Finding 1170283 (2025-001)

Section III – Federal Award Findings and Questioned Costs Criteria or Specific Requirements (Including Statutory, Regulatory, or Other Citations): According to 34 CFR 668.14(b)(22)(i), an institution agrees in its Program Participation Agreement that “[i]t will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the award of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of Title IV, HEA program funds”. Condition: During fiscal year 2025, the University self-identified potential concerns regarding past compliance with the rules prohibiting payment of incentive compensation in connection with achieving enrollment targets for the University’s student affairs and admissions personnel pursuant to 34 CFR 668.14(b)(22)(i) (“incentive compensation rule”). The University immediately conducted its own investigation into this matter, including engaging legal counsel to conduct and assist with this investigation. The investigation included review of documents, communications with various University personnel in all areas, and review of University policies regarding related incentive compensation practices over the past 10 years. The investigation covered three main areas: merit adjustments in base salaries each year, undergraduate admissions promotion policy and undergraduate admissions office-wide bonuses. With respect to merit adjustments in base salaries, we inquired of various University personnel including management and student affairs and admissions department personnel, reviewed email correspondence among student affairs and admissions department personnel as well as employee job descriptions and performance reviews over this 10 year period of time. We noted that enrollment goals/targets seemed to be a significant portion of staff performance evaluations, however, this was only one of a number of other criteria considered in annual merit increases. We also noted that merit increases were awarded to the department as a whole within a range of percentage increases that appeared in line with cost-of-living increases and university-wide standards, including those employees with no direct interaction with student recruitment (such as the department receptionist and administrative assistants). There did not appear to be a direct correlation between solely achieving recruitment goals and merit increases as these other factors played a role in determining overall merit adjustments each year. Undergraduate admissions personnel promotions were similarly based on a number of factors, including achievement of recruitment targets and goals, mentoring new undergraduate students, leadership activities, attending “career-type” events and participating in various on-campus events and activities. We reviewed the University’s promotion policies for these personnel, email correspondence and performance reviews for a sample of employees in the undergraduate admissions area, as well as made inquiries of various University management and admissions department personnel. Similarly, there did not seem to be a direct linkage between only achieving enrollment recruiting targets and promotions as many other factors were involved in determining promotions for employees in this area. Bonuses were observed in certain prior years for undergraduate admissions personnel and appeared to be paid to the entire undergraduate admissions department, including those not directly involved in student recruitment activities and were for the exact same amount for all personnel in the department (usually $1,000 per employee, including receptionists, administrative assistants and others with no direct responsibility for recruiting students). Once again, we inquired of various University personnel, reviewed email correspondence and University policies and procedures in this area. Bonuses appeared to be awarded to all department employees whether they had a recruiting role or not and were for the same amount. Therefore, it does not appear that bonuses were provided to undergraduate admissions personnel based solely on the achievement of enrollment targets. Notwithstanding the above, the University initiated the following remedial actions upon selfidentification of these items to ensure compliance with the incentive compensation rule in 34 CFR 668.14(b)(22)(i). 1. Updated its policies to specifically prohibit any form of compensation (including payment of bonuses and other forms of incentive compensation) or promotions for admissions department personnel to be based on the achievement of enrollment goals. 2. Discontinued the prior practice of awarding office-wide bonuses for undergraduate admissions personnel. 3. Engaged higher-education industry compliance experts to consult and assist the University with the development and implementation of stronger policies and procedures in the area of personnel compensation philosophy, including job levels and standardized promotional criteria. 4. Certain management-level employees responsible for oversight of enrollment recruitment and human resources departments within the University are no longer employed by the University. 5. Enhanced competencies of its internal compliance department and strengthened the program structure and operating model, supporting improved communication and oversight. Cause: Internal controls over the monitoring of compliance with the incentive compensation rule were not effective. In addition, policies and procedures in this area were unclear and not specific enough. Effect or Potential Effect: This could result in noncompliance with the incentive compensation rule, as well as potential fines and penalties being assessed by the Department of Education. Questioned Costs: None. Context: As described above, we made inquiries of financial management personnel, admissions department personnel and the attorneys who performed the investigation into this matter. We also reviewed the University’s policies and procedures related to compensation, in general, employee promotions, incentive compensation and specifically those policies and procedures for the admissions department of both undergraduate and graduate students. We also reviewed employee performance reviews for a sample of employees within the undergraduate admissions department. Lastly, we reviewed email correspondence between and among various University admissions department personnel and those responsible for overseeing, compensating and promoting those working in those departments. Identification as a Repeat Finding: Not applicable. Recommendation: While the University has strengthened controls and safeguards for monitoring compliance, management should continue to review and monitor its internal controls related to compensation, incentive compensation and promoting employees responsible for enrollment and admissions to ensure that the University is in continuing compliance with the incentive compensation rule. Note that management has already implemented improved policies and procedures in this area as previously described. View of Responsible Officials: Management has implemented the remedial actions previously described to ensure compliance with the incentive compensation rule.