One year after the Pennsylvania Higher Education Assistance Agency was found to be spending lavishly on its top staff, the state’s auditor is calling for major changes in the governance of the nonprofit state-chartered student-loan company.

The Pennsylvania auditor general, Jack Wagner, called today for changes at the lender, known as Pheaa, that include selecting a group of financial and academic experts to replace eight of the 16 state lawmakers on Pheaa’s 20-member board.

News reports last year described such expenses incurred by Pheaa executives as $45,000 to charter a Lear jet and more than $860,000 on trips that included spa treatments for spouses and staff members, limousine rides, and falconry lessons.

The auditor general reported today that Pheaa paid $121-million in salaries for management staff members during the three-year period audited, giving at least 12 of its executives salaries and bonuses that exceeded the governor’s annual salary of $164,500 during the 2006-7 fiscal year.

“Auditors documented a pattern of expenditures by which top management benefited themselves at the expense of taxpayers and students,” Mr. Wagner’s office said in a statement announcing its findings. The full text of Mr. Wagner’s report, which contains a written response from Pheaa, is available on the office’s Web site.

Pheaa, in its response, accepted several of Mr. Wagner’s recommendations intended to hold down salaries and benefits paid to the staff. But agency rejected the proposal to cut back on the number of state lawmakers serving on its board, saying the current system is important to maintain political diversity on the board, to maintain Pheaa’s tax-exempt status, and to ensure the flow of state funds to the agency.

Pheaa already has laid off staff members and, in February, stopped issuing federally guaranteed student loans. —Paul Basken