HR1372 96TH GENERAL ASSEMBLY

HR1372 LRB096 22144 NHT 42570 r

HOUSE RESOLUTION

WHEREAS, The College Illinois! prepaid tuition program has served Illinois families successfully for more than a decade, encouraging parents and grandparents to pay college tuition in advance through the purchase of State-sponsored prepaid tuition contracts; and

WHEREAS, The most recent (June 2009) financial soundness report for the College Illinois! program documents a record funding deficit of more than $515 million, corresponding to a funded ratio of only 67.6%; and

WHEREAS, The College Illinois! program's financial deficit has nearly doubled, increasing by more than $242 million from June 2008 to June 2009; and

WHEREAS, During the past year the Illinois Student Assistance Commission, administrator for the program, has authorized placement of nearly 20% of program participants' financial contributions into inherently risky alternative investments, including $135 million in three separate hedge funds; and

WHEREAS, Hedge funds and private equity investments often do not provide the level of transparency appropriate for public institutional investments of this kind; and

WHEREAS, This level of exposure to alternative investments is at best questionable, given the relatively small size of the College Illinois! portfolio and could expose the program to unnecessary financial risk; therefore, be it

RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-SIXTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that, in response to reports that the Illinois Student Assistance Commission lost $10.7 million of its $12.7 million investment in ShoreBank, a privately held company that has been declared to be in financial trouble by federal regulators, we direct the Illinois State Board of Investment to conduct an independent asset allocation study of College Illinois! investments to determine the overall level of risk associated with the program's investment mix and provide the results of that study to the General Assembly and the Governor no later than January 15, 2011; and be it further

RESOLVED, That we direct the Auditor General to conduct a special audit of College Illinois! operations to document growth in program administrative costs and determine the efficacy of program administration on behalf of participants and provide the results of this special audit to the General Assembly and the Governor no later than January 15, 2011; and be it further

RESOLVED, That suitable copies of this resolution be delivered to the Illinois State Board of Investment and the Auditor General.