Full Text of HR0174 097th General Assembly
HR0174enr 97TH GENERAL ASSEMBLY |
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| 1 | | HOUSE RESOLUTION 174
| 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
| 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
| 18 | | RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE | 19 | | NINETY-SEVENTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that | 20 | | the Auditor General shall conduct a management audit of the | 21 | | College Illinois! prepaid tuition program's administrative |
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| 1 | | operations; and be it further
| 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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