PHEAA saves $20.4 million annually following successful voluntary staff reductions
Board realigns operations to meet challenges in the marketplace
Harrisburg, PA (July 2, 2008) - PHEAA announced today that 264 non-union employees have taken advantage of the agency's voluntary workforce reduction program, which provides participants with a separation payment equal to two weeks of pay for each year of service, with a minimum of eight weeks and maximum 16 weeks.
1,008 non-union employees were eligible for the program. These reductions are estimated to save PHEAA $20.4 million a year, which can be added to more than $54 million dollars in savings that have already been realized through other cost-cutting measures.
Participants in America's student loan industry, including PHEAA, have been dealing with a series of unexpected financial and market challenges since October, 2007, stemming from national capital market disruptions and newly restrictive federal regulations. These difficulties have forced many lenders and other organizations to suspend some or all of their participation in the Federal Family Education Loan Program (FFELP).
“PHEAA's business model is evolving as market forces are reshaping the entire national student aid industry,” said State Representative William F. Adolph, Jr., Chairman of the PHEAA Board of Directors. “To better manage expenses while boosting operational efficiency during these difficult times, the Board directed management to conduct an aggressive cost cutting campaign, which included operational reorganization and streamlining.”
“PHEAA must adapt quickly to changes in the marketplace and the economy to best serve Pennsylvania students, families and taxpayers over the long-term,” added State Senator Sean Logan, Vice Chairman of the PHEAA Board of Directors. “Our next step is to carefully assess PHEAA's business needs relative to workflow and objectives, which will help us position PHEAA for continued success when market conditions eventually stabilize.”