A new fund manager for Oregon’s 529 college savings program will mean lower costs and more investment options, including a socially responsible fund, according to state officials.

Michael Parker, executive director of the Oregon 529 College Savings Network, said new fund manager, TIAA-CREF Tuition Financing Inc. of New York City, is an experienced manager and long-standing leader in the 529 industry. “We have enhanced the plan to provide some great new benefits to Oregon investors,” Parker said.

The state also has created a new layer of oversight for its 529 program after experiences with two previous fund managers.

TIAA-CREF replaces New York City-based OppenheimerFunds, which the state sued last April for $36 million after one of the company’s bond funds — meant to be a low-risk, conservative investment vehicle — lost nearly 36 percent of its value. The suit was settled in November for $20 million and the money distributed to roughly 45,000 Oregon 529 plan participants last week, Parker said.

OppenheimerFunds’ contract with the state expired at the end of 2009 and was not renewed. The company began managing funds for Oregon’s 529 program in 2004 after Strong Financial Corp. of Wisconsin was ousted due to a mutual fund trading scandal on Wall Street that brought the firm down, according to The Bulletin’s archives.

Strong had been the state’s original manager for the primary Oregon 529 plan when it was launched in 2001.

A 529 plan is a federal investment tool designed to pay for education expenses. Earnings and withdrawals are tax-free, as long as they are used for qualified college expenses such as books, tuition, and room and board.

Each state administers its own plan, though investors can invest in the 529 plan of any state. In Oregon, families who invest in Oregon’s 529 program can claim an annual state tax deduction of up to $4,170, based on contributions.

Parker said TIAA-CREF agreed to a lower management fee for Oregon 529 investors and will have a number of new investment options, including the socially responsible fund and a principle preservation fund that guarantees interest income.

A socially responsible fund doesn’t purchase equities in certain industries, such as defense or tobacco.

Bill Valentine, an investment adviser and president of Valentine Ventures in Bend, said TIAA-CREF is a fine firm but will continue to direct clients to other state 529 funds until TIAA-CREF’s track record in Oregon is solid. “(The state) is 0-2 in choosing a manager,” Valentine said.

To address oversight issues, Parker said the state has hired an independent third party to act as an investment adviser to the five-member board that manages Oregon’s 529 program.

Previously, the fund managers served as the board’s investment advisers, Parker said. “We’ve made some significant improvements to oversight of the funds, and it’s a big change,” he said.

New state Treasurer Ted Wheeler, who sits on the Oregon 529 College Savings Network board, said improving the state’s 529 program is among his top priorities.

Wheeler took over as treasurer earlier this month, after the death of Ben Westlund. “In my tenure as state treasurer, it’s very important to do everything I can to be a good steward of the plan and improve the plan because from my perspective, it’s the best way to get more families to put money away for college,” Wheeler said.

If you go

What: Oregon College Savings Plan information meeting

Who: Oregon 529 College Savings Network

When: 10 a.m. to 4 p.m. Wednesday, March 24

Where: High Desert Museum, 59800 S. U.S. Highway 97, Bend

Contact: 503-373-1903

What’s a 529 plan?

A 529 plan is a federal investment tool designed to pay for education expenses. Earnings and withdrawals are tax-free, as long as they are used for qualified college expenses such as books, tuition, and room and board.

Each state administers its own plan, though investors can invest in the 529 plan of any state. In Oregon, families who invest in Oregon’s 529 program can claim an annual state tax deduction of up to $4,170, based on contributions.