Posts Tagged ‘college savings’

State Officials, Lawmakers Reject Claim That Transfer Of Funds To Scholarship Program Was Improper

By Sean Whaley | 4:21 pm July 28th, 2011

CARSON CITY – State officials and lawmakers are rejecting the suggestion that they acted improperly last year when fees generated from several college savings programs were shifted to shore up the cash-strapped Gov. Guinn Millennium Scholarship for academically eligible Nevada high school graduates.

But one former lawmaker, who voted for the transfer, acknowledges he remains concerned about the decision.

The Legislature’s Interim Finance Committee voted in July 2010 to transfer $4.2 million in fees from the college savings programs to the Millennium Scholarship to ensure eligible college students would get full reimbursement for classes they took last year.

The College Savings Board had previously voted to use the money for other purposes, including support for the Nevada Prepaid Tuition program, a separate fund managed by the Treasurer’s Office for Nevada families to save for college within the Nevada System of Higher Education.

The transfer was unanimously approved by the 21 members of the IFC after lawmakers were told the fees to be used to shore up the scholarship fund would not affect participants or their investments in the separately managed college savings programs. The fees are paid by families investing in the various college savings plans to brokers, who in turn remit a portion of those fees to the state Treasurer’s Office.

Just over 471,000 college savings accounts, most of them from out-of-state residents, have been opened in the four programs offered through the state Treasurer’s Office as of March 31, 2011. Just over 7,000 Nevadans are enrolled in the programs and they do not pay any fees for participating.

The Nevada Policy Research Institute, a conservative Nevada think tank, on Wednesday published an article by Steve Miller suggesting that the shift of funds was illegal and that Nevadans participating in the Prepaid Tuition program may now have grounds to sue the College Savings Board because of the IFC vote.

Miller, vice president for policy at NPRI, cited a “nationally experienced securities attorney,” who was consulted on a confidential basis for the conclusions in his article.

“Because the Prepaid Tuition program was damaged by the IFC action — made financially weaker than it otherwise would have been — investors in the program would have legal standing against the program, said the attorney, who was consulted on a confidential basis,” he said in his article.

The Treasurer’s Office rejected the notion that the Prepaid Tuition program was harmed by the IFC action.

In a press release issued Thursday, state Treasurer Kate Marshall said the Prepaid Tuition program is funded at 108 percent.

“The program is solid, as demonstrated by the dramatic increase in the funded status and a 15 percent increase in new contracts totaling 594 in 2011,” she said.

Nevada State Treasurer Kate Marshall

Steve George, chief of staff for Marshall, said the article did not indicate that the IFC vote to transfer the funds was unanimous. The College Savings Board did not object to the transfer at its August meeting following the IFC vote either, he said.

“Treasurer Marshall and this office had worked for months to try and come up with some solution that might work to keep the Millennium going forward to the next legislative session,” he said. “That was accomplished by that move, and that’s why I made the comment that this is something that works for the Millennium, and it also does not harm college savings and prepaid.”

Even with the $4.2 million transfer to the Millennium Scholarship, the College Savings Board has transferred nearly $1.56 million over the two past fiscal years to the Prepaid Tuition Program, George said.

Sen. Mo Denis, D-Las Vegas, said he believes the article unfairly singled out Senate Majority Leader Steven Horsford, D-Las Vegas, for criticism. Horsford was co-chairman of the IFC at the time. The IFC is composed of the Legislature’s two money committees.

“I believe that we were making the best decision based on the information that was available to us and our legal counsel,” he said. “And so I think we all did it together and we did something that we thought was appropriate that we could do and legal counsel said we could do it.”

The transfer was needed to ensure kids received their Millennium Scholarships, Denis said.

Minutes of the July 21 special IFC meeting show that lawmakers were told the shift of funds was legal by Chief Legislative Counsel Brenda Erdoes.

Sen. Joe Hardy, R-Boulder City, said he believes the transfer was both lawful and appropriate.

“I think that not only was it legal, but it kept students, who anticipated getting tuition money, in college,” he said.

But Hardy said he does not take issue with a watchdog group keeping an eye on the activities of the Legislature.

The allegation that lawmakers may have acted improperly has political implications.

Horsford is rumored to be considering a run for Congress in a seat as yet undefined due to a legal dispute over the required redistricting process.

Senate Majority Leader Steven Horsford, D-Las Vegas.

Horsford declined to comment on the NPRI article.

Marshall, a Democrat, is also running for congress in a special election in the vacant 2nd Congressional District against former state Sen. Mark Amodei, R-Carson City.

Miller also quotes former long-time state Sen. Bill Raggio, R-Reno, as questioning the appropriateness of the transfer, but does not point out that Raggio “reluctantly” voted for the shift.

Raggio said the article accurately describe his concerns, which remain even with the advice from legal counsel. Funds held in trust should be used for the purposes specified, he said.

“Lawyers can differ, and even though Brenda said so at the time, there is always a question,” Raggio said. “And I wouldn’t be surprised if someone did challenge it.”

Miller said today he focused on Horsford in the article because the lawmaker was the point man pushing for the transfer. The unanimous IFC vote wasn’t included because lawmakers often rubber stamp such requests, he said.

Miller said he decided to run the story based on the one attorney’s comments because of the individual’s credibility. As a result of the article Miller said he has received a comment from one Nevada attorney about the potential for challenging the shift of funds.

The Millennium Scholarship is named for the late Gov. Kenny Guinn, who created the program in 1999 with legislative approval.

Gov. Brian Sandoval recommended adding $10 million in general funds to the scholarship in the 2011 legislative session, which was approved. The scholarship is now believed to be financially whole through at least 2015. It was originally intended to be fully supported by money from a tobacco company settlement, but those funds have declined annually due to lower smoking rates.

Audio clips:

Treasurer’s Office Chief of Staff Steve George says the vote by the IFC kept the scholarship program whole without harming the college savings or prepaid tuition programs:

072811George1 :23 savings and prepaid.”

George says the Prepaid Tuition Program is financially sound:

072811George2 :27 to go forward.”

Sen. Mo Denis says lawmakers made a unanimous decision based on the best information available:

072811Denis1 :20 could do it.”

Sen. Joe Hardy says the vote was legal and kept kids in college:

072811Hardy1 :19 stay in college.”

Hardy says he has no problem with watchdog groups keeping an eye on lawmaker activities, however:

072811Hardy2 :17 doing what’s right.”

Former Sen. Bill Raggio says he would not be surprised if someone does challenge the transfer:

072811Raggio1 :12 did challenge it.”

NPRI’s Steve Miller says he focused on Horsford in the article because the lawmaker was the point man pushing for the transfer:

072811Miller1 :32 some political power.”



Nevada Treasurer’s Office Announces Fee Reduction For College Savings Program

By Nevada News Bureau Staff | 3:26 pm September 28th, 2010

CARSON CITY – Nevada Treasurer Kate Marshall announced today that one of the major college savings plans programs administered by her office has agreed to cut its fees to account owners by more than 40 percent.

The Vanguard 529 College Savings Plan, one of the state’s direct-sold plans, is slicing its fees for age-based options from 44 basis points (0.44 percent) to 25 basis points (0.25 percent) starting Oct. 15. Expenses on the plan’s 19 other individual portfolios are also being reduced.  The Vanguard 529 Plan is now one of the lowest priced college savings plans available.

The fee reduction is expected to result in a savings to The Vanguard 529 College Savings Plan account owners of about $8.5 million annually.

“This is great news for families working hard to save for their children’s future college education costs, as the significant lowering of fees for Vanguard 529 College Savings Plan account owners will assist families in saving for a better tomorrow for their children,” Marshall said.

It is the fourth college savings plan fee reduction announced by the Treasurer’s Office in the past 18 months.

Vanguard Chairman and CEO Bill McNabb said: “Low costs are among the largest contributors to a portfolio’s long-term success. We’re pleased to help lower costs for Vanguard 529 College Savings Plan investors.”

The Vanguard 529 College Savings Plan has assets of over $4.5 billion dollars, with some 170,000 account owners nationwide, including 2,300 Nevada families.

State Treasurer’s Office Announces New College Savings Plan

By Nevada News Bureau Staff | 2:10 pm September 16th, 2010

CARSON CITY – Nevada parents along with their counterparts across the country will soon have a new option to save for their children’s college education.

Nevada State Treasurer Kate Marshall announced today the state has entered into a contract with Putnam Investments as a program manager to provide a new “adviser sold” plan through the college savings programs.

Putnam was selected from among 12 firms that responded to a request for proposals. The five-year contract with Putnam can be extended for a second five years. The company’s offerings through the 529 college savings plans will be detailed when the contract begins Oct. 1.

Marshall said that with an adviser sold plan, parents work with an investor to reach their college savings goals. Nevada also currently offers “direct sold” plans that do not include the services of a financial adviser.

Under the contract, Nevada parents who decide to invest with Putnam will pay no annual fees. Participants in other states will have to pay annual fees. There is a separate management fee involved for all participants for the Putnam adviser sold plans. Those fees will be clearly disclosed when the offerings are made available next month.

“This will again be a nationwide offering putting education in reach both for Nevadans and people across the country who want to try to save for college for their children,” Marshall said.

The College Savings Board of Nevada chose Putnam for its innovation, its nationwide footprint and for what the company could bring to the table for Nevada families and families nationwide, she said.

Robert Reynolds, president and chief executive officer of Putnam Investments, said the college savings plans are the most efficient and cost effective way to save for a college education.

Close to 36 million families nationwide have children in the home under age 18, he said.

“So there is a tremendous need for 529,” he said.

Reynolds said the college savings market right now nationwide is worth $125 billion, and should expand to $200 billion within four years.

Marshall said the contract makes the Putnam college savings plan exclusive to the state of Nevada. The state will collect fees for having Putnam offering its plan through Nevada, she said. The state expects to earn between $1 million to $2 million a year in fees once the plan becomes well established.

Marshall said the Putnam plan is expected to grow to $2 billion in assets within five years.

Putnam has spent more than a decade serving the 529 college savings market through advisors in a partnership with the state of Ohio.

Marshall and Reynolds indicated they expect the advisor-sold plan to place a heavy emphasis on advisor and investor understanding of savings needs and to provide innovative investment strategies and tools to help bridge to more successful outcomes.

The state of Nevada, through the Treasurer’s Office, currently offers several 529 college savings plans, including the Upromise College Fund 529 Plan, Vanguard 529 College Savings Plan and the USAA College Savings Plan.

Over 16,000 Nevada families are now participating in one of the four college savings plans now offered by the state. More than 400,000 families in other states are also participating in the plans.


Audio clips:

State Treasurer Kate Marshall says new college savings offering will benefit Nevada parents:

091610Marshall1 :23 to have here.”

Marshall says she wants more parents to save for college:

091610Marshall2 :12 your child’s debt.”

Putnam President Robert Reynolds says there is a tremendous need for college savings plans:

091610Reynolds1 :20 for college education.”

Charges, Countercharges Fly Between Martin and Marshall in Race for State Treasurer

By Sean Whaley | 8:08 am May 1st, 2010

CARSON CITY – Nevada GOP state treasurer candidate Steve Martin and Democrat incumbent Treasurer Kate Marshall engaged in a war of words this week over her management of the office for which she is seeking a second term.

Martin, a former state controller, initiated the exchange on Tuesday with a release criticizing Marshall on several issues including putting the Millennium Scholarship program at risk and running commercials for the Nevada College Savings Plans featuring her name and voice in an election year. She was also criticized for using her state office for her re-election efforts.

Martin said Marshall has shown failed leadership stemming from her “improper stewardship of the public’s money.”

Martin said Marshall has not been upfront about the deteriorating fiscal health of the Millennium Scholarship fund, suggesting it could have a $3.4 million shortfall by June 2011. He also said Marshall has not kept lawmakers and the public informed of the status of the fund.

On Thursday, the Marshall campaign issued a lengthy point-by-point rebuttal on the Millennium Scholarship issue, calling Martin’s criticisms false and distorted misrepresentations. The response also accuses Martin of violating the code of fair campaign practices which he signed March 3. The code prohibits malicious and unfounded accusations.

The Marshall campaign said it was the Legislature’s decision to take nearly $28 million in funding from the Millennium Scholarship program over three years to balance the state budget that has put it at risk. The response also says Marshall warned the governor and lawmakers about what taking the funds would do to the program, and that she has continued to communicate with them and the public on the status of the scholarship program.

Marshall has been open and honest with the governor, Legislature and Nevadans and has “repeatedly advised against under-funding and removing funds from the Millennium Scholarship,” the response from her campaign said.

“Steve Martin has misrepresented, distorted and falsified information through malicious and unfounded accusations,” the response said.

Martin’s campaign team on Friday pointed to a discussion at the Legislature’s Interim Finance Committee on Thursday as evidence lawmakers have not been fully informed as to the health of the scholarship fund.

At the meeting, Assemblywoman Heidi Gansert, R-Reno, and Senate Majority Leader Steven Horsford, D-Las Vegas, both said they believed the scholarship was to be funded through 2014 through an infusion of $4 million from the College Savings Plans account over two years based on Marshall’s testimony during the special session that ended March 1.

The five-member College Savings Plans board rejected the idea of transferring $2 million to the fund, however, approving only a $200,000 transfer to keep it funded through the 2011 fiscal year.

“If legislators were properly informed, as Treasurer Marshall’s campaign claims, then why at yesterday’s IFC meeting did a bipartisan group of legislators seem to state otherwise?” Martin’s campaign team asked. “This is just another item in the growing list of scenarios where Kate Marshall and her team are literally and figuratively writing checks they can’t cash.”

Marshall’s office has already responded to the radio ad issue, saying the expenditure of non-taxpayer money to promote a contest to school children publicizing the College Savings Programs managed by her office is appropriate and was approved by the board.

Martin said the $12,000 worth of ads are running on radio stations and programs aimed at voters, not children.

“How many ten year olds listen to KOMP Rock or Sunday morning talk radio sports programs on KBAD?” asked Martin. “These ads are targeted to parents who are voters, and for Marshall to claim otherwise undermines even basic credibility.”

“The give away will award $529 to just six children, so she is spending more on the advertising than the actual prizes,” said Martin.

Marshall’s office has also discounted a Nevada State Republican Party ethics complaint over the alleged use of her official office for her campaign, saying the issue was the result of an error in posting information by the secretary of state’s office.

GOP Consultant Calls State Treasurer Hypocrite for Radio Ads

By Sean Whaley | 9:58 am April 27th, 2010

CARSON CITY – A spokesman for Nevada State Treasurer Kate Marshall is rejecting any suggestion that her participation in radio ads to promote a children’s contest involving a college savings program is aimed at helping her re-election campaign.

But a campaign consultant for her GOP opponent called Marshall a hypocrite for engaging in the same practice she criticized her predecessor for doing, and for “pushing the envelope” by running ads after the close of filing for office.

The radio ads encourage children from kindergarten to fifth grade to participate in the contest, the theme of which is: “I want to go to college so I can become a______.” Six students will receive a prize of a $529 gift to be used to open a college savings plan account or to enhance an existing account.

Steve George, public information officer for Marshall, said the $12,000 radio campaign was approved by the College Savings Plans Board.

“It takes about two seconds for her to say, ‘This is state Treasurer Kate Marshall’ out of a 30-second or 60-second commercial,” he said.

The ads are aimed at children who can’t vote, George said.

The college savings programs are managed by the treasurer’s office but do not involve any state funds, he said. Parents who open accounts pay fees to fund the operating costs of the program.

Ryan Erwin, a campaign consultant for Steve Martin, a former state controller who is running against Marshall as a Republican, said Marshall, “is rapidly becoming a do-as-I-say-and-not-as-I-do case.”

“She may be the biggest hypocrite in Nevada politics today, and that is a high bar to reach,” he said.

Erwin said Marshall was a vocal critic when former treasurer, now GOP Lt. Gov Brian Krolicki, appeared in college savings ads. While not suggesting Marshall has violated any laws, it is a violation of common sense, he said.

Using a state managed program to get her name out in an election year, even in a modest radio ad campaign, is still hypocritical, Erwin said.

Krolicki faced more than just criticism over the ads he appeared in. The commercials became part of an investigation into Krolicki’s handling of the college savings program by Democrat Attorney General Catherine Cortez Masto after concerns were raised by Marshall. The ads stopped in 2006 before Krolicki filed for lieutenant governor.

Krolicki was indicted in December 2008 on charges of misallocating funds for the program, but earlier this year a Clark County district judge dismissed the case and Masto declined to pursue the matter further. Krolicki said the prosecution was political and that he had done nothing wrong.

The use of the airwaves by state elected officials to promote various programs has also been raised by the Nevada Republican Party in an ethics complaint against Secretary of State Ross Miller, who appeared in a TV ad promoting the U.S. Census. The ad featured fighters with the Ultimate Fighting Championship. Miller is also running for re-election.

Miller told the Las Vegas Sun the allegation in the complaint was “silly.”

Ciara Turns, communications director for the state GOP, said the Marshall radio spot issue has not yet been reviewed, but added it could become part of an ethics complaint in the future.

Both Marshall and Miller also face GOP complaints that they violated campaign laws by listing their state offices as contact points for their campaigns. Marshall said the criticism is baseless because the Secretary of State’s office inadvertently posted the incorrect phone number for her campaign contact. Miller called the complaint a frivolous campaign ploy.