School construction behemoth bulks up its budget for 2007 Reorganized SCC expects to be busy again Thursday, December 21, 2006 • BY DUNSTAN McNICHOL • Star-Ledger Staff Preparing for a surge in new work, New Jersey's embattled Schools Construction Corp. yesterday adopted an operating budget that will expand its staff by 20 percent and increase overall administrative spending by almost 50 percent in 2007. The extra spending and 53 new employees will support added construction as the corporation expects to step up activity after almost 18 months of disarray and reorganization. The new budget anticipates almost $1.4 billion in school project expenditures next year, compared with just over $1 billion in the current year. Administrative spending would rise from $32 million this year to $47.4 million. "This budget really reflects the crystallization of the changes we've been working on for the past six to eight months," Barry Zubrow, chairman of the SCC's board of directors, said after the board unanimously approved the operating budget. Two years ago, before the agency was rocked by revelations of waste and mismanagement, spending peaked at $1.375 billion, SCC records show. Scott Weiner, the corporation's chief executive officer, said the increased costs for staff and consultants in next year's administrative budget will be more than offset by savings from initiatives carried out by the new employees. For instance, he said, although spending on staff attorneys and hired lawyers is scheduled to rise from $2.8 million this year to $4.2 million in 2007, the corporation expects to save $12 million through aggressive management of contractors' payment claims. "We want the construction community to know we have established a process that's fair and that's expedient," he said. "That we are prepared to litigate when necessary and to mediate when appropriate." Officials also anticipate shaving more than $3 million from the $43 million the corporation is scheduled to pay Project Management Firms, the 13 private firms whose outsized oversight fees drew criticism from a series of auditors. In all, Weiner said, the corporation expects to save more than $24 million next year through closer management and spending controls. Zubrow said the beefed-up administrative staffing and new management controls established over the past year will help the corporation overcome a legacy of waste and mismanagement that stalled a $8.6 billion construction program. "The SCC has operated at a much, much lower percentage of operating expenses to program costs than most organizations," Zubrow said. "We've seen the effect of that. You get what you pay for." With the new budget, the corporation has an ambitious construction schedule for the 31 Abbott communities, the special-needs school districts that won a state Supreme Court ruling ordering the state to rebuild or replace hundreds of decrepit public school buildings. The new budget supports plans to wrap up construction on 13 partly completed Abbott projects next year and to begin building 33 more schools or school additions. Those plans assume lawmakers will approve additional funding for the corporation, which has already committed the $8.6 billion the Legislature authorized for the program six years ago. Earlier this year, a special task force recommended authorizing an additional $3.25 billion in borrowing to support the program for two more years. Dunstan McNichol may be reached at dmcnichol@starledger.com or (609) 989-0341. © 2006 The Star-Ledger. Used by NJ.com with permission.