SPRINGFIELD—House Bill 4116 was filed today by State Representative Jim Durkin (R-Western Spring) to ensure that College Illinois! funds will no longer be placed in high risk alternative investments. This legislation removes the program’s current exemption from the Public Funds Investment Act.
“Numerous factors have led to the current College Illinois! shortfall, one of which was the approval and placement of investments in high risk hedge funds and real estate ventures by the previous board and management,” said Rep. Durkin. “This legislation will tighten investments by making the Illinois Prepaid Tuition Trust Fund a component of the Public Funds Investment Act.”

The Act places certain restrictions and safeguards on the funds by limiting allocations to safer and more reliable investment options. It allows the public funds to be placed in a wide variety of investments as long as the investment institutions meet certain criteria; for example money can be placed in bonds as long as they are backed by the United States or in Banks as long as they are insured by the Federal Deposit Insurance Corporation. The Act currently applies to investments made by the State of Illinois and local governments.

“There will be many changes needed to return the program to stability and this is a step to strengthen the governance and the foundation of the investments,” said Durkin. “We will continue to work with ISAC in a cooperative manner to return confidence in the program and will work with the state universities to discuss college affordability as well. This must be a team effort.”

Members on the College Illinois Recovery Taskforce have been meeting for more than six months to explore solutions, and this legislation was one item produced by that taskforce.

“House Republicans will continue working during session to find solutions for this program,” said Representative Darlene Senger (R-Naperville). “This legislation is just one of many items we will establish to help the 35,000 families with contracts.”

LA GRANGE—Moody’s Investment Service has downgraded Illinois’ Bond rating from A1 to A2 and declared the state’s outlook is “negative,” which means higher costs when the state needs to sell bonds for the Capital Projects Program or any other future plans. Representative Jim Durkin (R- Western Springs) is very disappointed by the downgrade, but is not surprised due to the lack of action by the Democrat controlled legislature this session.

“For years, the House Republicans have stated how we need strong, meaningful financial reforms in the budget, including the costly Medicaid and pension components,” said Durkin. “The Democratic leadership has continued to sweep our proposals under the rug and further run this great state into the ground.”

According to Moody’s the A2 rating has also been assigned to the $800 million in ‘Series A and Taxable Series B’ general obligation bonds that the state has scheduled to price on January 11, the state’s $2.47 billion of outstanding Build Illinois sales tax revenue bonds, the $2.48 billion of ‘A3 from A2’ of Metropolitan Pier and Exposition Authority and $73 million in Civic Center Program bonds. The proceeds from the planned general obligation bonds will finance education, transportation and other capital development projects across Illinois.
“In order to increase our bond rating we will need to focus this session on credible long-term pension funding and a comprehensive plan to reduce the state’s $8 billion backlog of bills,” said Durkin. “If the Democrats continue to ignore the state’s financial problems another session, I would not be surprised if our bonds are downgraded even further.”

I was interviewed by Reuters News Service about College Illinois and a first step to bring greater transparency to the program. Please be reassured that many of my colleagues and I are committed to “righting” the ship at College Illinois and are committed to making college education affordable.

While there has been much publicity over the program the past six months, I want you to know that I have confidence in the new ISAC Board and the new Chair. I am pleased to say that a stakeholder (a College Illinois contract holder) who manages a billion dollar fund has accepted an appointment to the Board and will be sworn in at the next meeting.
I commend the Governor for this decision. Last summer, I told the Governor that it was extremely important that a Board position at ISAC be filled by a stakeholder in College Illinois. I believe it is important that you have one of your own on the Board. The fund is at 70% and did see an increase in its value this last quarter. I believe the investment decisions moving forward will be prudent and wise. This will be a process and will take time.

I still believe that College Illinois is a great program – that is why I am a contract holder for my daughter. Again, rest assured that we have not and will not take our “eye off the ball” on this important program.
Interview on College Illinois

SPRINGFIELD—Legislation has been filed by State Representative Jim Durkin (R-Western Springs) to require College Illinois! to make investment decisions in open meetings.
House Bill 3923, filed Thursday, no longer allows investment decisions under the Illinois Prepaid Tuition Trust Fund to be conducted behind closed door. The rationale behind investment decisions having been excluded from public review is due to an exemption in the Open Meetings Act. These decisions must be made public for the stake holders.
“There were questionable investment decisions made under the previous College Illinois! administration which possibly would not have been made if the families who own these contracts were in the room or aware of these investment choices,” said Rep. Durkin. “Chairman Hubbard and I agree going forward the program needs more transparency and we have agreed to work together to see that sustainability is achieved.”
A recently released report commissioned by the Illinois Student Assistance Commission, finds that, as of March 31, the fund shortfall was slightly less than the previous year which is an improvement. The recent executive summary states several of the possible avenues that ISAC staff are currently researching includes risk sharing with universities and premium reductions. A copy of the executive summary can be found on durkin.ilhousegop.org.
“The underfunded state of College Illinois! is something that cannot be fixed instantly and numerous organizations are going to have to come to the table to help increase the health of the fund,” said Durkin. “We are going to put in the work to make this fund succeed.”
This is just one of several legislative proposals Durkin is drafting to get College Illinois on the road to sustainability.
“I plan to meet with ISAC as soon as their new Chief Investment Officer and Consultant have had a chance to review the fund, most likely with in the month, and work with them to find solutions,” said Durkin. “Until then I am waiting to file any further legislation.”

Please read the executive summary prepared by the ISAC for the College Illinois program. There are positives which can be taken from this report and shows they expect the fund to grow stronger in time. I am committed to getting the program back on track and I am very pleased with the cooperation we have received from the new Chair and Board at ISAC. We are going to continue our review of this program in a cooperative manner and will , if appropriate, make legislative changes to the program. I want you to know that we have made this program a priority and will not lose sight of your concerns.

Executive Summary_Executed