Another top official is stepping down following a federal investigation into how Gov. Ned Lamont's administration distributed school construction money.

Lamont announced his embattled Budget Director Melissa McCaw is leaving immediately. He said it was McCaw's idea to leave the job just weeks into the legislative session, saying she wanted a "fresh start."

McCaw departs as the FBI is investigating her former chief deputy, Kosta Diamantis.

A federal grand jury is looking into whether Diamantis steered construction projects to his friends, one of whom hired his daughter. Diamantis denies those claims.

More than a year before the Lamont administration received a subpoena, a demolition company warned McCaw's office of red flags then later contacted Attorney General William Tong. In spite of that, McCaw told the Connecticut Mirror she saw no "broader steering concerns." 

Gov. Lamont is taking McCaw's word – at least publicly.

"Look, I've got confidence in her as secretary of Office of Policy and Management. I think she did a very good job. It's a big agency, a lot of things going on," said Lamont.

McCaw released a statement Friday saying, "I am so grateful to Gov. Lamont for his faith in me and for giving me the opportunity to be part of this team and make a difference for our state. We have weathered the pandemic, expanded services, maintained a budget surplus and paid down our pension liabilities by nearly $2 billion over our annual payments without raising a penny in taxes."

Lamont fired Diamantis from his budget job in October 2021, soon after his administration received the federal subpoena. Diamantis chose to retire from his position supervising school construction rather than accept a suspension.

The scandal also led Chief State's Attorney Richard Colangelo to retire early. An independent investigation found Colangelo was not truthful about why he hired Diamantis' daughter for a nearly $100,000 a year job, while he was lobbying her father for staff raises.

Republicans want lawmakers to launch their own investigation.

"We're hearing crickets from the other side of the aisle of how the legislature is going to step up, and what we responsibility we have," said Connecticut House Minority Leader Vin Candelora.

Democratic leaders have agreed to hold hearings, but in a statement, Senate President Martin Looney said, "The notion that the General Assembly can launch a criminal investigation parallel to and superior to the ongoing federal investigation is naïve and/or deliberately misleading."

The Lamont administration said it is also investigating, hiring an outside auditor and meeting with "dozens" of school districtsm construction contractors, and trade unions to overhaul the bidding process.

"Looking to contract with one, or multiple firms, to do audits going back to 2018 on the school audit process," said Michelle Gilman, the acting Department of Administrative Services commissioner.

That includes sharply limiting when projects can be deemed "emergencies," a process some school districts claim Diamantis used to steer contracts to a preferred list of companies.

At Friday's press conference, Lamont was asked numerous times who asked to shift school construction oversight from the non-partisan DAS office to the governor's budget office. Lamont said McCaw personally requested the change, but neither he nor others could directly answer why.

McCaw is taking a new job as finance director for the Town of East Hartford.