Higher Education Student Assistance Authority missed potential fraud, according to state probe by the Office of the Inspector General
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Sen. Richard J. Codey, left, with Mary Jane Cooper, New Jersey's current Inspector General, in this 2005 file photo. Cooper released a 91-page report showing that Higher Education Student Assistance Authority failed to comply with state rules and missed potential fraud.TRENTON — The state authority that oversees more than $1 billion in financial aid to New Jersey’s college students doesn’t have an internal auditor, fails to issue annual reports and operates under a management in "disarray," the state Inspector General said Tuesday.
A multi-year investigation into the Higher Education Student Assistance Authority found the agency failed to comply with state rules and missed potential fraud as it handed out taxpayer-funded scholarships, grants and loans, according to a report by the state Office of the Inspector General.
"I think disarray is a good way to describe it," Inspector General Mary Jane Cooper said in an interview.
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"Without appropriate internal controls, that’s when funds tend to be misspent, lost and wasted," Cooper said. "We have no way of knowing."
HESAA officials said they were still reviewing the report and declined to comment on the findings.
"The authority continues to work to ensure that the proper controls are in place to effectively carry out our responsibilities," said AnnMarie Bouse, HESAA’s director of communications.
The inspector general said HESAA has already made some of the smaller changes recommended in the report.
HESAA has come under state scrutiny in the past. In 2008, the agency agreed to a year of oversight by an independent monitor after the state attorney general uncovered "problematic" lending practices as part of a larger probe into the student loan industry.
The authority was created in 1959 and oversees what is considered one of the most generous taxpayer-funded student financial aid programs in the nation. It has about 185 employees in its Trenton office who oversee $1.3 billion in loans, grants and other funds and a $6 million reserve account.
The Inspector General’s Office, created in 2004 to look for government waste, began investigating HESAA in 2006. The probe was halted when the state attorney general began its own investigation into the agency’s student loan programs.
Once that investigation was finished in 2008, the inspector general’s office returned to HESAA and finished its report. Among the findings:
• HESAA has not filed an annual report since 2007 as Executive Director E. Michael Angulo and other top management officials squabble over who is responsible for issuing the document.
• The authority’s board meets just four times a year and has little power and scant information to oversee management.
• HESAA officials caught one unnamed, now-defunct higher education institution billing the state for $1.2 million in tuition aid grants for students who were not enrolled. The agency got the money back, but failed to investigate the potential fraud or refer the case to law enforcement.
• An unnamed HESAA official volunteering for a charity may have broken state ethics rules by soliciting a donation from an investment firm used by the agency. The case has been referred to the State Ethics Commission.
The HESAA investigation is one of several probes into state agencies, officials in the inspector general’s office said. Several similar reports are due to be issued within the next few weeks.