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Dispatches from public radio's correspondent at the Washington Legislature. Austin Jenkins is the Olympia correspondent for the Northwest News Network. You can also see Austin on television as host of TVW's (the C–SPAN of Washington State) weekly public affairs program "Inside Olympia."

Whistleblower Says He Was Fired For Questioning Washington's Pre-Paid Tuition Program

Michael Bennion
Michael Bennion served as associate director for fiscal planning at Washington state's Guaranteed Education Tuition program until he was let go earlier this month.

As Washington state prepares to reopen its popular pre-paid college tuition program, a recently terminated employee is alleging “gross mismanagement.”

Michael Bennion served as the associate director for fiscal planning at the state’s Guaranteed Education Tuition program until he was let go earlier this month.

In an August 29 email to several state lawmakers, Bennion alleged that GET has charged “unnecessarily high administrative fees” since its inception in 1998 and failed to properly account for that money.

“The GET Program is not and has not been accountable or transparent with the public,” Bennion wrote.

The GET program, with 97,000 active accounts, is temporarily closed to new customers to adjust for changes lawmakers made to tuition, but will reopen in the fall.   

“They’re going to start selling units again and I think they should recognize and be held accountable before they open the doors for new people,” Bennion said in a telephone interview.

Under the GET Program, 100 units pays for one year of tuition at a state-funded college or university.

According to Bennion, by one internal calculation the GET program had amassed $50 million in administrative fee revenues as of August 2016—or 10 times its annual operating budget. Bennion alleged he was pressured by his bosses to “mitigate the balance” in order to “divert attention away from inquiring legislative staff.”

As of 2014, GET charged $172 per tuition unit. That included a $5.93 operating expense fee, $20.51 for reserves and a $20.82 amortization fee. The amortization fee was temporarily collected beginning in 2011 after the Great Recession depleted the reserves of the program. As of 2016, the amortization fees were refunded because reserves had recovered more quickly than expected.

The GET committee is scheduled to set a new tuition unit price at its September 13 meeting in advance of the program reopening on November 1.

The Washington Student Achievement Council, which administers the GET program, declined requests for an interview. Instead WSAC issued a lengthy statement that said pricing decisions are based on an actuarial analysis and set by a committee that holds open meetings. The setting of those prices, according to the statement, is designed to balance “risk to the state and costs to customers.”

But the statement also acknowledged that “Separate accounting for these price components and resulting revenue was not established when the program began back in 1998.”

In his email to lawmakers, Bennion said the result of not properly accounting for all the fees collected was that “the program has overcharged its unit purchasers with inflated tuition unit price and other unnecessarily high administrative fees.”

In June, Washington’s Office of the State Actuary determined the GET program was 132 percent funded with more than $2 billion in assets. In evaluating the financial soundness of the GET program, the Actuary considers whether the program has sufficient administrative expenses on hand to cover the cost of each unredeemed unit in the event the program were to shut down in the future.

Bennion, however, wrote to lawmakers that GET customers were not told they were paying to cover the cost of a potential future shutdown of the program.

In his email, Bennion also accused the GET program of overspending as it sets up a new, traditional 529 college savings plan that will be offered in January 2018 in addition to the pre-paid tuition program. And he said the GET program is politicized with top staff openly discussing how many tuition credits individual state lawmakers own.

“We need to verify if this is true or not,” said Republican state Sen. Lynda Wilson, chair of the Senate Higher Education committee, in response to the email. “It’s important that our parents have confidence in the investments they are making in their children’s future.”

Wilson said she’s been concerned for some time about oversight of the GET program. Earlier this year she proposed legislation to add legislative members to the five-member GET committee. That bill did not pass.

On Friday, Wilson sent a letter to State Auditor Pat McCarthy asking her to look into Bennion’s allegations of mismanagement.

State Sen. Guy Palumbo, the ranking Democrat on the Higher Education committee also received the email from Bennion.

Palumbo owns GET credits for his three children and co-sponsored legislation this year to incentivize GET holders to transfer their credits to the state’s new 529 college saving program by giving them a true cash value of $143 per credit instead of the current payout value of $117. That bill also did not pass.

In his email to lawmakers, Bennion said GET staff suggested in meetings that the lawmakers behind the bill were looking out for their own self-interest.

“Totally untrue,” Palumbo responded. He added that if GET staff used personal account information to “impugn the motives on legislation of people like myself … that would be completely inappropriate.”

State budget director David Schumacher, who sits on the GET committee, said he had asked his accounting staff to look into Bennion’s allegations.

“We need some outside eyes on this to make sure everything’s OK,” Schumacher said. “We’re going to have our accounting folks go in and see if there are changes that need to be made even if it’s just for transparency purposes.”

In its statement, the WSAC said it takes Bennion’s concerns “very seriously” and had forwarded them to the State Employee Whistleblower Program at the Office of the State Auditor.

Bennion said he already filed a whistleblower complaint with the state auditor in early August, but it was rejected because he did not identify a violation of state law or rules. That’s when he decided to email lawmakers and go public.

A spokesman for the state auditor, Adam Wilson, said the office had received two whistleblower complaints regarding GET within the past month along with the request from WSAC to look into Bennion’s allegations.

“We are reviewing the information provided and intend to look into the concerns raised,” Wilson said.

Bennion said his firing was a direct result of raising concerns about how the GET program is operated.

“I tried to do my job and was demoted, refused a promised promotion, and ultimately terminated for what became clear to me in recent weeks -- I accidentally pointed out the emperor has no clothes,” he wrote in his email.

The statement from WSAC said Bennion’s termination was “completely unrelated” to the issues he raised in his email, but did not elaborate.

The GET program temporarily closed to new customers in July 2015 after state lawmakers voted to reduce college tuition. That created a gap whereby the value of the GET credits was greater than what tuition actually cost.

After that happened, customers were allowed to exit the program without penalty. According to GET, 23,000 accounts have been refunded.

For remaining customers, the GET Committee voted on August 1 of this year to “rebase” all GET credits. That resulted in current account holders receiving additional tuition units designed to keep them whole.

Since January 2004, Austin Jenkins has been the Olympia-based political reporter for the Northwest News Network. In that position, Austin covers Northwest politics and public policy, as well as the Washington State Legislature. You can also see Austin on television as host of TVW's (the C–SPAN of Washington State) Emmy-nominated public affairs program "Inside Olympia."