State treasurer apologizes for screw-up in Bright Start grants

State Treasurer Dan Rutherford apologized Wednesday for e-mails sent from his office that gave the family and friends of his staff an unfair advantage in winning grants for their kids’ college funds.

At least 25 friends and relatives of treasurer’s office staff received early notice last month that $250 matching grants would be handed to the first 2,500 parents who put money into their Bright Start college saving accounts, Rutherford’s office acknowledged.

The fund for matching grants was emptied within days. More than 6,000 families who made contributions to their childrens’ funds believing that they would get the $250 grant later learned that the grants had already been exhausted.

Speaking at a lunch meeting of the City Club of Chicago Wednesday, Rutherford said, “I was not aware of it, it was not appropriate to do and disciplinary action is being taken care of this week.”

He added, “There was a mistake, it was in our office — it’s done, and I’m sorry.”

A member of the treasurer’s staff who e-mailed colleagues May 31, encouraging them to let friends and family members know about the program, will be disciplined, Rutherford said. Three staff members who followed that advice and forwarded the e-mail to 25 friends and relatives will not face any disciplinary action.

Rutherford acknowledged that the e-mails could have subsequently been forwarded to other insiders but said he did not believe his staff meant to gain an unfair advantage.

Treasurer’s office employees are prohibited from benefitting from the program and did not, though it’s possible that the friends and family members did, Rutherford’s staff said.

Treasurer’s spokesman Matt Butterfield said it wasn’t possible to check the e-mail accounts that received the e-mail against the list of those who received grants in their Bright Start accounts, designated 529 accounts under the tax code,

But Rutherford said a county-by-county analysis of where the grants were sent revealed no abnormal patterns. Compounding the problem was a delay mailing notices about the grant program to all Bright Start account holders through the postal service, and an online mix-up that allowed account holders to continue applying for the grant after funds had run out, he said.

Those who made $250 deposits expecting a matching grant they did not receive can get a refund, he added.

Next year the grants may be smaller, so that every Bright Start account holder who applies receives something, he said.