Wednesday, March 28, 2007

PHEAA watchdogs: I hear nothing, I see nothing, I know nothing!

Remember the line Sgt. Schultz used in every episode of the old "Hogan's Heroes" TV series? "I hear nothing, I see nothing, I know nothing!"

When I read an interview with my state senator about the growing scandal over spending for lavish trips to resorts by employees and executives of the Pennsylvania Higher Education Assistance Agency, I kept hearing Sgt. Schultz's memorable catch phrase.

I've decided to award state Sen. Michael A. O'Pake the first Sgt. Hans Schultz Memorial Award for the worst job of overseeing a state agency.

Despite serving on the PHEAA board of directors for nearly 20 years, O'Pake told the Reading Eagle he had no idea that the agency had spent nearly $900,000 for extravagant trips and outlandish personal pampering.

O'Pake admitted to reporter Kori Walter that he went along on one of the trips about six years ago, but he was otherwise oblivious to the fact that the agency staffers and executives took these trips regularly while failing to provide any justification for the expenses.

"We don't approve or even see the expenditures that the working staff and the heads of this agency have," the Berks County Democrat told the newspaper.

O'Pake said he has not attended a PHEAA retreat since 2001. "In between the retreats there was lots of money being spent on the higher-ups (at PHEAA)," O'Pake told Walter. "It was just never raised at any of the board meetings."

In other words, "I hear nothing, I see nothing, I know nothing!"

What kind of expenses are we talking about?

A $10,000 bar tab. A $75 pedicure and $15 tip. A $3,900 hot-air-balloon ride. A $175 charge for falconry lessons. A $115 tab for a European facial. Greens fees totaling $2,659 on a golf outing. A limo ride for $966. Fly-fishing lessons for $836. Cigars costing $665. A $128 bill for a tuxedo rental. Meal expenses totaling $47,000 for a three-day trip. "Client appreciation" expenses, including spa treatments, costing $21,308.

Those are some of the jaw-dropping bills Pennsylvania's student-loan agency ran up for a series of "educational" trips to lavish resorts.

Can anyone explain how any of those expenditures helped one student get a loan for his college education?

PHEAA has fought hard to keep this information secret from the taxpayers of Pennsylvania, claiming that its expense records are "trade secrets." It took a lawsuit by three news-gathering organizations to force the independent state agency to release records of its extravagant spending.

PHEAA uses income from its student-loan business to pay for its operating costs, which totaled about $261 million last year, according to the Associated Press. But the wire service also points out that PHEAA received around $500 million a year in state tax dollars that it spent on college grants and subsidies.

And who is supposed to be looking out for that $500 million in taxpayer dollars? PHEAA answers to a 20-member board of directors made up mostly of Pennsylvania legislators.

The "fiscal watchdogs" include: Rep. William F. Adolph Jr., Sen. Sean Logan, Rep. Ronald I. Buxton, Sen. Jake Corman, Rep. Craig A. Dally, Sen. Jane M. Earll, Sen. Vincent J. Fumo, Sen. Vincent J. Hughes, Rep. Sandra J. Major, Rep. Jennifer L. Mann, Rep. Joseph F. Markosek, Sen. Michael A. O'Pake, Sen. James J. Rhoades, Rep. James R. Roebuck Jr., Rep. Jess M. Stairs, Sen. Robert M. Tomlinson.

Also serving on the PHEAA board is Gerald L. Zahorchak, Gov. Ed Rendell's education secretary, one of four appointees by the governor to the PHEAA board so "Teflon" Ed Rendell shares some of the blame in this disgrace.

While O'Pake and his legislative cohorts were obviously asleep at the wheel, other lawmakers are attempting to clean up the PHEAA mess.

State Sen. John Rafferty, R-Montgomery, and state Sen. Jane C. Orie, R-Allegheny, unveiled a plan to restructure the current appointment, reporting and accounting procedures of the PHEAA board.

This legislation will require PHEAA to contract with a third party accounting firm to conduct an annual forensic audit of the PHEAA board which must be submitted to the House and Senate Finance Committees by April 1 of each year. PHEAA would also be required on that date to submit a report to the Senate and House Finance Committees which contains all expenses and revenues associated with the operations of the PHEAA board.

This legislation also requires that all appointees to the PHEAA Board selected by the House and the Senate be approved by a majority vote in their respective chambers. It would prohibit standing legislators from serving more than two consecutive terms on the PHEAA board.

"Our goal is to bring greater accountability and fiscal responsibility to PHEAA and ensure that funds are not spent in a wasteful or unnecessary manner," Rafferty said. "The recent stories of financial mismanagement and over-the top-spending have made it necessary for us to take a closer look at the Agency’s fiscal bottom line."

Orie added that the legislation will ensure that PHEAA revenue is used for the purpose it was intended — to provide low-interest grants and loans to students.

"Lavish trips, tuxedos, and spa visits are not defensible expenses and should be stopped," Orie said. "This legislation will ensure that money is spent prudently and put PHEAA on notice that it has to be accountable to the Legislature and the citizens of Pennsylvania."

Accountability. Fiscal responsibility. What a novel concept for a state agency.

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