barberanne posted on 1/25/2011 1:46:00 PM
My point was that privatizing would very likely end up costing the state money that it does not currently pay for administering the grant and loan guarantee programs. And, yes, board members are paid as legislators, but I don't believe they receive anypayment for being on the board. Board retreats were discontinued years ago, before the fuss that led to Dick Willey's resignation. Salaries, except at the very top, have been cut, bonuses are a thing of the past, and PHEAA hasn't advertised since the collapse of the financial markets. Kick PHEAA loose, but PHEAA brings far more to the Commonwealth than other state agencies and does not cost taxpayers a dime.

Nathan Benefield posted on 1/25/2011 9:48:00 AM
Barberanne,

I think you've demonstrated PHEAA's split personality. On the one hand, you demand PHEAA remain a government entity, because of the "benefits" it gives to taxpayers. But at the same time, demand it be treated like a private entity, unaccountable to taxpayers for how it spends its money.

If PHEAA want to be treated like a private entity, it should be one--no lawmakers on the board, no employees in the taxpayer-funded state pension system, etc. As Matt Brouillett wrote in a memo to the PHEAA board:

"While PHEAA likes to claim that its operations, salaries, bonuses, board retreats, and advertising campaigns are not paid for by taxpayers, the "business earnings" that pay for such activities are effectively public funds, a fact that former Rep. Elinor Z. Taylor and chairperson of PHEAA's Board of Directors, has acknowledged in the past. I've enclosed a commentary I wrote in May 2006 that elaborates on the problem of PHEAA's "split personality" in which the agency wants to operate like a private business one day, but then claim government agency protections the next.

The reality is that PHEAA is an agency of state government. Its board consists primarily of persons whose salaries are paid by taxpayers. PHEAA's employees are enrolled in the State Employees Retirement System--which is backed by the full faith and credit of the taxpayers. PHEAA is also exempt from local, state, and federal taxes. These are all benefits that no private entity enjoys. Therefore, as a public agency, PHEAA must he held accountable to the taxpayers, voters, and residents of this state, including how it spends its money."

barberanne posted on 1/25/2011 9:37:00 AM
While the criticisms about Hershock might be merited, no taxpayer money is involved. The PHEAA Foundation received no tax money, only funding from PHEAA, which makes its own money--it receives no tax dollars for its administrative costs. The General Assembly does fund the state grant program, which PHEAA administers at no cost to taxpayers. Privatizing would require tasks that would still be the state's responsibility, such as collection on FFELP loans still guaranteed by PHEAA and grant processing, to be paid for. Those tasks are now covered by the money PHEAA makes. And the settlement paid to Hershock, as disturbing as it seems, comes from an insurance policy that PHEAA carried for such contingencies.

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