MOHELA spending called 'excessive'
Members of the MOHELA board spent large sums on retreats and parties.
Published Oct. 12, 2007
Missouri Auditor Susan Montee called the Missouri Higher Education Loan Authority's spending "excessive" in an audit of the agency.
The audit details the MOHELA board of directors' expenditures, which include severance packages of up to $853,381 and annual retreats for $12,334. They also include a holiday party for which the agency spent $2,741 in drink tickets and $500 for a magician.
The audit also details a lack of documentation about many fiscal matters and the board's policy of holding closed meetings.
MOHELA is supposed to spend its profit on ensuring affordable higher education in Missouri, Montee said.
She said MOHELA board members were treating the organization like a public entity with no shareholders to check their behavior.
"What they were doing is amassing large amounts of marketable funds and spending money on themselves," Montee said.
She noted that since the audit began, MOHELA has changed many of the policies in the audit.
She suggested the Missouri General Assembly place stricter restrictions on the way MOHELA spends its funds.
MOHELA issued a statement in response to the audit saying it acknowledges the audit and has already taken steps to address the problems reported. The release also stated that many of the board members have changed since the beginning of the audit.
The statement also said MOHELA is not a state agency, its employees are not state employees and it does not receive tax dollars, but that MOHELA was established by state statute and is subject to oversight by the US Department of Education.
It adds that the organization is audited annually by a private consulting agency, Deloitte and Touche, and its latest audit had no findings.
But Montee's audit states MOHELA caused delays of up to two years in internal audits, and it recommends MOHELA gives internal audits more attention and implement the recommendations in a timelier manner.
MOHELA board chairman John Smith and Treasurer and Audit chairman W. Thomas Reeves also wrote a letter to Montee stating they agree with her audit "with limited exceptions."
Smith and Reeves included a list of steps the board has taken to fix the problems in the report, including implementing an audit committee within the board and revising several policies.
The audit also states that four of the past executives have been terminated and have received large severance packages. Montee said the severance packages were smaller than the amount that was provided for legally, but the amount was determined in a closed meeting.
The audit states the closed meetings are illegal under the Missouri Sunshine Law.
Gov. Matt Blunt issued a statement to respond to the audit. He stated his office will continue to review the findings of the audit and that Montee should have included a review of the last 10 years of operations.
"I was disappointed the audit did not, as I had requested, include the last 10 years of operations, despite the fact that some of the issues addressed in the audit are longstanding ones, and that the audit did not include interviews with previous executives involved with MOHELA's operations," he said.
In the news conference presenting the audit's findings, Montee mentioned the agency's recent asset sale to private companies.
The agency is facing a class action lawsuit that claims the sale is illegal.
Montee said the audit does not express an opinion about the legality or effectiveness of the sale. But she said she personally thinks the sale money, which went to capital improvements, could have been spent more effectively.