One Illinois lawmaker says the first step to repairing the faltering College Illinois prepaid tuition program is making its investment decisions public.
Rep. Jim Durkin recently filed legislation that would require investment decisions for the program to take place in meetings that are open to the public. Such decisions are currently exempted under the Open Meetings Act. Durkin’s bill, House Bill 3923, comes after the Illinois Student Assistance Commission announced it has suspended the sale of College Illinois contracts until reforms to the program can be made.
“I’m not discouraged by what ISAC announced,” Durkin said. “They’ve taken some time to study the issue — new board, new executive director, new chairman — they’ve come to the same conclusions that we have: that we have to fundamentally change the program to keep it a viable option for parents and grandparents in Illinois.”
A recent report from ISAC showed College Illinois had a deficit of $559 million and was underfunded by about 30 percent as of March 2011. A state audit of the program released last summer found problems with the way ISAC chose contractors for investment advice. Durkin, a Republican from Western Springs, also takes issue with the types of investment being made, which have shifted to include investments in hedge funds, private banks and real estate along with the more traditional stock and bond purchases.
Durkin said he is working on a bill that would apply the investment restrictions put upon other state funds to College Illinois. He said such legislation “would require that the tools would be more conservative and not this whole world of alternative investments, which over the last three years the past board embarked on. I think it’s too risky. It’s not what parents signed up for.”
He added, “I do want to move us as far as we can off alternative investments because you either win big or you lose big.”
John Samuels, a spokesperson for ISAC, said that commission staff members are working on recommendations that will be heard at a meeting scheduled for January 29. Then, the commission will send recommendations to Gov. Pat Quinn and the General Assembly. Samuels said he thinks it will take legislation to reform College Illinois. He said that belief, along with the fact that ISAC was in the process of hiring a new actuary to set contract prices, is why contract sales were suspended. “Until we knew what the changes were, we felt it was unfair to sell contracts.”
“We’ve got some time between now and the end of January to discuss what type of legislative changes need to be enacted,” Durkin said. The House is scheduled to return for the spring legislative session on January 31, 2012.
Durkin said that administrators should be included in the conversation because he said that the growing costs of tuition in the state are also contribution to College Illinois’ woes. “The rising cost of [college education] has caused stress upon the value of the funding within the system,” he said.
Durkin said the most important thing is to make sure that College Illinois contracts are honored. He said the future of the programs depends on the public having faith enough in it to buy contracts. “We need to market it better. We need to approach this in a better way. We’re not getting a lot of people signing up for the contracts. … I think we need to present it in a new manner to the people of Illinois and explain to them why it still is a good program.”
For more on the problems facing College Illinois, see Illinois Issues May 2011.
For more on the problems facing College Illinois, see Illinois Issues May 2011.
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