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1 | SENATE RESOLUTION
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2 | WHEREAS, The College Illinois! prepaid tuition program has | ||||||
3 | served Illinois families successfully for more than a decade, | ||||||
4 | encouraging parents and grandparents to pay college tuition in | ||||||
5 | advance through the purchase of State-sponsored prepaid | ||||||
6 | tuition contracts; and | ||||||
7 | WHEREAS, The financial performance of the College | ||||||
8 | Illinois! prepaid tuition program is critical to ensure the | ||||||
9 | plan participants' ability to access funds when students are | ||||||
10 | prepared to attend an institution of higher education; and | ||||||
11 | WHEREAS, The College Illinois! prepaid tuition program is | ||||||
12 | not backed by the full faith and credit of the State of | ||||||
13 | Illinois, but rather constitutes a moral obligation of the | ||||||
14 | State, making the College Illinois! prepaid tuition program | ||||||
15 | long-term investment portfolio vulnerable to risk-intensive | ||||||
16 | investment practices; and | ||||||
17 | WHEREAS, In 2009, College Illinois! prepaid tuition | ||||||
18 | program assets were virtually stocks and bonds in their | ||||||
19 | entirety, but, by the conclusion of January 2011, the College | ||||||
20 | Illinois! fund held $419 million or 38% in alternative | ||||||
21 | investments such as hedge funds, real estate, and private | ||||||
22 | equity investments; and |
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1 | WHEREAS, Hedge funds and private equity investments often | ||||||
2 | fail to provide an intensive level of transparency appropriate | ||||||
3 | for public institutional investments of this kind; and | ||||||
4 | WHEREAS, The Illinois Student Assistance Commission's | ||||||
5 | stated strategy is to pursue alternative investments until the | ||||||
6 | College Illinois! prepaid tuition program portfolio reaches | ||||||
7 | 47% in alternative investments such as hedge fund, real estate, | ||||||
8 | and private equity investments; and | ||||||
9 | WHEREAS, In 2008, the Illinois Student Assistance | ||||||
10 | Commission invested $12.7 million in ShoreBank, a privately | ||||||
11 | held company and, in 2010, the entire $12.7 million was lost | ||||||
12 | when federal regulators closed the bank; and
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13 | WHEREAS, As of June 30, 2007, the College Illinois! prepaid | ||||||
14 | tuition program fund was 7% underfunded, and, as of June 2010, | ||||||
15 | the date of the most recent figures available, the College | ||||||
16 | Illinois! prepaid tuition program fund was 31% underfunded; | ||||||
17 | therefore, be it
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18 | RESOLVED, BY THE SENATE OF THE NINETY-SEVENTH GENERAL | ||||||
19 | ASSEMBLY OF THE STATE OF ILLINOIS, that the Auditor General | ||||||
20 | shall conduct a management audit of the College Illinois! | ||||||
21 | prepaid tuition program's administrative operations; and be it |
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1 | further
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2 | RESOLVED, That the audit include, but not be limited to, | ||||||
3 | the following determinations: | ||||||
4 | (1) The growth in recent years of program costs; and | ||||||
5 | (2) The efficacy of the program's administration, and, | ||||||
6 | in particular, the Illinois Student Assistance | ||||||
7 | Commission's oversight and administrative capacity to | ||||||
8 | evaluate and direct College Illinois! prepaid tuition | ||||||
9 | program investments; and be it further | ||||||
10 | RESOLVED, That as a part of this audit, the Auditor General | ||||||
11 | shall conduct an independent asset allocation study of College | ||||||
12 | Illinois! prepaid tuition program investments to determine the | ||||||
13 | overall level of risk associated with the program's current | ||||||
14 | alternative investment mix; it is intended that this study | ||||||
15 | shall be conducted in comparison with a standardized investment | ||||||
16 | portfolio containing no alternative investments, as well as in | ||||||
17 | comparison with actual investment portfolios of similar public | ||||||
18 | prepaid tuition programs currently operating in the states of | ||||||
19 | Michigan, Virginia, Washington, and Florida; and be it further | ||||||
20 | RESOLVED, That the Illinois Student Assistance Commission | ||||||
21 | and any other entity having information relevant to this audit | ||||||
22 | cooperate fully and promptly with the Auditor General's Office | ||||||
23 | in the conduct of this audit; and be it further |
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1 | RESOLVED, That the Auditor General commence this audit as | ||||||
2 | soon as possible and report his findings and recommendations | ||||||
3 | upon completion in accordance with the provisions of Section | ||||||
4 | 3-14 of the Illinois State Auditing Act; and be it further | ||||||
5 | RESOLVED, That suitable copies of this resolution be | ||||||
6 | delivered to the Auditor General and the Director of the | ||||||
7 | Illinois Student Assistance Commission.
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