Connecticut State Auditors cited a total of $276.6 million in overspending and discrepancies in school construction projects in their audit of the Department of Administrative Services (DAS) for fiscal years 2021 and 2022, including paying out far more per square foot for school construction than currently allowed.
According to the audit, Connecticut taxpayers shelled out between $13 and $172 more per square foot in construction costs than the maximum allowed across eleven projects. The School Building Project Advisory Council (SBPAC) established a maximum price per square foot of $365 in 2016 and hadn’t been updated since then. Even when accounting for inflation, auditors found the price per square foot exceeded the maximum, resulting in $92.5 million in ineligible costs.
“Based on the department’s policies, building construction costs that exceed the cost cap, and a proportionate share of consultant costs would be ineligible for state reimbursement,” auditors wrote. “Therefore, by not enforcing cost limits, total school project costs may become excessive, and districts may be reimbursed for otherwise ineligible costs.”
DAS agreed with the auditors’ findings at the time and conceded the cost had not been updated since 2016 and they were conducting a study to update the maximum price per square foot.
According to a 2023 school construction cost benchmarking study conducted by Arcadis, the average cost for schools ranged from $542 per square foot for an elementary school to $571 per square foot for a high school and $578 per square foot for a technical high school, far outpacing inflation, which would have taken the $365 per square foot figure to $453.72.
That study prompted DAS to update the maximum price per square foot, with the regulatory change process beginning in 2025 and going into effect in March 2026. The new maximums range from $502 for kindergarten through elementary and $532 for high school, accounting for roughly 93 percent of the average construction cost in Arcadis’s study.
However, auditors also found the school construction grant program was exceeding maximum change order amounts, resulting in $8.7 million in ineligible costs. Change orders occur when there is something unaccounted for in the construction estimates, leading to a price increase. State statute sets a 5 percent maximum on change orders for a project over $10 million; in order to exceed that amount, the DAS commission must authorize a waiver.
None of the seven projects identified by auditors as having change orders over 5 percent had received waivers, including one project that had $3.2 million in ineligible change order costs. DAS indicated they were updating their record keeping system to better track eligible and ineligible costs. Auditors also found that DAS had awarded $1.1 million more in construction grants to magnet schools, which, according to state statute, are limited to half the reimbursement rate for “limited eligible costs,” although DAS disagreed with the auditors’ statutory interpretation.
Finally, the audit report found DAS had overstated its grant commitments by $174.3 million by including projects that were already complete, nearly complete, or projects that had been cancelled, which may have resulted in overstating future funding requirements.
“The Office of Grants Administration has one employee primarily responsible for entering the school construction data into Core-CT. This person is also responsible for reviewing grant applications submitted in June for inclusion on the priority list published in December,” the auditors wrote. “There is not enough time for the employee to evaluate the projects and complete review of grant applications during the same period.”
The DAS’s Office of Grants Administration was formerly called the Office of School Construction Grants and Review and was headed by Office of Policy and Management Deputy Director Kosta Diamantis after Gov. Ned Lamont transferred administration of school grants from DAS to OPM.
Diamantis subsequently used that office and his position to solicit bribes from contractors looking to secure school construction projects in 2018 and 2019, and get his daughter a job “at an inflated salary,” according to federal prosecutors who secured a conviction against Diamantis for bribery, extortion, and making false statements before Diamantis fled to Greece to avoid serving his seven year sentence.
However, more recently, Inside Investigator reported on alleged bid-rigging on school roofing projects that are likewise covered under Connecticut’s school construction grant program. Architects and planners were creating job specifications that steered roofing bidders toward a single roofing manufacturer, supplying “dead equals,” or even specifying a specific manufacturer in violation of bidding requirements, resulting in numerous lawsuits.
Those designs are approved through DAS who ignored warning about the bid violations, potentially driving up the cost of school roofing projects significantly by limiting or effectively eliminating competitive bidding.
The auditors’ findings in the latest report, however, were nothing new; the findings regarding the price per square foot, ineligible change orders, and reporting issues were all repeated from earlier audits. The finding regarding magnet school reimbursement was new.
The previous audit encompassing years 2018, 2019, and 2020, found $21.6 million in change orders that exceeded the cap; found 61 percent of selected school construction projects exceeded the price per square foot cap; and $253 million in inaccurate grant reporting.
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