Editorial: Good return on investment

The Dispatch and The Rock Island Argus

Published Thursday, January 17, 2008

When the young Democrat Alexi Giannoulias was running for state treasurer, he pledged to use the office to make a difference in everyday Illinoisans lives. Count us among the skeptics who questioned how the office charged with investing the state's money could affect anything other than the citizenry's pocketbook.

A year after his inauguration, he's proving skeptics like us wrong. Consider, for example, his visit to the Quad-Cities on Monday to deliver his "Green Rewards" program to Rock Islanders. The city became the first in the state to "drive clean and save green" by purchasing a fleet of new fuel-efficient hybrids through the treasurer's new program. The city will get a $1,000 rebate on each of the cars it purchased at Zimmerman Cars of Rock Island in cooperation with American Bank & Trust. Participating financial institutions offer the rebates through the Green Rewards program to help offset the higher costs of hybrid vehicles, the treasurer told our editorial board Monday.

Here's how it works, according to the treasurers office. The agency deposits $25,000 with a lender when a purchaser finances a car. The office accepts 4 percent less in interest earnings on the deposit, freeing up $1,000 in interest savings for the lender to rebate to the purchaser. (To find out which banks are among the 89 participating, check the treasurer's Web site at www.treasurer,il.gov.)

The program’s low cost, and long-range impact makes it a win-win for everyone.

Thanks to the state's $1,000 rebate, a federal tax rebate and discounts, the treasurer says that the $23,235 cars will cost the city $18,765 per vehicle up front. Treasurer Giannoulias estimates that the city will reduce its carbon emissions by 50,000 pounds a year, and save about $76,000 in fuel costs over the 10-year life of the cars.

It's not surprising that the city of Rock Island is the first in the state to take advantage of this innovative program; that city, and others here such as Moline, have been leaders in the green revolution the past few years. All deserve a hand. So does the treasurer who says he's been contacted by states across the country who want to copy the $2 million program, which is currently the largest in the nation. We salute his initiative.

But that's not the only area where the 31-year-old son of a Chicago community banker is making a difference. There's the state's Bright Start college savings program.

When Mr. Giannoulias ran for office, he pledged to lower the fees and fix other problems that led to the program being ranked 47th out of 48 similar state plans. The problems are significant given that Bright Start has 142,776 accounts totaling more than $2.1 billion. The first thing the treasurer did was dump fund manager Legg Mason in favor of Oppenheimer Funds, Inc. after a competitive bidding process. In addition to lowering fees -- some estimate investors who contribute $3,000 a year to Bright Start will save $5,000 to $10,000 in fees over 18 years under the new manager -- Oppenheimer offered more and better investment options (including Vanguard low-cost funds) AND $500,000 a year in scholarships for low-income college-bound students in the state. That represents $3.5 million over the life of the seven-year contract. The end result, the treasurer said Monday, is that Illinois went from one of the worst college saving programs to one of the best. We salute the treasurer and the citizen panel which helped him negotiate this better deal for Illinois college-bound kids.

In addition to helping college kids save, the treasurer is also helping put more dollars in the state treasury in several ways, including selling the state's excess property on eBay. He's also introduced a securities lending program that he says will boost the state's portfolio by as much as $1 million annually. Speaking of the state's portfolio, his office also is working to make the process more transparent by posting the state's performance, along with benchmarks, on the treasurer's Web site.

In his spare time, the treasurer also is working to negotiate an end to state-financed very bad hotel deals in Springfield and Collinsville. His office is moving ahead with foreclosure efforts that will at last get this mess of the books.

All that's not bad for a first-time elected official who had to run against his own party's pick. What will he do for an encore? There are more big plans, he says, including stepping up efforts to increase financial literacy of kids and adults alike, and using the office's resources to help citizens cope with the mortgage crisis.

Treasurer Giannoulias likes to say that his office invests more than just state dollars; it's investing in communities and people. So far, we're well pleased with the state's return on that investment.