A state agency that oversees college investment accounts failed to determine in a timely fashion if some of the accounts had been abandoned by their owners and to properly protect sensitive personal information, according to a report by the Office of Legislative Audits.
The audit released Monday found that the College Savings Plan of Maryland had 448 checks totaling $1.7 million that had not been cashed in more than three years.
Auditors noted that while the agency “determined that certain of these checks, such as those with stop payment action, may no longer be properly classified as outstanding, (College Savings Plan of Maryland) had not determined and specified which funds from the aforementioned $1.7 million should be classified as abandoned and, accordingly, transferred to the comptroller.”
Accounts that have not been claimed by the owner within three years must be transferred to the Office of the Comptroller until the account is claimed, according to state law. The report also noted that the fund had not yet implemented a 2008 policy regarding outstanding checks.
In a written reply to the audit, agency officials said staff is undertaking “a labor intensive exercise to research” older accounts including check stubs and statements in order to resolve as many uncashed check issues as possible.
“This effort is a top priority for the College Savings Plan of Maryland that we expect to have completely resolved before the end of the current fiscal year,” wrote Andrew Friedson, the agency’s interim executive director.
Friedson wrote that while it agrees with auditors’ findings regarding uncashed checks and the need to transfer abandoned accounts to the control of the comptroller, it disagreed with the total dollar amount cited in the report.
“Specifically, the current number of outstanding checks has been reduced from 448 to 235 and the value of those checks has been reduced from the nearly $1.7 million cited in the report to $313,089.09.”
Friedson wrote that the agency would implement the policy on outstanding checks by December 31.
The College Savings Plan of Maryland is an independent state agency that operates two college savings plans: The Maryland College Investment Plan and the Maryland Prepaid College Trust.
The investment plan offers individuals the opportunity to invest money to pay for the college education of specific beneficiaries, regardless of what state they live in. The future principal is not guaranteed.
The college trust plan allows for future payment of tuition and mandatory fees through a scheduled payment plan. Beneficiaries must be residents of Maryland or Washington, D.C., at the time the contract is purchased.
As of June 30, 2014, the Maryland Prepaid College Trust reported having nearly 146,000 participants with a total savings account balance of $3.9 billion. The agency also administers 31,600 prepaid tuition contracts under the Maryland College Investment Plan totaling $895 million.
In a second finding, the auditor found that the agency “lacked assurance that sensitive account holder data maintained by the third-party service provider used to manage the (Maryland College Investment Plan) was properly processed and secured.”
Friedson noted that the security procedures recommended in the auditor report were developed after 2006 when the agency contracted with its current program manager and set up its current system.
“However, recognizing the rapidly changing landscape of data security today versus 2006, the agency has obtained a binding, written commitment from the (Maryland College Investment Plan) program manager” certify that it has improved security related to the program. Friedson wrote that he expects that work to be completed by next June.