Georgia firm rebuts state auditors’ finding

CARSON CITY -- A firm that legislative auditors say was allowed to improperly retain control over more than $3 million in state fees while serving in an advisory role overseeing Nevada's college savings plan has rebutted the auditors' finding in a letter sent to state Treasurer Kate Marshall.

The fees provided to the Georgia consulting firm G.I.F. Services were "program fees" that were not state funds, said Steven McCoy, president of Treasury Solutions LLC, in a letter dated July 17. Treasury Solutions is the new name of the firm.

"As shown in this response, the allegations made against the plan adviser in the audit report suggesting any wrongdoing on its part are incorrect and unwarranted," McCoy said.

A legislative audit released to the Legislature in May said the company was allowed to retain $3.2 million in its account that should have been given to the state. Auditors said that by letting the company retain control over the state fees, the state lost out on several thousand dollars in interest income.

The audit was sought by lawmakers after Marshall expressed concerns about the disposition of fees collected by the state for the operation of the College Savings Plans during the tenure of former Treasurer Brian Krolicki. Krolicki, now lieutenant governor, has denied that anything improper occurred with the management of the college savings plans.

Marshall had no immediate response to the Treasury Solutions letter, which has been forwarded to the attorney general's office for review.

In his letter, McCoy also said that $300,000 in fees paid to the firm in 2005 and 2006 were proper, and he cited contract language to support his position.

Legislative auditors said the state was not contractually obliged to make the $300,000 in payments to the company.

"During the six years that we have served as plan adviser, our firm has executed the terms of its contract faithfully and in a manner that served the Nevada College Savings Plans Board well," McCoy said.

The company's efforts helped make Nevada's plan among the best and most successful in the nation, he said.

McCoy asked for corrections to the final audit report to reflect the company's position.

It was the second firm to respond to critical findings in the audit.

A California legal firm that auditors said collected nearly $100,000 in excess fees for advice relating to a college savings program disagreed with the findings in the review, but repaid the money seeking to avoid any "damaging disagreement" with the state, which the firm called a valuable client.

The check was sent along with a letter dated July 3 by the legal firm Orrick of Sacramento, Calif., disputing the findings in the audit of the college savings program.

None of the money that parents invested for their children's education is missing or ended up in an improper account, according to the audit. The plan has assets worth nearly $3.3 billion as of the end of 2006.

The College Savings Trust Fund program was established to allow parents to invest money in nationally recognized mutual funds to build up college funds for their children. More than 300,000 U.S. parents have invested in the program, including 4,623 in Nevada.