 State Rep. Jim Durkin, R-Western Springs, is backing legislation
that would require the General Assembly to cover salaries and
benefits for employees of the College Illinois! program, which is facing a
deficit of $559.9 million.
The $3.2 million in annual salaries and benefits for those
employees for fiscal 2011 are paid out of the returns on the
12-year-old fund's investments.
That figure could drop substantially if the General Assembly
picks up the tab. Some employees of Illinois Student Assistance
Commission, which administers College Illinois, spend only part of
their time working on prepaid tuition fund, according to Durkin's
office.
Durkin also is asking the state to cover the fund's annual
management and administrative expenses of $3.7 million, which also
are paid out of the returns on the investments.
"They are state employees, and the (contract holders) should not
be paying for salary and benefits of people who administer College
Illinois," Durkin said. "I also believe the administrative and
marketing fees fall under that category."
John Samuels, a spokesman for the Illinois Student Assistance
Commission, said Durkin's legislation is under review.
"We haven't had time to fully analyze what impact it might have
on the program. We appreciate Rep. Durkin's sincere commitment to
the College Illinois program and its contract holders and will
continue to work with him and other stakeholders," Samuels said.
The $1.1 billion fund allows residents to purchase tuition at a
university or college for a child at the current rate. The program then invests the money, with the hope that by the time the
child is college-bound, the original investment and profits realized
from the investment will cover the cost of tuition.
Questionable investments, the Great Recession and spiking tuition
costs have created an unfunded liability in the fund of 30 percent,
or $559.9 million.
Part of the uproar over the program is that investors said
it was marketed as being backed by the state, meaning that even if
the investments tanked, the state would rescue the fund.
In reality, the prepaid tuition program is not backed by the state. The
fund can ask the state for a bailout, but the Legislature doesn't
have an obligation to say yes.
Durkin said his legislation is the first of many steps needed to
revive the program, but he insisted that it isn't the start of a much
larger taxpayer bailout.
"There may be a time and a place down the road where we will have
that discussion. I'm hoping to avoid that. I think that we can put
our collective thoughts and our talent together to revise the
program," Durkin said.
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Jim Tobin, president of Taxpayers United of America, a taxpayer
watchdog group, called giving any taxpayer money to the ailing fund
"dumb."
The fund "shouldn't be bailed out," Tobin said. "It'll just
encourage more ... improper investment decisions. It's best for
folks to save their money in the private sector, almost anywhere but
with the government."
Ginnie Flynn and her husband, Dan, bought two semesters for their
oldest daughter. Ginnie Flynn said she appreciates the efforts to
fix the fund, but she has realistic expectations about its future.
"My hope is the answer lies somewhere in the middle. I don't
think the state is going to 100 percent fix this. I don't think
investors are going to come out 100 percent unscathed," Flynn said.
There are enough assets in the program to fund it for the
next decade. However, the last contract will expire in 2029, long
after the fund runs dry if nothing changes.
Another solution to the fund's crisis is for the state's
universities to give tuition discounts to students participating in
the program.
Colleges and universities, which are owed $880 million by the
state already, have been lukewarm to that idea.
"We have lots and lots of needs, so it would be difficult to give
the College Illinois students special" treatment, said Rita Cheng,
chancellor for Southern Illinois University at Carbondale. "We'd
have to look at it on a case-by-case basis."
Jan Dennis, a spokesman for the University of Illinois, the
state's largest university system, said the university knows of the
idea of discounts but doesn't have a position yet.
[Illinois
Statehouse News; By ANDREW THOMASON]
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