School construction program audit lacks key facts

State officials released a highly anticipated audit into Connecticut’s school construction office late last week, but it is unlikely to alleviate all of the concerns about the multibillion-dollar construction program, which became the focus of a federal investigation last year.

The 23-page report that was produced by Marcum LLP, an independent auditing firm, included an analysis of more than 111 school construction projects that were undertaken in Connecticut between 2018 and 2021.

But some lawmakers are more concerned about what is missing from the audit: namely, a review of interactions between local school officials and the state Office of School Construction Grants & Review.

“This audit is a start but it is by no means a conclusion,” said Senate Minority Leader Kevin Kelly, R-Stratford. “The concern certainly of the federal investigation has always been on the purported influence on municipalities, and that wasn’t even looked at here at all.’

State officials hired Marcum last March in an effort to restore public trust in the school construction program, which was directed for more than six years by Konstantinos Diamantis.

Diamantis, who stepped down from that position in late 2021, was named in several grand jury subpoenas that were issued to the state and several municipalities.

Once that federal investigation burst into public view, several school superintendents, town attorneys and local elected leaders came forward to allege that they felt pressured by Diamantis to hire specific construction companies for their school building projects.

Many of those officials said they felt like they had to go along with Diamantis’s recommendations or they would risk losing state funding for their construction projects.

Republican legislative leaders argued last year that those circumstances made it essential for the auditors to talk with local education officials and to understand whether anyone was pressured to hire certain contractors.

But that type of review was not included in Marcum’s work, as the final report made clear.

“The scope of work for this engagement did not include outreach to the school district, nor did we perform any work on site at the school districts,” the report states. “The School Audit Team within the DAS business office served as the direct, and sole, point of contact for the Marcum team during the engagement.”

Kelly said he did not understand why state officials chose not to involve local officials in the audit process.

“Don’t the people in charge of DAS want to know what happened there?” he asked. “To know they expanded the scope of the audit and they still didn’t look at the real problem is not paying attention.”

The state paid Marcum roughly $240,000 to conduct its audit into the 111 school building projects, according to the purchase order that was signed last year. And the auditing firm spent more than 10 months performing its review.

But officials with the State Department of Administrative Services, which houses the school construction office, said Marcum did not need any information from the local school districts in order to complete its work.

That’s because Marcum’s contract was narrowly focused on the paperwork and processes that the state uses to manage the school grant program.

Marcum’s findings noted, for instance, how state officials within the Office of School Construction Grants & Review often skipped steps while reviewing completed school projects. It pointed out how the state doesn’t scrutinize smaller charges that are billed by school construction contractors and subcontractors.

And it highlighted how the state’s financial share in some school projects was larger than Connecticut law allows, even though there was no explanation for why the state was picking up a bigger portion of the tab.

“Marcum had all the needed documents to do their review thoroughly without having to reach out to the schools,” Jesse Imse, a senior advisor to DAS Commissioner Michelle Gilman, said. “DAS has adopted all recommendations outlined in the report and is committed to maintaining efficiency, consistency and transparency for all of its programs.”

The lack of feedback from local school districts was not the only thing that was noticeably absent from Marcum’s report.

There is also no mention of the demolition and hazardous waste contracts that the state asked Marcum to look into last year.

The CT Mirror published a story in early 2022 that showed that two companies — AAIS and Bestech — received the vast majority of those contracts, which included demolition and asbestos work at school construction sites.

In response to those revelations, the state paid Marcum roughly $111,000 and asked the firm to randomly sample from 321 different demolition and abatement projects throughout the state.

But none of that additional work by Marcum was referenced in the report that was delivered to lawmakers late last week.

Imse told the CT Mirror that auditing process is ongoing and he suggested those results would not be released until a later date.

“The Hazmat Program is a different program than School Construction Grants,” he said. “Our agency continues to work with Marcum to complete the audit to ensure a thorough review.”

Lawmakers may soon get a chance to ask about that auditing process too.

Gilman, who took over as DAS Commissioner last year, is scheduled to come before the legislature next week for a confirmation hearing.