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Audit Rips PHEAA For Hersheypark Day, Huge Bonuses

POSTED: 11:35 am EDT October 4, 2007
UPDATED: 6:39 pm EDT October 4, 2007

HARRISBURG, Pa. -- Pennsylvania's student loan agency, PHEAA, has paid hundreds of employees more than $7.5 million in bonuses over the last three years, according to a preliminary report of an ongoing audit by state Auditor General Jack Wagner.

"This is really outrageous and unnecessary, and if PHEAA management doesn't get it, they shouldn't be in management," Wagner said Thursday morning.

Hours after Wagner released his preliminary findings, PHEAA CEO Dick Willey submitted a letter of resignation effective Oct. 10. Willey had previously planned to retire at the end of the year.

Wagner called for PHEAA to permanently end employee bonuses and said the agency shouldn't raise salaries to compensate for that money.

He said that PHEAA signed an agreement with Hersheypark just one day after PHEAA's board of directors issued a news release promising to tighten expenses last March.

PHEAA rented Hersheypark for a day, providing free rides and food for employees and their guests at a total expense of $108,000, according to Wagner.

"The expenditure of $108,000 -- which I consider to be dollars that could be utilized for grants or loan forgiveness -- was unnecessary," Wagner said.

The timing of the Hersheypark deal shows that PHEAA executives were not serious about changing their free-spending ways, Wagner said.

Wagner saved his harshest criticism for the bonuses PHEAA executives bestowed upon themselves, also fattening their pensions.

"This method is a double-dip for the recipients, but a double-whammy for taxpayers who must bear the financial impact twice -- up front with bonuses, and years later with inflated pensions," Wagner said.

"We've got to clean that agency up," Gov. Ed Rendell said. "I intend to meet with senators who feel the same way I do."

Matthew Brouillette, president of the Commonwealth Foundation, suggested that PHEAA could be privatized.

"This is not necessarily something that government needs to be involved in," Brouillette said.

State Sen. Sean Logan, vice-chairman of PHEAA's board, said Thursday that he's angry about the preliminary results of Wagner's audit. He told Team 4 that the board knew nothing about the employee day at Hersheypark.

Logan also said he told Willey that he wanted him to leave now, rather than wait to retire.

"This audit shows us that we are actually moving backwards, and Dick Willey keeping some of the items in the audit from the board actually shows his disconnect with the board," Logan said.

Though Willey is officially resigning Oct. 10, Logan called it a formality and said the next time Willey appears at PHEAA headquarters will be to clean out his desk.

PHEAA released a statement Thursday afternoon saying that Wagner's audit is not complete yet.

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