BCT Editorial – 9/4/07

This page was last updated on September 6, 2007.

PHEAA’s excess; Editorial; Beaver County Times; September 4, 2007.

Below is a detailed critique of the subject editorial.

“The state’s embattled college loan agency added fuel to a raging fire last week, proposing to compensate top executives by hiking their salaries in lieu of controversial bonuses.

“This announcement came in wake of widespread criticism over a vote by the Pennsylvania Higher Education Assistance Agency’s executive committee to provide those same executives with more than $500,000 in bonuses for the 2006-07 fiscal year.

“PHEAA drew fire earlier this year for lavish travel spending, which included such things as extravagant banquets, bar tabs, spa treatments, golf outings and cooking courses.

“So how does the agency respond? By proposing pay raises for executives who already make more than Gov. Ed Rendell.

“The governor’s office has characterized the PHEAA spending as a ‘culture of excess.’

“‘This is another example of the agency’s failure to understand that its mission is to help students pay for college and not to provide further compensation for well-paid executives,’ Rendell spokesman Chuck Ardo told The Associated Press following the bonus announcement.

“Earlier this year, after 19 months of legal wrangling, The Associated Press and several other news agencies won a court case that forced PHEAA to open its books to public scrutiny.

“What the media found was that PHEAA spent hundreds of thousands of dollars between 2000 and 2005 on trips to resorts as far away as California.

“Two weeks ago, the PHEAA board approved bonuses for top executives, including Richard Willey, the president and chief executive officer, who received $180,857 in addition to his $289,118 salary.

“Rendell, by comparison, makes $164,500.

“PHEAA’s justification was that the compensation was necessary in order to keep top-performing employees from seeking higher paying jobs.

“In response to the public outcry that followed, PHEAA is now considering substituting the bonuses for pay hikes. The raises would have to be approved by the executive committee.

“PHEAA is a nonprofit agency created and controlled by the Legislature. Its mission is to provide grants and low-interest loans to deserving college students.

“While its operating expenses - money used for such things as salaries, bonuses and travel - comes from its own fund-raising efforts, the agency still has an obligation to spend its money wisely.

“Rendell supports an effort by several state senators to change the way PHEAA operates. Sen. Jane Orie, R-Allegheny, has proposed Senate hearings on the agency.

“The Legislature should review the entire PHEAA operation and place stringent guidelines on internal spending.

“After all, each dollar spent on a mud bath is one that won’t be used to pay tuition.”

[RWC] Gee, what a shock. An out of control government agency. While private companies can go out of control, at least the company owners are the ones to pay, not the taxpayers.

PHEAA’s existence would be bad enough if it were a breakeven endeavor. Unfortunately, it currently gobbles about $420 million per year of state and federal taxpayer dollars according to a recent annual report.

Let’s get government out of this business. Worthy students will still get their assistance.