HR0174HAM001LRB097 11122 NHT 53830 a

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AMENDMENT TO HOUSE RESOLUTION 174

2    AMENDMENT NO. ___. Amend House Resolution 174 by replacing
3everything after the heading of the resolution with the
4following:
 
5    "WHEREAS, The College Illinois! prepaid tuition program
6has served Illinois families successfully for more than a
7decade, encouraging parents and grandparents to pay college
8tuition in advance through the purchase of State-sponsored
9prepaid tuition contracts; and
 
10    WHEREAS, The financial performance of the College
11Illinois! prepaid tuition program is critical to ensure the
12plan participants' ability to access funds when students are
13prepared to attend an institution of higher education; and
 
14    WHEREAS, The College Illinois! prepaid tuition program is
15not backed by the full faith and credit of the State of

 

 

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1Illinois, but rather constitutes a moral obligation of the
2State, making the College Illinois! prepaid tuition program
3long-term investment portfolio vulnerable to risk-intensive
4investment practices; and
 
5    WHEREAS, In 2009, College Illinois! prepaid tuition
6program assets were virtually stocks and bonds in their
7entirety, but, by the conclusion of January 2011, the College
8Illinois! fund held $419 million or 38% in alternative
9investments such as hedge funds, real estate, and private
10equity investments; and
 
11    WHEREAS, Hedge funds and private equity investments often
12fail to provide an intensive level of transparency appropriate
13for public institutional investments of this kind; and
 
14    WHEREAS, The Illinois Student Assistance Commission's
15stated strategy is to pursue alternative investments until the
16College Illinois! prepaid tuition program portfolio reaches
1747% in alternative investments such as hedge fund, real estate,
18and private equity investments; and
 
19    WHEREAS, In 2008, the Illinois Student Assistance
20Commission invested $12.7 million in ShoreBank, a privately
21held company and, in 2010, the entire $12.7 million was lost
22when federal regulators closed the bank; and
 

 

 

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1    WHEREAS, As of June 30, 2007, the College Illinois! prepaid
2tuition program fund was 7% underfunded, and, as of June 2010,
3the date of the most recent figures available, the College
4Illinois! prepaid tuition program fund was 31% underfunded;
5therefore, be it
 
6    RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE
7NINETY-SEVENTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that
8the Auditor General shall conduct a management audit of the
9College Illinois! prepaid tuition program's administrative
10operations; and be it further
 
11    RESOLVED, That the audit include, but not be limited to,
12the following determinations:
13        (1) The growth in recent years of program costs; and
14        (2) The efficacy of the program's administration, and,
15    in particular, the Illinois Student Assistance
16    Commission's oversight and administrative capacity to
17    evaluate and direct College Illinois! prepaid tuition
18    program investments; and be it further
 
19    RESOLVED, That as a part of this audit, the Auditor General
20shall conduct an independent asset allocation study of College
21Illinois! prepaid tuition program investments to determine the
22overall level of risk associated with the program's current

 

 

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1alternative investment mix; it is intended that this study
2shall be conducted in comparison with a standardized investment
3portfolio containing no alternative investments, as well as in
4comparison with actual investment portfolios of similar public
5prepaid tuition programs currently operating in the states of
6Michigan, Virginia, Washington, and Florida; and be it further
 
7    RESOLVED, That the Illinois Student Assistance Commission
8and any other entity having information relevant to this audit
9cooperate fully and promptly with the Auditor General's Office
10in the conduct of this audit; and be it further
 
11    RESOLVED, That the Auditor General commence this audit as
12soon as possible and report his findings and recommendations
13upon completion in accordance with the provisions of Section
143-14 of the Illinois State Auditing Act; and be it further
 
15    RESOLVED, That suitable copies of this resolution be
16delivered to the Auditor General and the Director of the
17Illinois Student Assistance Commission.".