ULV officials hope to reduce SCE fine

Campus Times
November 22, 2002

by Tim Tevault
Editorial Director

University of La Verne officials are hoping the federal government will substantially reduce a $6.9 million fine for apparently illegal recruitment practices in the School of Continuing Education.

ULV was asked earlier this year to return the funds to the U.S. Department of Education's Office of the Inspector General for providing bonuses and commissions to employees at the SCE during the 1999-2000 school year.

According to the Inspector General's Final Audit Report, ULV's payroll records for July 2000 showed $133,954 given out in bonuses.

"From the report, the auditors work with a standard formula, " ULV executive vice president Philip Hawkey said. "Any financial aid they received had to be paid back into Title IV funds. "

He added, however, that the roughly $6.9 million figure was "exaggerated and outlandish.

"It is our expectation that (the Department of Education) will recognize we solved the problem ourselves," Hawkey said, adding that there "might be a modest fine."

ULV President Stephen Morgan added: "I take this very seriously because it's distressing that the University would be out of compliance."

According to the Inspector General's report ULV's Marketing Incentive Plan for academic year 1999-2000 violated the Higher Education Act provision prohibiting bonus payments based directly or indirectly on success in securing enrollments.

The report states that because the SCE gave bonuses to its employees for securing enrollment in the school, the Office of the Inspector General is requesting that the money borrowed from Title IV - a federal financial aid fund to help pay for the recruited students' education - be paid back.

According to the report, 428 of the 1,116 students who enrolled in the SCE in 1999-2000 received Title IV funding.

Between July 1, 1999 and Dec. 4, 2001, more than $6.5 million in Federal Family Education Loan money was distributed to those 428 students, while an additional $395,730 was distributed in Federal Pell Grant money.

Since receiving word of the fine, Morgan has met with Rep. David Dreier, R-Glendora, and staff members from California senators Dianne Feinstein and Barbara Boxer's offices "to see how they think we should deal with the issue, " Morgan said.

"We believe they have made inquiries to the Department of Education," Morgan said. "(They are) putting in some words on our behalf. "

Morgan said he is not sure whether the politicians he contacted have talked about the specifics of ULV's situation with the U.S. Department of Education.

"There is a wide range of action the Department of Education can take regarding that report," Morgan said, adding that the University has set $600,000 aside from the budget for such unexpected expenses.

Morgan said, however, that such a fine affects the University budget.

Sharon Davis, co-chairwoman of the Faculty Salary Committee, said she hopes the fine will not affect faculty who are hoping for a mid-year raise.

The faculty had been looking forward to this particular raise, she said, because July's salary increase of 2.19 percent was lower than what they had hoped for.

She said faculty were looking to this raise to compensate, in a way, for July's low increase as well as try to stay competitive with other universities.

Davis said she hopes to see an announcement on the status of the mid-year salary increase soon.

"The faculty would like to see an announcement on what will happen to have enough time to respond," Davis said.

Despite the pending fine, Davis said she believes the faculty will still receive some sort of mid-year raise.

"I really feel we will get something," she said. "The question is how much."

When ULV first received a report from the Office of the Inspector General on Mar. 11, 2002, officials involved admitted to violating the provision, however they disagreed with the number of staff the report contended were involved in the recruitment process.

According to the report, "ULV described the responsibilities of the 15 staff members who received bonuses and concluded that 11 of the 15 staff were not engaged in student recruiting or admission activities. "

Hawkey, to whom the report was addressed, helped write the response to the Office of the Inspector General. Although he agrees that what SCE did was wrong, he also said the University spotted the problem long before the Office of the Inspector General found out what happened.

"The administration discovered the problem, solved it and ended the practice, " Hawkey said. "We caught it ourselves and stopped it ourselves. It's not like they caught us doing something. "

Hawkey was assigned by Morgan to deal with this issue, as he has dealt with high profile, legal issues in the past.

According to the report, ULV officials also disagreed with the way the Office of the Inspector General calculated the total owed.

The report stated that 11 of the SCE staff were involved directly or indirectly in securing enrollments into the school.

According to the report, in 1999-2000 six academic advisors, one assistant director of teacher education programs, one departmental business manager/director of administration and operations, one associate dean of academic affairs for adult undergraduate main campus programs, one director for marketing and communications and one marketing director of corporate contacts received bonuses.

The bonuses ranged from 0.3 to 0.8 percent of the "bonus pool," the report contended.

The report is now under review by the U.S. Department of Education.

Education Department officials will determine the action ULV must take.

Meanwhile at ULV, Morgan said plans are under way to train administration to catch problems like this one in the future.

"What we learned from this is that we need to have others in the university be familiar with regulations," he said. "That infraction went through several checkpoints (and) it was not caught along the way. "

Morgan said that there will be no punitive action taken toward those involved in the compensation process at the SCE.

Instead, he stressed that he is "more interested in seeing it doesn't happen again."

ULV officials hope to reduce SCE fine

by Tim Tevault Editorial Director

University of La Verne officials are hoping the federal government will substantially reduce a $6.9 million fine for apparently illegal recruitment practices in the School of Continuing Education.

ULV was asked earlier this year to return the funds to the U.S. Department of Education's Office of the Inspector General for providing bonuses and commissions to employees at the SCE during the 1999-2000 school year.

According to the Inspector General's Final Audit Report, ULV's payroll records for July 2000 showed $133,954 given out in bonuses.

"From the report, the auditors work with a standard formula, " ULV executive vice president Philip Hawkey said. "Any financial aid they received had to be paid back into Title IV funds. "

He added, however, that the roughly $6.9 million figure was "exaggerated and outlandish.

"It is our expectation that (the Department of Education) will recognize we solved the problem ourselves," Hawkey said, adding that there "might be a modest fine."

ULV President Stephen Morgan added: "I take this very seriously because it's distressing that the University would be out of compliance."

According to the Inspector General's report ULV's Marketing Incentive Plan for academic year 1999-2000 violated the Higher Education Act provision prohibiting bonus payments based directly or indirectly on success in securing enrollments.

The report states that because the SCE gave bonuses to its employees for securing enrollment in the school, the Office of the Inspector General is requesting that the money borrowed from Title IV - a federal financial aid fund to help pay for the recruited students' education - be paid back.

According to the report, 428 of the 1,116 students who enrolled in the SCE in 1999-2000 received Title IV funding.

Between July 1, 1999 and Dec. 4, 2001, more than $6.5 million in Federal Family Education Loan money was distributed to those 428 students, while an additional $395,730 was distributed in Federal Pell Grant money.

Since receiving word of the fine, Morgan has met with Rep. David Dreier, R-Glendora, and staff members from California senators Dianne Feinstein and Barbara Boxer's offices "to see how they think we should deal with the issue, " Morgan said.

"We believe they have made inquiries to the Department of Education," Morgan said. "(They are) putting in some words on our behalf. "

Morgan said he is not sure whether the politicians he contacted have talked about the specifics of ULV's situation with the U.S. Department of Education.

"There is a wide range of action the Department of Education can take regarding that report," Morgan said, adding that the University has set $600,000 aside from the budget for such unexpected expenses.

Morgan said, however, that such a fine affects the University budget.

Sharon Davis, co-chairwoman of the Faculty Salary Committee, said she hopes the fine will not affect faculty who are hoping for a mid-year raise.

The faculty had been looking forward to this particular raise, she said, because July's salary increase of 2.19 percent was lower than what they had hoped for.

She said faculty were looking to this raise to compensate, in a way, for July's low increase as well as try to stay competitive with other universities.

Davis said she hopes to see an announcement on the status of the mid-year salary increase soon.

"The faculty would like to see an announcement on what will happen to have enough time to respond," Davis said.

Despite the pending fine, Davis said she believes the faculty will still receive some sort of mid-year raise.

"I really feel we will get something," she said. "The question is how much."

When ULV first received a report from the Office of the Inspector General on Mar. 11, 2002, officials involved admitted to violating the provision, however they disagreed with the number of staff the report contended were involved in the recruitment process.

According to the report, "ULV described the responsibilities of the 15 staff members who received bonuses and concluded that 11 of the 15 staff were not engaged in student recruiting or admission activities. "

Hawkey, to whom the report was addressed, helped write the response to the Office of the Inspector General. Although he agrees that what SCE did was wrong, he also said the University spotted the problem long before the Office of the Inspector General found out what happened.

"The administration discovered the problem, solved it and ended the practice, " Hawkey said. "We caught it ourselves and stopped it ourselves. It's not like they caught us doing something. "

Hawkey was assigned by Morgan to deal with this issue, as he has dealt with high profile, legal issues in the past.

According to the report, ULV officials also disagreed with the way the Office of the Inspector General calculated the total owed.

The report stated that 11 of the SCE staff were involved directly or indirectly in securing enrollments into the school.

The bonuses ranged from 0.3 to 0.8 percent of the "bonus pool," the report contended.

The report is now under review by the U.S. Department of Education.

Education Department officials will determine the action ULV must take.

Meanwhile at ULV, Morgan said plans are under way to train administration to catch problems like this one in the future.

"What we learned from this is that we need to have others in the university be familiar with regulations," he said. "That infraction went through several checkpoints (and) it was not caught along the way. "

Morgan said that there will be no punitive action taken toward those involved in the compensation process at the SCE.

Instead, he stressed that he is "more interested in seeing it doesn't happen again."

by Tim Tevault
Editorial Director