by Kenneth Todd Ruiz
Assistant Editor
The University of La Verne reached an agreement with the Department of Education to dramatically reduce the $6.9 million fine, originally recommended in last year’s audit of recruiting practices by the School of Continuing Education.
ULV will pay a $27,500 administrative fine, one of the remedies requested by the administration in its formal response to the audit.
University and Education Department attorneys finalized the settlement Jan. 14, seven months after the department’s Office of Inspector General submitted its final audit report and recommendation.
The investigation came after the Department discovered that during the 1999-2000 school year, the SCE had violated a statute in the Higher Education Act, prohibiting incentive payments for recruiters based on securing enrollment.
The number of staff that violated the statute is disputed by the administration and the Department of Education: the department claims 15 staff members were involved, while ULV officials say only four were paid illegally.
According to the final audit report filed last June, the SCE’s Marketing Incentive Plan for the year included inducements paid from a “bonus pool” of revenue derived from enrollment exceeding a base quota.
SCE marketing directors received 3 percent of this pool with other staff being paid 0.3 percent to 0.8 percent.
The report states that ULV’s payroll records for July 2000 indicated that $133,954 had been awarded under this system.
ULV officials explained that the incentive program only existed for a year and that they discontinued it immediately upon discovering the problem, long before the Department of Education became involved.
“Four people made a mistake,” said Philip Hawkey, ULV executive vice president, in charge of resolving the University’s case. “We discovered it, and we corrected it. Good public policy would reward that. You levy a fine for repeated and egregious violation.”
Auditors were only following protocol, Morgan said.
“It’s their job to follow the letter of the law, weigh in the heaviest extent of the law, and make a recommendation based on the maximum penalties possible,” Morgan said.
Hence the $6.9 million.
Auditors based that amount on all Title IV federal aid received by students who enrolled in the SCE in 1999-2000, maintaining that the University should be compelled to forfeit all such funds.
In their official response, ULV attorneys said “there was no adverse, harmful effect on students or the institution based on [the incentive program].”
“The financial aid awarded to students was used for the purpose the federal government intended,” Morgan said. “To assist students in paying for their education. At no time did we dilute admissions standards for the sake of recruiting.”
Morgan said a lack of training and communication between departments led to the violation.
To prevent future problems, the administration has implemented new training and orientation programs for staff.
Incoming Director of Financial Aid Leatha Webster will oversee the disbursement of federal funds and ensure that other departments do not violate federal statutes.
Meanwhile, ULV had set aside $600,000 in this year’s fiscal budget toward paying the anticipated fine.
Half of that money will now be invested in needed campus construction and maintenance projects.
The remaining $272,500 will go to one-time bonuses of $500 to all full-time faculty, staff and administration.
The assistance of area congressional representatives was vital to reducing the fine, Hawkey said.
Reps. David Dreier, R-Glendora; Gary Miller, R-Diamond Bar; and Howard “Buck” McKeon, R-Santa Clarita, advocated for the University at the Education Department.
“All the work that I did, all the work our attorneys did in Washington, was minor compared to a couple of telephone calls and the personal intervention of the congressmen,” Hawkey said.
The University Board of Trustees’ role was essential in enlisting their assistance.
“Through our Board of Trustees we were able to get direct access and support from Congressman Miller,” Hawkey said. “Through him we were able to get the support of Congressman Buck McKeon, member of the House Committee on Education.”
Trustee Bill McIntyre has also additionally aided the University by donating a Mercedes-Benz to the University, the auction of which will go toward paying the fine.
ULV has already delivered a check for the fine and consider the audit resolved.
“We are glad to have achieved closure,” Morgan said.
