 The Investment Advisory Panel was created as part of College
Illinois, the state's prepaid tuition program, 12 years ago.
"Their function and responsibility is to advise and oversee the
overall investment policy as well as to advise on asset allocation,"
said Andrew Davis, executive director for the Illinois Student
Assistance Commission, or ISAC, which administers College Illinois.
Even though College Illinois is under examination by the Illinois
auditor general, Illinois attorney general and the Illinois
secretary of state for its investment practices and massive deficit,
the seats on the panel have remained empty for months. As of May,
College Illinois was $243 million in the hole.
The investment panel has seven members serving three-year terms --
three members named by ISAC, one member named by the Illinois
treasurer's office, one member named by the Illinois comptroller's
office, one member named by the governor's Office of Management and
Budget, and one member named by the Illinois Board of Higher
Education, or IBHE.
The positions filled by the comptroller, governor's Office of
Management and Budget, and IBHE are vacant. Terms for the
treasurer's appointee and one of ISAC's three appointees have
expired
ISAC would not say why it hasn't done anything about Michael Mann's
expired term other than to say that "under the statute advisory
panel members with an expired term serve until successors are
nominated and approved by the full commission."
As for the governor's Office of Management and Budget, spokeswoman
Kelly Kraft said the state's budget takes priority over anything
else. Once the budget is taken care of, filling the seat will be
addressed, Kraft said. Gov. Pat Quinn said he would sign the budget
Thursday.
The comptroller's office did not respond to inquiries about its
vacant seat, and the treasurer's office could not be reached for
comment.
Insiders and observers of the program agree that the doubling of
tuition costs at Illinois universities during the past decade has
led to the current deficit of College Illinois.
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But many outsiders also point to the decision to move funds from
traditional stocks and bonds investments to alternative investments,
such as real estate and hedge funds, before the global economic
meltdown in 2007, as a source of trouble for the program.
These investments generally offer more return on investments than
stocks and bonds, but come with higher risks. The Investment
Advisory Panel made the decision to move to the higher-risk
investments, Davis said.
The program went from being 93 percent funded, or having enough cash
and investments on hand to pay for 93 percent of all contracts, both
current and future, in 2007 to a funding level of only 82 percent as
of May.
Davis said that while ISAC has moved away from strictly traditional
investments, it actually lowered risk by spreading money out over
several different kinds of investments.
At least one of the vacant seats on the board could be filled soon.
Karen Kissel, associate vice president for financial services at
Governors State University, was tapped recently by IBHE to fill its
seat. George Reid, executive director for the IBHE, said the recent
fervor over College Illinois did not factor into IBHE's selection of
Kissel.
"We did not make the appointment of her for any specific reason,
except that she has great expertise to serve on a panel like this,"
Reid said. "As long as she uses her expertise, I think she'll be a
great addition to this body."
Reid said the position has been vacant only for a matter of months.
It's up to ISAC to approve Kissel at its July 8 meeting.
[Illinois
Statehouse News; By ANDREW THOMASON]
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