Chief of PHEAA fund-raising arm fired over expenses

HARRISBURG - The leader of the fund-raising arm of Pennsylvania's student-aid agency has been fired in a dispute over his travel expenses.

The board of the Pennsylvania Higher Education Foundation voted unanimously Monday to terminate Michael Hershock from his $150,000-a-year job as its president and chief executive officer, citing a "willful breach of the president's fiduciary duty involving personal profits," the Harrisburg Patriot-News reported yesterday.

Hershock's lawyer, Walter Cohen, accused the board of "totally disregarding" the terms of his client's contract, but said he was unsure whether they would pursue legal action challenging the firing.

The board plans to meet today to appoint a successor.

The foundation is a nonprofit operated by the Pennsylvania Higher Education Assistance Agency, which itself has come under fire in recent years for its spending on lavish retreats for members of its board, which is dominated by legislators.

The foundation board began questioning Hershock's travel expenses when it reviewed records that the Patriot-News had requested under the state Right-to-Know Law.

Among the expenses were a $1,032 bill in 2007 from the Four Seasons Hotel in New York City, where he had met with potential donors, and $1,360 for a 2005 presentation to the Pennsylvania Community Bankers Association in Alberta, Canada.

Legislators who head the PHEAA board said Hershock's expenses undercut their efforts to rein in spending.

The records show Hershock "didn't get it," said Sen. Sean Logan (D., Allegheny), vice chairman of the PHEAA board. "He missed the memo."

Cohen said the $14,000 in expenses over eight years was a small amount.

Hershock, 64, has headed the foundation since it was created in 2001, initially as part of his job as PHEAA's president and CEO and continuing after he resigned from PHEAA in 2002. He has received a salary and benefits from the foundation since 2004 and is required under his contract to work 20 to 40 hours a week.

The foundation has raised and disbursed tens of millions of dollars, much of it contributed by PHEAA, to nursing schools around the state in the form of block grants. The schools use the money for scholarships and other incentives to attract students in response to a shortage of nurses and nurse educators, PHEAA spokesman Keith New said yesterday.

PHEAA's financial problems prompted the agency to suspend its $10 million annual contribution to the foundation for the last two years, and Logan said its days were probably numbered.

"We don't want to hurt them," he said. "But rest assured [the foundation] is getting wound down."