PHEAA making progress to help state residents
As we begin the new fiscal year, we would like to update you on several reforms that have helped transform PHEAA into one of the nation’s most efficient and accountable organizations. When we were elected chairman and vice chairman of the PHEAA Board of Directors three years ago, we welcomed 13 new members to the 20-member board.
Our new board took swift, bipartisan action to eliminate management bonuses, automatic salary increases and unnecessary sponsorships and advertisements. The board also instituted one of the nation’s strictest business and travel expense reimbursement policies. Those reforms alone have resulted in more than $77 million in savings.
Concerned about unethical business practices that were occurring in some corners of the student aid industry, we were also the first to adopt a Code of Ethics, formalizing longstanding business practices that were founded on integrity and respect for federal regulations.
After navigating through the most difficult economy in PHEAA’s 46 year history – resulting in a suspension of lending, staff reductions, internal restructuring and sweeping cost-saving initiatives – PHEAA successfully secured a federal contract to service the nation’s growing direct student loan portfolio.
This is especially important considering that PHEAA self-funds all of its operations without any support from Pennsylvania taxpayers.
Finally, the legislative members of the board successfully passed legislation that restructures the board itself, which was signed into law by the governor on July 9. This legislation was based on a unanimously adopted PHEAA Board resolution calling upon the general assembly to replace legislative seats on the board with private-sector individuals who could provide additional expertise in an increasingly complex financial environment. The legislative members, who include the chairmen of the House and Senate Education Committees, along with their staffs, crafted legislation that would make PHEAA even more accountable and responsive to families and taxpayers.
Specifically, the legislation reduces the number of lawmakers serving on the board from 16 to 12. The four legislative seats will be replaced with private-sector professionals with experience in banking, investments and information techno-logy. The legislation also reduces the six-year board term to four years.
As the student aid environment continues to evolve, so will PHEAA. The additional expertise that we are bringing to the board will help us anticipate future changes so that we can be most responsive to the needs of our citizens.