Lincoln Journal Star from Lincoln, Nebraska • 2

2A Lincoln Journal Star Friday, September 7, 2007 FROM PAGE 1A Allegations and findings Student loan reform is a high priority, senator says Also in the past year, nonprofit student lending advocates and New York Attorney General Andrew Cuomo exposed a variety of ways student lenders influenced schools for positions as preferred lenders for their students. Nelnet was among companies that backed out of deals that, for example, paid Western Illinois University tor referring borrowers and preferred-lending deals with alumni associations. Nelnet agreed to pay $2 million and adopt a national code of conduct as part of a settlement with Cuomo's office. Nelnet joined 1 1 banks and student lending firms including Sallie Mae, JP Morgan Chase, Bank of America and Citibank that settled with Cuomo. While not illegal, the preferred-lending agreements and other practices were deceptive and anticompetitive, according to Cuomo.

Among the practices Cuomo said Nelnet engaged in were sponsoring marketing events and paying for school employees to participate, including covering their travel and hotel costs. Cuomo said Nelnet also paid for school financial aid personnel to attend luncheons, dinners and retreats and gave school employees tickets to sporting events, shows and spa treatments. Nelnet also agreed to pay $1 million and adopt a code of conduct on student lending as part of an agreement with Nebraska Attorney General Jon Binning. Journal Star Business Editor Richard Piersol, Reuters wire service and Lincoln Journal Star archives contributed to this report advocates called unearned subsi: dies by bundling low-interest student loans with higher-interest loans and collecting higher guarantees from the government. Nelnet never tried to hide what it was doing.

After Sen. Edward Kennedy, joined in the criticism, the company said it had opposed the practice as public policy since early 2003, stopped adding loans that qualified for it when legislation was introduced to forbid it and didn't book revenue it was collecting from the practice until it consulted federal authorities. "In the past, however, as a prudent business decision made in a highly competitive market, Nelnet applied for and received payments pursuant to this provision available to it under current law," the company said in November 2004. Nelnet was one of the lasc organizations to use the opportunity "and by far the most open about its actions," the letter said. The inspector general of the Department of Education later sought to recoup what it called improper payments from Nelnet.

Nelnet reached a settlement with the U.S. Department of Education that allowed it to keep $278 million in disputed profits from the controversial subsidy. As part of the settlement, Nelnet agreed not to take advantage of the subsidy in the future, depriving it of more than $880 million in potential profits. The company has said that, overall, it earned about $322 million from the subsidy. Congressional reforms have removed the possibility of getting any more from it not attend.

The ombudsman found that neither employees nor board members who attended the event were compensated for that attendance, so there was no use of state resources. But the ombudsman called the attempt to produce foster children at the campaign event "troubling." "There is something distasteful about the image of foster children, who have no power to say being taken away from their play time or their school work to be used in a campaign event." Stitt's response: She said she invited foster families to the event because of Osborne's "intense interest in foster care." "I think it is important that leaders see these children. We have done this before (brought foster children to news conferences with former Govs. Mike Jo hanns and Ben Nelson)." Allegation: Asking an employee to share confidential Information with a reporter The employee alleged that Stitt asked her to provide confidential information about a foster child to TV reporter Kathy Saran-tos-Niver at Channel 3 In Omaha. Ombudsman's findings: The report said there were differing versions of what happened and indicated that Stitt "may" have issued that directive.

However, the employee did not pass on confidential information, so no law was violated, the ombudsman concluded. The ombudsman also cited problems with the law that requires juvenile records to remain confidential to protect the privacy of children. The bureaucracy can use the confidentiality laws to protect themselves from the disclosure of their own mistakes, the ombudsman noted. "This is unfortunate," the ombudsman wrote. But "public officials are not at liberty to ignore those laws simply because it may seem convenient or desirable to do so." Stitt's response: She denied she had ever asked anyone to reveal confidential information about foster children.

Stitt said she was interviewed by Sarantos-Niverfora story. Foster care Continued from Page LA volve itself in detailed oversight of the operation and decision-milking of the agency," said Ombudsman Marshall Lux and his deputy, Terry Ford, in the report. The board also needs to seriously examine evidence indicating possible violations of the Foster Care Review Board regulations and errors in judgment on Stitt's part, the report said. The ombudsman's office investigated allegations made by Tammy Peterson, an agency employee, under the state's whisUeblower act. Peterson, the Omaha-area supervisor for the board, resigned as of Sept.

5, according to the report. She could not be reached for comment Thursday. The agency board also asked Allen Curtis, former director of the Nebraska Crime Commission, to investigate the allegations, according to Jim Gordon, a Lincoln attorney and chairman of the Nebraska Foster Care Review Board. The board will meet Monday afternoon to look at both reports, he said during a Thursday news conference. Stitt, who had been working from home during the investigations, was back at the office on Thursday.

Gordon said he personally believes the director should continue the work she has been doing for the past 24 years, strengthening the agency that monitors the states foster care system and more than 5,600 children. "As far as I'm concerned, she will be the executive director," Gordon said during a news conference attended by agency employees. Stitt "has done a phenomenal job of representing the interests of abused and neglected children. Anyone who has worked with Carol Stitt knows that she is a person of great integrity with a passion for helping children," he said. Gordon said he expects the board of directors to seriously consider some of the recommendations found in the two reports, including better oversight.

"I find some things that could be improved. I don't find anything wrong," said Gordon about the two reports. The Curtis report is similar to the ombudsman's report, which was made public, Gordon said. But he said he does not expect the board to release the Curtis report. Stitt said she was surprised by the allegations and upset by the "damage a disgruntled employee can do to an organization." "It's easy to make allegations, Lincoln Journal Star The state ombudsman's office on Thursday said it had found no criminal wrongdoing by Carol Stitt, director of the state's foster care review agency.

The three issues investigated, the findings and Stitt's responses: Allegation: Mandating counseling An employee alleged that Stitt "mandated" that she and other employees submit to sessions with Nancy Thompson, an Omaha counselor, on personal issues. The employee also alleged that Thompson provided private counseling for Stitt and her family, for which the state paid. Ombudsman's findings: Stitt paid for all counseling provided to her and her family. The counselor provided professional coaching but not therapy to staff who sought advice. The coaching included learning to be assertive and strengthening supervisory skills.

Other employees told the ombudsman that the individual sessions were available if the employee chose them and were not mandated. The ombudsman found no violation of law but suggested that this contract for staff development should have been approved by the Foster Care Review Board. Stitt's response: During a Thursday news conference Stitt said she did not ask, but should have asked, for board approval of the contract with Thompson for the staff development work. "As the queen of contract oversight" and an advocate that the state should better oversee contracts, "I should have brought that to the state board," she said. Allegation: Forcing attendance at a Tom Osborne political event The employee alleged that Stitt used state resources to get staff members, foster parents and children to attend a Tom Osborne for governor political event on Arbor Day, a state holiday.

Ombudsman's findings: Some employees said they felt pressure to attend and were encouraged to arrange for foster children to attend the event Other employees said they received invitations to the event but felt no pressure to attend and were not disciplined when they did and it's very hard to clear your name," she said. Stitt said she did not think the allegations stemmed from any parti- san politics. Gov. Dave Heineman, she said, "has embraced the Foster Care Review Board's agenda and is leading it, masterfully." The allegations may have been an attempt to drive a wedge between Heineman and the agency, Sshesaid. Nancy Hicks at 473-7250 or Connect.

Vol. 141, No. 250 USPS 0527- 200 Copyright 2007 ISSN 1084-5283 September 7, 2007 iiorr JournaoStar From staff and wire reports President Bush is expected to sign a bill to slash federal subsidies to student loan firms and to boost student grants, the reform bill that Nelnet said is responsible for its restructuring, according to news reports Thursday. Reuters news service reported that Rep. George Miller, a California Democrat, was told of the president's intention in a phone call from U.S.

Education Secretary Margaret Spellings, said Miller's spokeswoman, Rachel Racusen. Miller is chairman of the House Education Committee and spoke at a Democratic rally on Thursday supporting the legislation that would raise college student aid funding by $20 billion while making changes expected by Wall Street analysts to pare back the profits of lending firms. A congressional conference on Wednesday released final legislation that calls for a cut in the "special allowance payment" subsidy to for-profit companies that make federally guaranteed student loans, such as Nelnet and Sallie Mae, Reuters reported. Senate Majority Leader Harry Reid, D-Nevada, at a news conference on Thursday listed student loan legislation as a high priority for passage in the next few weeks. Congressional reform of the student lending system, which includes private and public agencies, has been brewing since 2004.

Nonprofit advocates of direct government student lending exposed a system that allowed lenders such as Nelnet to legally reap millions of dollars in what the Continued from Page 1A offices in Sacramento, San Antonio; Mesa, Honolulu; and Tulsa, Kiser said. The company is downsizing operations in Indianapolis from more than 320 people to about 55. "Most areas of the company will be touched in some way," Kiser said. Nelnet employs about 900 people in Lincoln and has expanded its call center in the Gold's Building at 1 1th and streets to accommodate more. The company's total employment is 3,300, according to the announcement Thursday.

Local officials sounded as if the city had dodged a bullet a day after Windstream announced it was closing its broadband customer service operation at a cost of 100 jobs. "We appreciate Nelnet's long-term commitment to increasing the number of jobs in Lincoln from their current levels," Mayor Chris Beutler said in a prepared statement "We share Nelnet's concern over the short-term job losses that will impact Lincoln workers. Their reorganization is not unique to Nelnet but is the result of student loan industry adjustments nationwide. "This case is driven by student loan industry factors, not local factors. Recent news of job gains in Lincoln's manufacturing sector and Nelnet's commitment to the Tall Continued from Page 1A town and said the building can make a statement without being tall.

He would be distressed if city officials "boot it and put up something ugly," he said. The committee will address such issues through a sort of architectural review, Zimmer said. And the city hired Crandall Arambula a Portland, consulting firm that spearheaded the updating of the Downtown Master Plan as design advisers to ensure the design fits with the master plan. Froehlich and his architect at Believe Continued from Page 1A Before MS hit her when she was 20, she was a typical kid. She drank on weekends with the popular kids of Ord, but she was a good kid.

She was a cheerleader, a captain of the drill team, a lifeguard. Gosh, she says, she loved to swim. She was in the public pool every day in the summer. She won ribbons. She had long, strong legs.

Her dad told her she moved through the water so fast, like a pencil. She went to the University of Nebraska-Lincoln, joined Kappa Alpha Theta sorority. A photo of that young woman smiles down from a shelf above her hospital bed. A gorgeous girl with a tan. "Did you turn heads?" She laughs.

When she was 20, her legs grew numb. A doctor diagnosed the MS. journalstar.com 926 Street Lincoln NE 68508 Mailing address Lincoln Journal Star P.O. Box 81609 Lincoln NE 68501-1609 Delivery General Ton free Lobby Saturday, issues (402) 473-7300 telephone (402) 475-4200 (800) 742-7315 hours Monday-Friday, 6 a.m. to 5:30 p.m.; 6 a.m.-noon; Sunday, 6 a.m.

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Box 81689, Lincoln, NE 68501. Verizon applicants People who want to get a job with Verizon Wireless should go to the Verizon Wireless Web site at www.Verizon-Wireless.com and click on the careers link at the bottom of the home page. A story published Thursday on Page 2A of the Journal Star listed an incorrect Web site. iHLl Powerball (Sept. 5) 11,20,21,30,48 Powerball: 18 Power Play: 2 Jackpot: $15 million (One winner in Wisconsin) Pick 3 (Sept 6) 3,1,0 Pick 5 (Sept.

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"The decisions affecting associates are very difficult," Dunlap said. "Through the transition, we are committed to supporting our associates with career and job placement services, extended benefits and severance packages." Those severance deals were not disclosed. As part of its efforts to help minimize the impact on associates, Nelnet said it has signed two letters of intent with third parties to offer jobs to some employees in the company's Indianapolis and Bryan, Texas, offices, as well as to sublease office space and purchase certain assets. About 175 employees, included in the net reduction of positions, may be offered positions with these third parties, Nelnet said. In recent years, as subsidized student lending by lenders became a hotter political issue, Nelnet began making acquisitions that diversified its company to become less dependent on politically sensitive policies.

The key elements of the company's business model now are diversifying revenue streams, increasing fee-based income, which makes up more than 50 percent of the company's total revenue from services such as tuition payment plans, campus commerce and enrollment services, in addition to student lending. Reach Richard Piersol at 473-7241 or rpiersoljournalstar.com. said. The group wants to build a "signature building," he said. And he asked the design committee for ideas about how to do that With the site of the towers now a temporary parking lot, how long is this going to take to sort out? Froehlich said the targeted completion date is August 2010.

Synergy's proposal was selected by the city in April, and negotiations were expected to take six to 18 months. Froehlich told the committee he should have "something to show you" between November and January. Reach Deena Winter at 473-2642 or dwinterjournalstar.com. position? She improved and convinced herself for a while that she didn't have MS, that she'd been misdiagnosed. In 1980, she met the love of her life at a church barbecue.

He was tall, blond and handsome, and she was blown away. He was a Christian. He led her to the Lord. Now, she says, maybe she's bringing others to the Lord. Such as her dad.

Since her mom died a few years ago, they've grown extremely close. He didn't used to be close to the Lord, she says, or to her when she was growing up. Such as the physical therapists. "When I go to physical therapy and stuff, and they say, 'Well, Jenny, why haven't you given And I say, 'Well, I'm doing it for the Lord. I know he'll help me, and he'll do what he can for me on In heaven, she will ask the Lord for children, three of diem.

She will ask him to let her swim again. And she will thank him for all the love in her life, especially his. Colleen Kenney is on leave. Reach her editors at 473-7306 or citydeskjoumalstar.com. future job expansion in Lincoln demonstrate that this city is on the right track for job growth." Lincoln Chamber of Commerce President Wendy Birdsall called Nelnet a good corporate citizen that contributes a great deal to the community and to the economy with "high-quality jobs in a clean industry." "You never want to hear about job cuts, particularly in your own community," Birdsall said.

"It's unfortunate that's taking place, but we're pleased to know we'll be made whole and stand to gain jobs." Kiser didn't say directly whether Lincoln was spared deliberately. "Lincoln is a great place to call home for a company, and it has been a target for our growth in recent years, he said. "The community is rich in talent and has incredible public and private education opportunities." Nelnet's new plan to cut expenses by $25 million to $35 million a year was the result of congressional student lending reform's financial impact on Nelnet, the second biggest institution in the student lending market "Severe cuts to the student loan programs are changing our approach, but not our commitment, to the education finance market and, specifically, the Federal Family Education Loan Program," said Mike Dunlap, chairman and chief executive officer of Nelnet. "Fortunately, our business model has been developed specifically to re tended the Urban Design meeting and indicated his group "certainly can look at" the height issue. But the hotel and retirement tower must be a certain size.

And so far, he said, they've been more focused on how to fit everything into the space. After his group's proposal was made public, Froehlich said, he heard overwhelming" excitement about the proposed change to Lincoln's skyline. But in the past few months, he has heard more concern that the buildings will be too tall. And some people "felt we went too far" with the design submitted to the city. "You can feel like a yo-yo," he On the Web For an audio slideshow or to share your beliefs, go to www.JournalStar.com.

The series SUNDAY: feminist artist, abuse survivor and mother Deslie Ervin MONDAY: Car salesman Weird Wally Smith TUESDAY: Bartendercollege student Chris Hoffmann WEDNESDAY: High school student Veronica Benton THURSDAY: Businessman Jon Camp TODAY: Believer Jennifer Harms SATURDAY: Artist Dick Budig The next summer, she jumped in the water and sank. She couldn't even tread water. Some days, she couldn't get out of bed. She got mad at God. How could you let me be in this Questions? Comments? newsnMmgjjwmalstarcom.

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