Creating Schools for the 21st Century

John F. Spencer is the chief executive officer of the New Jersey Schools Construction Corporation (SCC). The SCC is responsible for the entire school construction program within the state of New Jersey. Since its inception, the SCC has supported more than 2,700 school construction projects and has also completed $660 million in health and safety projects at more than 350 urban schools. As much as $12 billion may be spent on school construction projects throughout the 10-year life of the program. Spencer spent 33 years with the Port Authority in New Jersey and left there as the deputy chief engineer. He has a bachelor’s degree in civil engineering and an advanced degree from Fairleigh Dickinson University. He is a licensed engineer in both New York and New Jersey. In September of 2003, Spencer was given an opportunity to head the school construction program in New Jersey, and he jumped at the opportunity.

School Construction News: What is the New Jersey Schools Construction Corporation? How and why was it formed?

John F. Spencer: A New Jersey Supreme Court act said that the state had to provide every child with a thorough and efficient education. In order for the state to provide that, the students needed equal and adequate facilities. As an outcome of that ruling, the legislature passed an act in July of 2000 called the Educational Facilities Construction and Financing Act, which provided $8.6 billion to public school construction. At that time, $6 billion was earmarked for what are called the "Abbott districts"-they’re named after one of the original defendants in the court case. These are less affluent urban school districts in areas like Trenton, Newark, Patterson and Passaic. There are about 30 Abbott districts.

For two years, not much was accomplished. In response to this lack of movement, Governor McGreevey created the Schools Construction Corporation, incorporated in October 2002. Since that time, we’ve made remarkable progress.

Once a project in an Abbott district is moved from the district to the Department of Education and is approved, it comes to the SCC. We then go out and work with the district and the municipalities to investigate potential sites and identify the best site for the school. I then purchase the site. I’m responsible for relocating businesses and homeowners or tenants at those sites. I work in concert with the Board of Education to retain the architect to develop the design. I advertise and bring in, competitively, the contractor to build the school. After the school is built, I fill it with the required furniture and equipment and technology, and then I turn the school back over to the district. I do soup to nuts.

In the non-Abbott districts, which are funded with $2.5 billion, the same process happens. The district proposes the project to the Department of Education and the department approves it. There, I’m more of a funding mechanism. I pay a minimum of 40 percent of the eligible costs of that project. The districts need to referendum the rest of the money. I pay based on milestones. We do audits and assure compliance with the bidding laws.

The remaining $100 million is for the county vocational schools and is a grant.

SCN: When was the $8.6 billion program established? Since then, how many new schools have come on line, are in design, or are in construction?

JFS: Since the act was passed and the SCC was put into place, we’ve made good progress. We have about 2,500 school projects underway throughout the state. We’ve concentrated on health and safety work and on developing early childhood development seats. We are constructing about 940 early childhood seats for about 14,000 3- and 4-year-olds. Those were our first two priorities and they are behind us. We are now in the process of designing new schools and major additions. I have about 120 schools under design and I have 60 under construction. That’s just in the Abbott districts. By the end of the year 2004, fifty new schools statewide will have come on line.

SCN: We’ve read that by January of 2006, the SCC will no longer be able to commit funds toward new school projects and that continued funding for the program would be necessary to keep it on track. How much more money is needed?

JFS: Billions is what I’ve been telling people. We’ll know what the number is after every district submits its long-range facility plan. They are in the process of developing them right now. Those plans are required by law and they have to be submitted by October 15, 2005. Once those plans are submitted and the Department of Education reviews and approves them, I’ll be able to price them out. By the end of 2005 I’ll be in a position to say how many billions are needed to provide all the court-mandated facilities.

SCN: What were initial costs per square foot projections when the program was started? What are the current costs?

JFS: When the act was first proposed, they were using a price of $125 per square foot. Subsequently, that was raised to $138 a square foot, including soft costs. Land acquisition, relocation, and remediation were never considered, so the $138 was the cost that was used to develop preliminary estimates. Right now, I am building what I believe to be very cost effective schools at an average of about $200 to $210 per square foot, just for the construction.

SCN: What delivery methods to you prefer?

JFS: Since every school here is unique to the community, every one is fully designed; they’re bid and they’re built. We do have a number of design-builds. There’s one under way and five or six under development, but the typical model for delivery is full design, bid, award and construct.

SCN: Is New Jersey facing a shortage of contractors?

JFS: No, we’ve been fortunate. The school program, even today, still gets very responsive bids. We get a number of bids, and when I look at the prices compared to my construction cost estimates, we are still awarding work at less than the construction cost estimates. We are very happy with the level of competition. We try to deal with contractors, consultants and vendors in a very professional way. Our goal is that we want repeat business.

SCN: Do you have a statewide need for more of a particular type of school, such as early childhood centers or high schools?

JFS: No, it’s a mix. Every district does their mix differently. Some go from pre-K to 8 and then into high school, and some districts opt for pre-K to 3 and then they go 4, 5, 6, and 7, 8 and into high school. Some have academic high schools and others have niche high schools. Right now we’re designing and constructing elementary, middle and high schools, as well as early childhood centers.

SCN: How much funding has been for health and safety projects? What types of projects are those?

JFS: We did $660 million in health and safety in the Abbott districts. I think about 350 schools were impacted. We did roof replacements, window replacements, parapet wall repairs, fire alarm upgrades, lighting upgrades, HVAC, the whole gamut. This work had been deferred for years. The average age of a school in Newark is, I believe, more than 80 years.

SCN: By the end of 2004, the SCC expected 50 new schools to open. How do you manage that?

JFS: That’s 50 schools statewide, and 23 of them will be in the Abbott districts. Within the Abbott districts, even back in 2002, once the corporation came on line it would have been impossible to bring enough staff on board to get this program up and running quickly. The decision was made that we would keep the in-house staff to a minimum and outsource as much as possible. Every design is done by outside firms and most of the management is done by project management firms. We have most of the major players in the country on board and they work as an extension of my staff. We also created regional offices. The capital is down here in Trenton, but since the work is done all over the state, instead of having people spend half their time on the Garden State Parkway, we have regional offices in Newark, Jersey City and Patterson. Eighty percent of the Abbott work is done in the northern part of the state, and then we have a regional office also down here at corporate headquarters in Trenton that covers the north and the south.

SCN: Tell us about the six school-based demonstration projects, where school construction serves to anchor the community and the school may even include features open to the community at large, such as athletic fields or auditoriums. We understand that the demonstration projects are meant to help encourage economic growth.

JFS: Under the act, we could enter into up to six projects. We’ve just signed the final development agreements with three; the other three should be signed shortly. Those projects are valued at around $525 million. We try to leverage the school construction work to try to encourage economic redevelopment. These projects are unique in as much as teams, or projects, were identified by cities. The Redevelopment Agencies within those cities put together a team with a redeveloper, an architect and a construction manager, and they sent in proposals. We evaluated them based on many factors and ultimately chose six projects that would give us the most bang for the buck.

SCN: What about the early childhood classrooms? What ages are served? How many facilities have come online?

JFS: They are full day programs for 3- and 4-year-olds. We have 940 of those classrooms under design and construction right now. It’s basically to begin the child’s education at 3 years old. There are approximately 15 children per classroom and each classroom is self-contained with its own laboratory and access to play areas, for instance. Education in New Jersey starts at 3 years old and that was one of the priorities of the act.

SCN: What are the challenges you face when it comes to existing schools?

JFS: Right now the big challenge is land acquisition. The land market in Jersey is comparable to many other high-priced areas. Prices are going through the roof all over. It’s more difficult than ever now, because most of the district lands we’ve already captured. Now, to capture enough property owners for a site, I may be affecting 50 or 60 homeowners and/or businesses. That’s difficult. Not to mention the impact on the cities. There’s a balance between the best location for a school and the impact on redevelopment plans. It’s not for SCC in Trenton to decide where a school site is supposed to go. What I need is cooperation between the boards of education in these cities and mayor’s offices. They need to make the compromises.

SCN: What are the challenges you face when building new schools?

JFS: Everyone wants them sooner rather than later. They all think you can build a $60 million school within a year. What we try to tell them is that we’d rather go into this having solid documents that have input from all the stakeholders and that have been reviewed for code and put on the street with a reasonable amount of time for construction. All our contracts require PLAs, so labor has not been an issue. Trying to keep a handle on price per square foot has been an issue, too. Steel costs and other factors have been driving the costs up. We’re trying to keep a balance of work that goes out and not overloading the market at any given time. We’ve been fairly successful.

SCN: Do you have any final comments?

JFS: We’re working now with the legislators to discuss the ways we’ve spent the money from the Educational Facilities Construction and Financing Act. I think we’ve spent it very cost efficiently. We’ve kept our overheads down to a minimum. I believe that building schools for $200 or $210 per square foot compares favorably with any other urban district, whether it’s L.A., or Boston, or New York. New York, on one project, was happy to award a job for $350 a square foot. If I look at how I’d compare myself to other school programs, I think we’ve done a really good job.