PHEAA Audit Finds Too Much Money On Perks, Seeks Board OverhaulPHEAA Audit Finds Too Much Money On Perks, Seeks Board Overhaul
State Examines College Loan Agency's Spending Over 3-Year Period
POSTED: 1:18 pm EDT August 19,
2008
UPDATED: 5:05 pm EDT August 19,
2008
HARRISBURG, Pa. -- The Pennsylvania Higher Education Assistance Agency has spent too much of its money on its internal operations -- including perks for board members and employees -- and not enough on financial aid for students, according to a state audit."While PHEAA's mission remains beyond reproach, the agency ... has lost its focus," Auditor General Jack Wagner said during a news conference Tuesday. "Many of PHEAA's leaders seem to have put their self-interest ahead of the needs of Pennsylvania students."An 18-month investigation by Team 4 exposed big bonuses for PHEAA employees and expensive retreats at posh resorts for lawmakers on the agency's board.
On Tuesday, Wagner announced findings of his audit of PHEAA and recommended slashing the number of legislators on the board.
(Read The Audit)Sixteen of the board's 20 members are legislators. Wagner said the number of lawmakers should be cut in half and the newly opened seats should be given to people who have expertise in higher education and finance.The new members should include the Cabinet secretaries that head Pennsylvania's banking and community and economic development agencies, leaders of public and private colleges and universities, and one full-time college student, Wagner said.State Sen. Sean Logan, PHEAA's board vice-chairman, said he has an issue with part of Wagner's plan to restructure the board."If you map this out and have the governor making four or five additional picks -- the governor, be it Democrat or Republican, one party could control this board," Logan said.Wagner announced in April 2007 that his office would conduct a special performance audit of PHEAA -- the first of its kind -- citing Team 4's investigative reports about hundreds of thousand of dollars being spent on luxuries such as extravagant banquets, bar bills, golf outings and spa treatments.Wagner examined PHEAA's spending and management practices from July 1, 2004, to June 30, 2007. Auditors found that the agency spent $121 million on management salaries, $62.5 million in fees related to contracts with law firms and lobbyists, and $30 million on advertising and promotional expenses."The time frame of this audit -- I can't go back to 2004. I mean, I'm sorry, I can't do that," Logan said. "I can't go back to 2005, I can't turn back the hands of time. What we can do is change the policies and procedures to make sure the things that happened in 2004, 2005, 2006, never happen again."
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(Read The Audit)Sixteen of the board's 20 members are legislators. Wagner said the number of lawmakers should be cut in half and the newly opened seats should be given to people who have expertise in higher education and finance.The new members should include the Cabinet secretaries that head Pennsylvania's banking and community and economic development agencies, leaders of public and private colleges and universities, and one full-time college student, Wagner said.State Sen. Sean Logan, PHEAA's board vice-chairman, said he has an issue with part of Wagner's plan to restructure the board."If you map this out and have the governor making four or five additional picks -- the governor, be it Democrat or Republican, one party could control this board," Logan said.Wagner announced in April 2007 that his office would conduct a special performance audit of PHEAA -- the first of its kind -- citing Team 4's investigative reports about hundreds of thousand of dollars being spent on luxuries such as extravagant banquets, bar bills, golf outings and spa treatments.Wagner examined PHEAA's spending and management practices from July 1, 2004, to June 30, 2007. Auditors found that the agency spent $121 million on management salaries, $62.5 million in fees related to contracts with law firms and lobbyists, and $30 million on advertising and promotional expenses."The time frame of this audit -- I can't go back to 2004. I mean, I'm sorry, I can't do that," Logan said. "I can't go back to 2005, I can't turn back the hands of time. What we can do is change the policies and procedures to make sure the things that happened in 2004, 2005, 2006, never happen again."
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Copyright 2008 by ThePittsburghChannel. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.
