Caldwell-helmed co-op faced audit over contracting, surplus practices

Dale Caldwell, the Democratic nominee for lieutenant governor, possesses a long and distinct résumé: Centenary University president, pastor, school board member, tennis community leader, and more.

A less eye-catching role of his was the presidency of the Educational Services Commission of New Jersey, a little-known but wide-reaching procurement cooperative that secures contracts for more than 700 school districts and local governments throughout the state.

Caldwell served as a top official at the commission for more than two decades, during which the agency transformed. The commission started as a Middlesex County-based co-op that helped local schools secure contracts on services ranging from utilities to health insurance. By 2016, the commission had partnered with hundreds of districts across the state’s 21 counties, even changing its name to reflect its new statewide mission.

Last year, Caldwell resigned from the commission, as well as his longtime role on the New Brunswick Board of Education, to devote more time to his work at Centenary.

But last July, shortly after Caldwell departed, the Office of the State Comptroller published an audit that found the commission improperly procured contracts, amassed an excessive surplus of taxpayer money, and failed to consider alternative health insurance providers.

“The routine lack of compliance with procurement laws and sound financial controls is a red flag because it raises the risk of waste,” acting State Comptroller Kevin Walsh said at the time.

Now, Caldwell is running for lieutenant governor alongside Rep. Mikie Sherrill, who is seeking to keep the governorship in Democratic hands. If Sherrill wins, Caldwell will be tasked with leading a state-level agency (the Sherrill campaign has not announced what department Caldwell would lead).

“During Dr. Dale Caldwell’s time as board chair of the Educational Services Commission, the organization was a lifeline for some of our most vulnerable students in New Jersey, and was able to help save taxpayers millions of dollars by providing shared educational and business services to school districts throughout the state,” said Sherrill campaign spokesperson Sean Higgins.

ESCNJ presidents don’t necessarily oversee day-to-day operations; the role is more akin to a chair of the Board of Directors. Caldwell held the role of president for 22 of his 25 years at the commission, according to TAPinto New Brunswick. He first joined the commission via his service on New Brunswick’s Board of Education — each Middlesex County school district sends one representative to ESCNJ.

Though day-to-day responsibilities fell to ESCNJ’s staffers, the comptroller’s office found faults with the commission’s topline budget, a matter within Caldwell’s purview. The audit found the commission collected “substantially” more revenue than needed to cover its costs, eventually reaching a $69.6 million surplus in fiscal year 2023. The audit also found the commission did not have an official plan for the extra money. The ESCNJ reportedly said the money was needed to cover operational expenses and $29 million in future projects, but the audit found most of those capital projects had not yet been approved and that the commission lacked an official process for determining an appropriate surplus.

“[The audit] found ESCNJ had no officially approved plans for capital projects, nor did it have a process or policy in place to identify how much general fund balance is necessary to maintain or when to return funds or reduce fees when revenues far exceed what is spent,” the comptroller’s office said in a release. “As a result, the ESCNJ fund balance grew to more than $69 million in FY 2023 and likely resulted in higher costs for local governments, school districts, and taxpayers.”

The $69 million surplus exceeded those at similar cooperatives in the state, according to the New Jersey Monitor.

“[When] an entity has tens of millions of dollars sitting around, along with these red flags, the potential for waste grows exponentially,” Walsh said.

The audit also found improper contract procurement practices. ESCNJ awarded seven contracts worth a combined $14.6 million without seeking competition, according to the comptroller.

Since 2008, state entities have also been required to submit contracts worth more than $2.5 million to the comptroller for review. The commission didn’t do so until 2024, when a draft of the audit was given to the ESCNJ. In fiscal years 2021 and 2022, the audit found “ESCNJ failed to submit about 43 contracts valued at more than $900 million.”

The commission largely accepted the audit’s recommendations, according to the New Jersey Monitor, including a more concerted effort to comply with contract review policies.

In addition to its contract services, ESCNJ operates six special education schools and provides busing for some 14,000 students. The ESCNJ said that regardless of the audit’s findings, the commission has succeeded in lowering costs for the state’s school districts, pointing to research that shows between $2 million and $7 million in savings.