As Pheaa Faces Scathing New Report, President Moves Up Departure Date

October 04, 2007

Richard E. Willey will step down as president of the Pennsylvania Higher Education Assistance Agency next Wednesday, rather than at the end of the year, the Pittsburgh Tribune-Review reported. Mr. Willey moved up his departure date just as the state’s auditor general released an interim audit report accusing the student-loan agency, known as Pheaa, of lavish spending on employee benefits and executive perks.

In a written statement describing the audit’s findings, the auditor general, Jack Wagner, said Pheaa had granted bonuses totaling more than $7.5-million since July 1, 2004, including a payout of $1.1-million to its 23 highest-ranking executives just a month ago. The agency “has a far more extensive and lucrative bonus/incentive program for employees and management than has been previously revealed to the public,” he said, and “has cost taxpayers millions of dollars that could have been used to help needy students.”

Mr. Wagner also criticized Pheaa for spending $108,000 on an employee outing at Hersheypark in April, a month after the agency’s board had said it would curtail excessive spending.

Keith New, a spokesman for Pheaa, in turn criticized Mr. Wagner, saying his report “reads more like a subjective commentary than an objective audit.” In comments to the Pittsburgh newspaper, Mr. New said the cost for the employee outing was nearly $30,000 less than the amount reported by the auditor general, and he argued that it was unfair to consider such an event in the same category as the travel and entertainment costs the agency has pledged to cut.

Still, some state legislators apparently see the report as evidence that Pheaa officials reneged on a promise. “They must not have taken us seriously,” Rep. Bill Adolph, chairman of the agency’s board, told the Associated Press, and we were very, very serious” about cutting costs. Mr. Adolph has scheduled an emergency meeting of the board for next Wednesday.

Mr. Willey had announced last week that he would step down at the end of this year. The Post-Gazette has reported that he could receive a pension of up to $370,000 a year. —Charles Huckabee