 House
lawmakers this week unanimously adopted a resolution calling
for an investigation into the investment practices of the state's
College Illinois. Families make payments to "lock in" present rates
to pay for future tuition at Illinois colleges or universities,
according to its website. Approximately 55,000 students participate
statewide.
State Rep. Jim Durkin, R-Western Springs, is chief sponsor of
House
Resolution 174. He invested in a 15-year contract with the program
for his 9-year-old daughter.
"I thought it was a good, safe investment ...
to ensure that my daughter would have an affordable education
available for her by the time she graduates from high school,"
Durkin said,
The office of Illinois Auditor General William Holland released a
report last week raising red flags about the Illinois Student
Assistance Commission's investment losses and questionable business
practices concerning College Illinois.
The audit found that ISAC invested $12.7 million in
Chicago-based Shorebank in 2008, despite concerns about the bank's financial
health. When federal regulators closed the bank in 2010, the
original investment was worthless.
Also, College Illinois had a deficit of $338 million on June 30 and
a deficit of $342 million in 2009.
An investigation would help ensure the program lives up to its
marketing as "low-risk," Durkin said.
"We need to restore confidence in the parents who have made these
investments for their children and grandchildren," Durkin said.
The audit revealed officials invested in "virtually all stocks and
bonds" in 2009, but by January 2011, had shifted $419 million of its
investment portfolio into "riskier alternatives," like hedge funds,
real estate and private equity, according to the resolution.
The resolution calls for the auditor general's office to conduct a
management audit into the program's administrative operations and
its recent cost growth. Auditors would determine the program's
overall risk, whether funds are safe and will be available in the future. It
would also compare the program's investment portfolio to similar
programs in Washington state, Michigan, Virginia and Florida.
State Rep. Lou Lang, D-Skokie, said the new audit would help to
ensure college investments are available in the future. Lang also
invested in the program for his daughter, who is now in college.
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"We are going to take care of these college savings," Lang said,
"and make sure that the money is there to send our kids to college,
especially when it is so expensive now."
State Rep. Chad Hays, R-Catlin, asked parents to be patient until
further investigation into the program.
"As we go forward in conjunction with our universities," Hays said,
"my hope is that people will have renewed confidence in the entire
fund as we see this thing through."
Andrew Davis, ISAC's executive director, said during this week's
House Executive Committee meeting that the commission agrees to
cooperate with the review.
"We do believe it is the right thing to do at this point to give
assurance to all the families in the state and to the legislators
who are responsible, ultimately, for our oversight that the program
is in good shape, which it is," Davis said. "And so we welcome this
opportunity to have a public examination of our track record."
The auditor general's office is expected to submit its findings to
the Illinois Legislature and the governor by Jan. 15.
[Illinois
Statehouse News; By DIANE S.W. LEE]
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