HARRISBURG -- The head of the state's student loan agency resigned yesterday, hours after an interim audit report revealed more evidence of lavish spending, including a $79,000 staff outing to Hersheypark.

Richard E. Willey, the embattled CEO of the Pennsylvania Higher Education Assistance Agency, already had announced plans to retire in December. But that wasn't soon enough for PHEAA board vice president and state Sen. Sean Logan, a Monroeville Democrat who pressed for his immediate departure.

"I want him to resign right now, today," Mr. Logan said yesterday afternoon. "I wanted him to resign two hours ago" when the report was released.

Instead, Mr. Willey plans to stay until the end of the workday Wednesday.

That timeline isn't ideal, but it's acceptable, Mr. Logan said. Mr. Willey scheduled a vacation day today and is off Monday for Columbus Day, so he effectively has two workdays left.

"PHEAA has been dealing with a relentless series of negative media stories and political posturing that has done little to advance our public service mission, but much to undermine our ability to increase business earnings so we can support our public service mission for the commonwealth," Mr. Willey wrote to PHEAA's board chairman, state Rep. Bill Adolph, R-Delaware.

"Following [yesterday's] release of an auditor general report that criticizes the old issue of executive compensation and the new issue of our employee appreciation event at Hersheypark, it has become obvious that the media and political environment has become so antagonistic that our ability to compete effectively as a business is being jeopardized," Mr. Willey wrote.

Mr. Logan said he was surprised by the negative findings that Auditor General Jack Wagner revealed yesterday.

"We didn't know about any of this. That's what angers me so much," Mr. Logan said. "He did not inform the board about what was going on, he withheld information from the board and he went against what the board wanted and now he has to go."

One of the agency's four vice presidents likely will be tapped to serve as interim director while the board conducts a nationwide search for a permanent replacement.

PHEAA already had been under fire for six-figure bonuses and for board members' lavish retreats that included $150 cigars, golf outings, spa treatments and hunting lessons.

As a result, PHEAA promised on March 22 that it would curb spending. But auditors discovered a contract executed one day later to pay for amusement park rides, meals and refreshments for 3,500 agency employees and guests.

"This Hersheypark outing [shows] that reform at PHEAA has not occurred," Mr. Wagner said yesterday.

PHEAA spokesman Keith New said it was the agency's second annual "employee appreciation day" at Hersheypark and had been in the works for months before the contract was signed. The event was held to reward employees for boosting productivity and helping to increase revenues, he said. Employees were given two tickets and allowed to buy more.

"We like to recognize our employees, just like a lot of companies do," Mr. New said.

The auditors' report indicated PHEAA spent $108,000 but Mr. New said $29,000 of that was reimbursed by employees who brought more than one guest.

"We only paid about $79,000 for that event," he said.

That was no consolation to Mr. Logan.

"I don't care if it was a dollar. [Outings to amusement parks] don't help Pennsylvania students go to college," he said.

The Hersheypark event wasn't the only expense that auditors found "new and disturbing," Mr. Wagner said.

"Our auditors have found that the incentive and bonus programs are far more lucrative than has been previously disclosed" and have cost millions of dollars that could have been used to help students pay for college, Mr. Wagner told reporters yesterday.

The audit was spurred by news reports of spending on spa treatments and other items for top executives and their spouses.

PHEAA also is under fire for paying large bonuses to executives already earning six-figure salaries, including Mr. Willey.

PHEAA officials initially said that the bonuses -- the biggest of which was $180,857 this year -- were necessary to retain talented executives to run the international student loan business, which generates profits that fund programs for Pennsylvania students.

Later, though, they said they would end the bonus program after readjusting salary scales.

Mr. Wagner said the current salaries are sufficient to attract top talent and that they should not be increased to reflect the termination of the bonus program.

The base salary alone for Mr. Willey is $289,118. That's "almost double the [$164,000] salary of the governor of the commonwealth," Mr. Wagner said. Add Mr. Willey's bonus and his total compensation this year will be $469,975.

Most egregious, Mr. Wagner said, is that employment contracts for the top 23 executives -- who received the highest of the 350 bonuses -- specify that the payments should count as salary and therefore be used to calculate pensions, which are based on an employee's top three earning years. That provision is unusual and did not apply to other PHEAA employees' bonuses.

"PHEAA treats its executives in a far more elitist way than even its other employees," he said. "These huge bonuses can be built, for those 23 employees, into their pension plans ... and their full pension ends up being higher than their salary."

He called the executive compensation program a "double dip for recipients, who receive bonuses up front and higher pensions after retirement" and a "double whammy for taxpayers who must bear the financial impact of these bonuses not once, but twice."

Without the provision allowing bonuses to count toward retirement benefits, Mr. Willey's maximum annual pension would be roughly $200,000 a year instead of nearly $370,000, according to Post-Gazette calculations based on records provided by the State Employees' Retirement System.

Mr. New argued that the lump sums given to executives were "at-risk pay," not bonuses, and that they are properly considered salary. Executives had to meet performance benchmarks to receive them, and not everyone received the full amounts possible.

"We've worked very hard to operate as a business, and our CEO has been very cognizant of the pay-for-performance culture. We expect our employees to work a high capacity and we compensate them for it," Mr. New said.

In all, PHEAA has given $7.5 million in bonuses over the last three years and two months. More than half of that has gone to a small group of executives in amounts that grew each year.

This year, bonuses for the top 23 executives averaged about $63,300, up from $37,800 three years ago. Bonuses for other PHEAA managers, meanwhile, averaged $4,300 this year, up from $3,000 three years ago. They averaged $1,200 for union employees, up from $700.

PHEAA's operating budget -- including the funds used for bonuses, retreats and employee appreciation events -- comes from revenue from loans, not tax dollars. The Legislature does provide tax money -- $451 million this year -- to be distributed as grants and scholarships to Pennsylvania students. According to PHEAA's Web site, the agency manages more than $84.4 billion in total assets.

Mr. Wagner said he is continuing to audit PHEAA's records. He couldn't say how long the review will take. It is the first such review by the state auditor general in PHEAA's 44-year history.

Gov. Ed Rendell said the audit "absolutely was long overdue.''

He said there should be "some structural changes in the makeup of the board and controls on spending.'' He said the current board, which contains 16 state legislators and four gubernatorial appointees, was "unwieldy,'' but he didn't say how big the board should be.

He said there also should be a limit on how long a board member can serve.

As for Mr. Willey, Mr. Rendell said "he did some good things, but he didn't have the right understanding that it's a public agency.''