SPRINGFIELD – The governor's office has quietly replaced the majority of the Illinois Student Assistance Commission, with four of the new appointments coming just days before the panel's meeting Friday.
There is nothing unusual on the agenda at this point, but some state legislators worry that the Blagojevich administration has a surprise up its sleeve.
One possibility is a renewed attempt to sell the commission's secondary market student loan portfolio, a last-minute suggestion from the Governor's Office of Management and Budget that was shot down last May.
"We have heard that plans for this sale are continuing behind the scenes," state Rep. Chapin Rose, R-Mahomet, said in a written release this morning.
Lawmakers from both sides of the aisle balked at the request last spring, which was not revealed even to the Illinois Student Assistance Commission until Memorial Day evening, the night before the General Assembly adjourned.
John Filan, Gov. Rod Blagojevich's budget director, said at the time that the state could get $300 million to $500 million by selling off the student loan portfolio held by ISAC's secondary market. Several other states have done the same thing, he said. The plan was to use one-third of the revenue for need-based scholarships and the rest for general state operating expenses.
The executive director of the Illinois Student Assistance Commission protested, saying the move could cost about 200 state jobs and was not something the agency would support.
ISAC entered the student loan secondary market in 1977 to help banks free up capital so that they could make more student loans, commission spokeswoman Lori Reimers said on Wednesday.
The commission's secondary market operates differently than for-profit firms that buy student loans from banks, she said.
"As a nonprofit secondary market, the earnings that we generate from the student loan programs can be reinvested back into services to students," Reimers said. "We're not out to make money for our shareholders. And those services include financial aid workshops, a one-stop Web site, telephone counselors in English and Spanish, loan default prevention workshops, etc. In addition to that, we also use that money for interest rate reductions for good payment history and waive loan fees so that students have more of their loan proceeds to use for educational costs."
By selling ISAC's secondary market student loan portfolio, the state would get an immediate influx of cash, and the buyer would get the payments students make on those loans every month.
Becky Carroll, spokeswoman for the Governor's Office of Management and Budget, said on Wednesday she was not aware of any immediate attempt to sell the student loan portfolio or any plans to address that issue at Friday's ISAC meeting.
"I have not heard anything to that effect," Carroll said.
She said she did not know whether the administration would include the idea in its budget proposal for the year beginning July 1.
"I think right now that everything's on the table for the fiscal '07 budget and it's probably too early to say one way or the other whether we would pursue it," she said.
While the budget office sought legislative permission to sell off the student loan portfolio last spring, state law does give ISAC the power to sell the loans without the General Assembly's OK.
With a majority of commission members now hand-picked by the Blagojevich administration, that could be a possibility.
The 10-member commission had been operating with nine members after one of the members died and was not replaced. Six of the remaining nine members had been serving on expired terms for quite some time, because the governor had neither reappointed them nor named replacements.
But last month, Blagojevich named Don McNeil to replace commission Chairman Bob Barr, and appointed Andrew Davis to replace commissioner Gretchen Winter. He also named a new student commissioner, Ashley Dearborn. The Senate confirmed all three appointments during the recent veto session.
Then this week, ISAC staff were notified that three more commissioners would be replaced before Friday's meeting. They were Vice Chairman C. Richard Neumiller and commissioners Christopher Kurczaba and Pauline Betts. All had been serving on expired terms.
The governor also appointed a commissioner this week to fill the vacant seat.
Blagojevich spokeswoman Rebecca Rausch said the governor filed paperwork on Wednesday to appoint Sharon Alpi, Lynda Andre, David Vaught and Warren Daniels Jr. to the commission. "Basically there have been some expired terms for quite some time and we've just been concentrating on filling them in anticipation for a meeting that is scheduled on Friday," Rausch said.
She said the appointments were not meant to influence any specific action and she was not aware of any particular vote planned for that meeting. Rausch said the flurry of appointments had nothing to do with any attempt to sell the student loan portfolio.
"What board members choose to do on the board is up to them," she said. "This is just about filling some vacancies."