(Springfield, IL) — January 24, 2011. More Illinois families are saving for college, at least according to the latest financial report by Auditor General William Holland.
A financial report for the Illinois’ College Savings Program, which include the Bright Start College Savings Program and the Bright Directions College Savings Program, shows that it made significant gains from the previous year, according to the report released Thursday.
Last year, the number of investors increased about 8 percent for Bright Start and 20 percent for Bright Directions. Total net assets also increased $62.4 million.
The plan, which began in 1999 under the Treasurer’s Office, is designed to allow parents to pay for their child’s education through investment funds. Earnings from the accounts can be used to pay for qualified college expenses — including tuition, books and room and board — tax-free.
The program had an $867.1 million jump in investment earnings from the previous year. The past two years showed steady losses, largely attributed to the downturn in the stock market and the mismanagement of funds.
Former Treasurer Alexi Giannoulias came under fire when the 2009 financial report revealed that the program had lost $629.7 million in investments. The discovery led to a lawsuit against OppenheimerFunds, an investment company, which resulted in the state recouping some of the losses.
According to the 2009 report, investments are diversified to minimize the risk of loss. Even if some assets experience short-term losses, “long-term [gains] justify their inclusion,” the report read.
Under the regulations, account owners invest at their own risk.
Investments earnings — measured at $237.5 million — are now back near 2007 levels.
In efforts to avoid a similar decline in value in the future, the Treasurer’s Office is evaluating the program.
“Treasurer Rutherford was just inaugurated into office last week, and it’s a new day for the Treasurer’s Office,” Melissa Hahn, Treasurer Dan Rutherford’s spokeswoman, said.
Rutherford will have his hands full.
Despite more people joining the program, total contributions to accounts are down $94.5 million from last year. Treasurer’s Office officials, however, insist that the dollar amount of contributions entering the fund still outweighs the amount going out.
“We need to be able to evaluate all the details — go through this audit page by page. And once we do that, hopefully, we’ll be able to set some goals,” Hahn said.
Melissa Leu, Illinois Statehouse News