State Auditor Susan Montee had promised that one of the first audits to be performed once she moved into her office would be one of MOHELA – the Missouri Higher Education Loan Authority. That audit has now been completed. And, it zeroes in on practices and activities that occurred a number of years before Governor Matt Blunt (R-MO) announced his Lewis and Clark Discovery Initiative, which calls for the selling off of approximately $350-Million of MOHELA assets to fund capital improvements at Missouri’s colleges and universities.
The audit includes findings on executive severance packages and bonuses, contracts, procurement policies, and expenditures. In short, in finds MOHELA needs more oversight.
The audit points to severance benefits paid to four executives who either resigned or whose employment was terminated in recent years. Those benefits amounted to $2.3-Million, $2-Million of which the audit determines to be excessive. The audit also takes aim at annual performance bonuses paid to five MOHELA executives, including the four who also received severance packages, between fiscal year 2001 through fiscal year 2004. Those bonuses totaled almost $1.5-Million. In addition to these bonuses, the five received temporary base salary increases during the first three months of each of those periods for what was termed, "in consideration of upcoming extraordinary activities required by the Employee in the next quarter." Those increases amounted to $65,000 in FY 2001 and $82,500 in FY 2004.
The audit points to a number of what it considers to be excessive benefits provided to top executives between October of 2000 and June of 2004. They include a combined total of up to 480 hours (12 weeks) of vacation leave and personal time off each year, with a provision allowing the individual to convert any unused time off to cash at the end of the fiscal year. Also included in what the audit considers excessive was a car or annually adjusted car allowance starting at $750 per month. This perk amounted to $146,000 in car allowances for the five employees between FY 2001 and FY 2004.
The audit finds dollars were wasted at the time MOHELA moved into its new permanent headquarters in St. Louis County. The organization moved into its new building in April of 2002, but could not get out of a lease agreement at its former location, so MOHELA paid more than $1.25-Million in lease payments over an 18-month period for a building that was no longer being used. The circumstances under which the contractor for the new building was hired come under fire as there is no documentation to support how the contractor was selected or whether there was a competitive bidding process. This lack of a competitive bidding process extends to procurement policies prior to March of 2007. The audit finds expenditures for such things as attorney services, office supplies, bulk mail services, and promotional items were made in which competitive bids or proposals were not solicited.
Various expenditures are criticized for what the audit considers to be unreasonable or imprudent use of funds. They include more than $46,000 on the annual MOHELA Board retreats. The retreats in November of 2004 and 2005 were held at a luxury resort near Branson. The November, 2006 was held in St. Louis, and came with a bar tab of $1,200.
Another area of concern is the disposition of assets – long before Governor Blunt’s Lewis and Clark proposal. Between July of 2003 and December of 2006, MOHELA disposed of more than 1,200 property items with an original cost totaling over $3.8-Million. But there are no record of the disposition of these items.
The audit concludes MOHELA has taken steps to address many of the concerns outlined. But it adds the MOHELA Board has closed its meetings on numerous occasions in recent years, and will not release the minutes of those meetings. The State Auditor’s Office says this has limited the scope of its work and has prevented the findings from being complete.