Treasurer hopefuls debate college fund

While Democrat candidate for state treasurer Robin Kelly contends that losses in the college-savings program Bright Start resulted in tighter financial controls, her Republican opponent Sen. Dan Rutherford counters those lessons haven't sunk in.

Risky investments in one of the Bright Start accounts managed by OppenheimerFunds Inc. caused losses of $136.5 million in 2008.

The state reached a $77 million settlement with Oppenheimer in 2009 but it took a toll on families saving money for their children's tuition.

Kelly, chief of staff for Treasurer Alexi Giannoulias, said, “when we noticed the issue, we jumped on it immediately. Every loss counts but only 3 percent of account holders were in it 100 percent.

She blamed the economic crisis and a “rogue investor for the fund's slump.

“Using the excuse of market conditions is bogus, Rutherford said, arguing that bond-based funds shouldn't have such dramatic swings. He faulted Giannoulias and Kelly for not firing the fund managers.

The troubled fund known as Core Plus was marketed as a conservative account perfect for families with college-age children.

The Kelly campaign noted that bond-based funds across the country lost money during the 2008 market crash.

The fund manager and staff who worked on Core Plus were fired, she said.

Since the Core Plus debacle, the treasurer's office has added an extra audit, hired an employee to review all funds daily and a consultant to compare Bright Start Illinois' performance with other states, Kelly said.

It was ranked among the top five college savings plans by ConsumerReports in spring 2009.

If elected, Rutherford promised to personally review a weekly assessment of portfolios.

“It would allow someone to be absolutely responsible, he said. “I would be able to see trends. If it was your own private portfolio and you saw it going down the tank, you'd ask your manager what was going on.

Rutherford of Chenoa and Kelly of Matteson are joined by Libertarian James Pauly and Green Party candidate Scott Summers in the Nov. 2 election race.

Summers, a Harvard resident, recommends consolidating Illinois' Bright Start program with other states to avoid future meltdowns, explaining “you would have more concentrated management expertise.

At a Daily Herald editorial board session Wednesday, Kelly faulted Rutherford for missing 473 votes.

Rutherford dismissed the remark, saying missed votes occurred while he was negotiating with Senate leaders over legislation as assistant Republican leader.

Kelly recently has criticized Rutherford for accepting campaign contributions from liquor manufacturers and once voting against lowering the blood-alcohol limit used to determine if a driver is legally drunk.

“She's desperate, Rutherford said. “That bill was 15 years ago and it's the law of Illinois. I'm not introducing any legislation to change it.

Chicagoan Pauly could not be reached for comment.