By Lauren N. Johnson
On the same day Gov. Pat Quinn appointed a new chair of the Illinois Student Assistance Commission, some lawmakers are calling for prepaid tuition to be removed from the commission’s control.
Rep. Jim Durkin, a Western Springs Republican, said the commission has mismanaged the fund and made poor investments that put at least 55,000 contracts at risk.
“College Illinois is the worst-funded prepaid college tuition program in the country,” said Durkin, who today suggested that the program be placed in the hands of Illinois Comptroller Judy Baar Topinka. While Durkin said that the principles behind the program are fine, he remarked that potentially risky alternative investment tools used by the commission, such as hedge funds, are not.
Brad Hahn, spokesman for Topinka, said Durkin would have to lay out specifics on the shift but that all stakeholders are working to regain confidence from parents and students in the program. “The comptroller believes it is critical that when parents invest in College Illinois, they can be confident the funds will be there when the time comes to send their kids to school.”
Hahn added, “She is interested in making sure that happens and is willing to assist in whatever way the governor and General Assembly deem best.” Durkin said he pushed for the fund to be placed under the comptroller’s office instead of the state treasurer’s office because that office presently manages Bright Start, another college investment program.
Durkin’s proposal was prompted by a report from Crain’s Chicago Business that found the commission has been shifting a larger portion of College Illinois’ portfolio into higher risk investments. A recent report from Auditor General William Holland concluded that the commission did not follow the state’s procurement law when it sought an outside firm to provide investment advice.
However, John Samuels, spokesman for ISAC, said its administrators are confident that a new audit Holland is conducting on the program — as requested in House Resolution 174, approved in April — will have different findings. “That work will provide clarity and hopefully restore confidence through the findings …because we are confident that it will show that the program has been well-administered.” Samuels said the audit would address some specific questions and concerns raised.
“What we’re looking at here is a fund that’s being managed more like an investment group that meets on a Wednesday night and is looking for the flavor of the day than a College Illinois kind of a fund,” said Rep. Chad Hays, a Caitlin Republican.
Quinn appointed Kym Hubbard, who will serve as the commission’s chair, and Miguel Del Valle, who will serve as a member of the commission. Hubbard is also the treasurer and chief investment officer of Ernst &; Young, and Del Valle, a former state senator and former Chicago city clerk, was the chair of the Illinois P-20 Education Council.
Durkin said the appointments are a positive step but that more needs to be done to ensure that College Illinois is properly administered. He plans to introduce legislation before the end of the month that would call for the program to be placed under the control of the comptroller’s office.
For more on lawmaker’s concerns about the College Illinois Program, see Illinois Issues, May 2011.