State Sen. John H. Eichelberger Jr., R-30th Dist., said he has seen a letter from Gov. Ed Rendell to the chairman, vice chairman and board members of the Pennsylvania Higher Education Assistance Agency in which Rendell listed "startling new information about the depth of the problems swirling around PHEAA."The $570,000 bonus figure for top PHEAA executives initially released included just the agency's management team. The new total includes bonus money paid to all staff in 2007 and has soared to $2.5 million, according to Eichelberger.
PHEAA is the Pennsylvania agency responsible for providing student loans to college students. While most of the agency's funding comes from investments, Pennsylvania taxpayers contribute $500 million a year to PHEAA.
"The patronage laden work force reaches a total of 2,574 employees," Eichelberger noted. "Defenders of PHEAA cite the good work of the agency and the management in particular to justify these bonuses, but a closer look reveals that when comparing the same nine-month period from last year to this, operating expenses have grown 70 percent faster than operating revenues, operating income is down and the agency's net assets are $11.5 million lower."
Eichelberger is outraged by the growing scandal, saying, "This mess is unfortunately what I have found all too often in Harrisburg. The legislature and many state agencies are bloated bureaucracies that have no regard whatsoever for the hard working people who pay their salaries. This is an embarrassment for Pennsylvania and I will do everything in my power to stop this abuse immediately."
PHEAA fought for two years to prevent release of expense records that showed the agency wasted nearly $900,000 on trips to resorts and spas and lavish gifts for its executives, board members and their spouses.
The bonuses to top executives have also been widely criticized. PHEAA's top executive, Richard E. Willey, received $180,857 in addition to his annual salary of $289,118. Bonuses of $113,514 each were awarded to Tim Guenther, executive vice president and chief financial officer; Brian Lecher, executive vice president of information technology and chief information officer; and James Preston, executive vice president of client relations and loan operations. Kelly Powell Logan, executive vice president of public service and marketing, received a $52,436 bonus. Guenther, Lecher and Preston earn annual salaries of $217,757 each; Logan's is $201,178.
PHEAA previously awarded $852,834 in bonuses in the 2005-06 fiscal year to Willey and six executive vice presidents.
The lack of oversight by members of the Legislature who make up the PHEAA board is scandalous. For a national perspective on the PHEAA mess, read Richard Vedder's article, "Ripping Off Taxpayers, Pennsylvania Style" at the Center for College Affordability and Productivity blog.
The following is a list of PHEAA board members, primarily incumbent state lawmakers: Rep. William F. Adolph Jr.; Sen. Sean Logan; Rep. Ronald I. Buxton; Sen. Jake Corman; J. Doyle 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; Roy Reinard; Sen. James J. Rhoades; Rep. James R. Roebuck Jr.; A. William Schenck III; Rep. Jess M. Stairs; Sen. Robert M. Tomlinson; and Rendell Education Secretary Gerald L. Zahorchak.
Many of the career politicians listed above will seek re-election in 2008, as if you needed any more reasons to vote them out.
A major overhaul of the scandal-ridden agency is long overdue. It should start with all the top executives and should include replacement of all 20 board members. The foxes have been guarding the chicken coop long enough.
Additional oversight, including bills introduced by state Sen. John Rafferty and state Sen. Jane C. Orie, to require independent audits and a new way of appointing the PHEAA board, should be a priority when the Legislature returns in session.
(Cartoon by Randy Bish/Pittsburgh Tribune-Review)
1 comment:
Tony,
PHEAA has made substantial changes in the past 6 months. They adopted a strict travel policy and ethics policy, tougher than any other entity in the state government. PHEAA was also one of the first to draft a Student Loan Code of Ethics, encouraging others within the financial aid industry to follow.
Your references about the board conferences and extravagant spending are old news and have since been resolved. It is time to move on.
Students and families, like myself, rely on PHEAA for financial aid help. I guess I place myself in a different category then most, because I don’t expect PHEAA to pay my way through college, I expect them to present the best student aid options possible. You will not see this type of service through any other financial aid company.
Even if PHEAA is considered a “state agency,” they too have to provide the best services to students…without paying competitively; they would lose some of the top financial aid experts in the industry.
Furthermore, Rendell’s motives are purely political. After being “outraged” by the bonuses, he turned his cheek and said it was ok he was mandating the Pennsylvania Liquor Control Board to run like a business. Last I checked the PLCB was too a state agency.
As I remember, Rendell stood next to PHEAA in 2005 and promised $1 billion over 5 years toward student aid initiatives. PHEAA has so far held up its end of the bargain, where is Rendell’s?
It is clear that Rendell’s loyalties are with one of PHEAA’s largest competitors, Sallie Mae. And because he supports companies like Sallie Mae proves his interests are not for the sake of the students in Pennsylvania.
The direction that Rendell wants to take is extremely short-sighted, and I am disappointed with his policies and that of others within our legislative branch for not thinking this through. The financial detriment this will have on students in Pennsylvania is not one to be toyed with. This is not a political lay-off game. This is about students finding success through a higher education. We are the future of Pennsylvania.
Average Joe.
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