 Even if that means asking for a taxpayer-funded bailout, said John Sinsheimer, executive director for the Illinois Student Assistance
Commission, or ISAC, which administers the College Illinois program.
"There are a variety of solutions out there. They range from seeking
a full-faith guarantee from the General Assembly, to closing the
program out to all new contracts and having the General Assembly
make up the shortfall, to what we call benefit cost-sharing, where
the universities would help," Sinsheimer said during a hearing
Tuesday of the Legislative Audit Commission, a joint committee of
the Illinois House and Illinois Senate.
College Illinois stopped accepting new contracts on Sept. 30,
after media reports of risky investments, funding shortfalls and
accelerated withdraws from the program.
State Rep. Rich Brauer, R-Petersburg, said he has received calls
from constituents who've bought contracts, asking for advice on what
to do.
"Parents call me, and of course they ... have these payments due,
and they're wondering if they should make those payments or
default," Brauer said.
Sinsheimer said he did not know if the fund's $1.1 billion in
assets could cover a complete refund of everyone's initial
investment plus the additional 2 percent return usually paid out
when people withdraw their investment.
He said the program will not attempt to prevent people from
leaving en masse by charging a penalty for withdrawals.
"There is no truth in that," Sinsheimer said.
Sinsheimer said he wants contract account holders, employees of
ISAC and legislators to discuss together how to revamp the plan and
make it financially sound. The General Assembly and Gov. Pat Quinn
would need to take action on any recommendation.
Meanwhile, people like Sarah Antonacci and her husband, Gianni
Antonacci, are left to worry.
The Antonaccis purchased plans for their three children and are
still making monthly payments for their two youngest.
Sarah Antonacci repeated one adjective over and over to describe
how she and her husband are feeling about the program's future --
"scary."
The Antonaccis said they have tens of thousands of dollars
wrapped up in the plan. At times their monthly check to College
Illinois was larger than their mortgage payment. With so much money
in the system and at least eight years of payments left, Sarah
Antonacci said she and her husband feel trapped.
"If we had just gotten into it, we would pull the money out
without thinking about it, but we didn't just put our money in,"
Sarah said.
[to top of second column] |
Created 12 years ago, College Illinois allows people to pay for
tuition and mandatory fees at universities and community colleges
years in advance at a lower cost. The money people contribute is
invested, and the return on the investments is supposed to cover
tuition and fee inflation during the coming years and decades.
Plans can be paid for in full or through monthly installment
payments of up to 10 years.
Taxpayers' dollars do not legally back College Illinois.
Instead, the Legislature can be asked -- not compelled -- to
cover any kind of deficit or default.
Individual lawmakers have said they oppose giving taxpayer
dollars to the program.
Sinsheimer said the fund could pay for current contracts through
2020 before running out of cash. Current contracts cover students
through 2029.
Sinsheimer's said the 2020 figures assume current investments
will earn a rate of return of 8.75 percent, that college tuitions
continue to edge upward at the current rate and that contract
holders don't make a run on the bank.
Illinois Auditor General William Holland said his office is
investigating the investments made and the management of College
Illinois. He said the investigation should be completed later in the
year and will be made public.
"Some of the things we are looking at ... (are) the growth in the
program cost over the recent years, the efficacy of the program
administration and then to look at the asset allocation of the
program," Holland said.
[Illinois
Statehouse News; By ANDREW THOMASON]
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