early to make any judgments about what should happen to the SDA. “We are interested in the Attorney General as well as the State Committee on Investigations reports,” Acevedo said in a statement. “Once we have seen the results of those investigations, the Assembly and Senate leadership will make determinations as to any recommendations the Legislature should take up.”
Delgado-Polanco, an ally of Gov. Phil Murphy, stepped down as head of the SDA in April, and then as vice chair of the New Jersey State Democratic Committee.
Murphy resisted the notion of dissolving the SDA, arguing the agency serves a unique function and has yielded benefits for some of the state’s most impoverished school districts.
Delgado-Polanco’s resignation came in the wake of NorthJersey.com reports that under her leadership dozens of longtime workers were let go as part of a “restructuring,” only for their posts to be filled by her friends and family with six-figure salaries even though they often lacked qualifications.
The EDA was criticized in a January audit in which found that it improperly awarded billions of dollars in tax breaks, insufficiently vetted applications and failed to thoroughly monitor compliance among tax break recipients.
In addition, a task force appointed by Murphy to scrutinize tax breaks found that corporations with strong ties to South Jersey power broker George Norcross and his family won some of the largest Grow NJ tax breaks.