Full Text of HR0174 97th General Assembly
HR0174 97TH GENERAL ASSEMBLY |
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| 1 | | HOUSE RESOLUTION
| 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! program is critical to making certain that the plan's | 9 | | 55,000 participants are able to access funds when the students | 10 | | are ready to attend an institution of higher education; and
| 11 | | WHEREAS, The College Illinois! program is not backed by the | 12 | | full faith and credit of the State of Illinois, making its | 13 | | long-term investment portfolio vulnerable to risky investment | 14 | | practices; and
| 15 | | WHEREAS, In 2009, College Illinois! assets were virtually | 16 | | all stocks and bonds; as of the end of January 2011, however, | 17 | | the fund held $419 million, or 38%, in riskier alternative | 18 | | investments, such as hedge funds, real estate, and private | 19 | | equity investments; and
| 20 | | WHEREAS, Hedge funds and private equity investments often | 21 | | do not provide the level of transparency appropriate for public |
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| 1 | | institutional investments of this kind; and
| 2 | | WHEREAS, The Illinois Student Assistance Commission's | 3 | | strategy is to continue purchasing alternative investments | 4 | | until the College Illinois! portfolio reaches 47% hedge fund, | 5 | | real estate, and private equity investments; and | 6 | | WHEREAS, In 2008, the Illinois Student Assistance | 7 | | Commission invested $12.7 million in ShoreBank, a privately | 8 | | held company and, in 2010, the $12.7 million was lost when | 9 | | federal regulators closed the bank; and | 10 | | WHEREAS, The level of exposure to alternative investments | 11 | | is at best questionable, given the relatively small size of the | 12 | | College Illinois! portfolio, and could expose the program's | 13 | | investors to unnecessary financial risk; and | 14 | | WHEREAS, As of June 30, 2007, the College Illinois! fund | 15 | | was 7% underfunded, and as of June 2010, the most recent | 16 | | figures available, its shortfall grew to 31%; therefore, be it
| 17 | | RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE | 18 | | NINETY-SEVENTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that | 19 | | in response to the Illinois Student Assistance Commission's | 20 | | questionable investment practices and the College Illinois! | 21 | | program's growing shortfall in its fund, we direct the Illinois |
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| 1 | | State Board of Investment to conduct an independent asset | 2 | | allocation study of College Illinois! investments to determine | 3 | | the overall level of risk associated with the program's | 4 | | investment mix and provide the results of that study to the | 5 | | General Assembly and the Governor no later than January 15, | 6 | | 2012; and be it further
| 7 | | RESOLVED, That we direct the Auditor General to conduct a | 8 | | special audit of College Illinois! operations to document | 9 | | growth in program administrative costs and determine the | 10 | | efficacy of program administration on behalf of participants | 11 | | and provide the results of this special audit to the General | 12 | | Assembly and the Governor no later than January 15, 2012; and | 13 | | be it further
| 14 | | RESOLVED, That suitable copies of this resolution be | 15 | | delivered to the Illinois State Board of Investment and the | 16 | | Auditor General.
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