04/17/07

Pennsylvania Auditor General to audit college-loan agency


By PETER JACKSON
Associated Press Writer

HARRISBURG, Pa. (AP) -- State Auditor General Jack Wagner said Tuesday his office will conduct a special performance audit of Pennsylvania's college-loan agency, citing news reports about lavish spending at the agency as a major reason.

The audit of the Pennsylvania Higher Education Assistance Agency will focus on its performance in improving access to higher education for Pennsylvanians, "including but not limited to an evaluation of the state grant program and an evaluation of compensation, benefits and expenses," Deputy Auditor General Stephanie G. Maurer wrote in a letter to PHEAA president and chief executive Richard Willey.

The audit, which will look back as far as July 2004, is being conducted under the authority of the state fiscal code and the law that established PHEAA. It is the first such audit of PHEAA and is expected to take months to complete, the auditor general's office said.

Wagner said he ordered the audit because of news accounts detailing "excessive and unnecessary" spending at the agency and because of PHEAA's unique legal status. The agency, whose 20-member board includes 16 state legislators, finances its operating expenses from its own income, but dispenses nearly $500 million a year in state taxpayers' money in the form of student grants and subsidies.

A performance audit "digs deeper" than a conventional audit and is aimed at determining whether an agency is fulfilling "expectations of its original mission," said Wagner, a former state senator who was elected auditor general in 2004.

In a written response to Wagner, Willey said the agency is audited more than 40 times a year by regulating authorities and other entities. He pledged that it will cooperate fully with the state auditors.

Willey told Wagner he is "confident that you will discover that PHEAA is an extremely well-run and efficient business operation that is intensely focused on helping Pennsylvania families achieve an affordable higher education."

In March, after losing a 19-month legal battle with The Associated Press, The Patriot-News and WTAE-TV in Pittsburgh, PHEAA was forced to release documents detailing how its board members, as well as PHEAA staffers and guests, spent hundreds of thousands of dollars on trips to exclusive resorts as far away as California between 2000 and 2005. The expenditures ranged from transportation and lodging to extravagant banquets, bar bills, golf outings and spa treatments.

Willey is one of the highest-paid employees of the state government and related agencies, receiving about $470,000 in salary and bonuses in 2005.

In March, amid criticism of its spending practices by Gov. Ed Rendell and some legislators, the PHEAA board unanimously approved new limitations on travel expenses for board members and employees.

The new policy limits board members to per-diem reimbursements set by the Internal Revenue Service instead of being reimbursed for the full cost of their lodging and meals. It also prohibits employees from charging the agency for limousines and requires them to use the lowest-priced rental cars available.

"We will be looking at what the new policy says and whether or not that is adequate," Wagner said.