Thursday, March 22, 2007 | 7:08 a.m.
CARSON CITY - As Brian Krolicki prepared to leave the state treasurer's office last December, he not only made an important change in a state contract that will cost the state millions of dollars, he also gave an order to "button things up" in the office, his replacement as treasurer charged Tuesday.
Kate Marshall, who is now working with Krolicki's former staff, said the employees took that order to mean that they were to "erase documents in the office."
But she said that some employees worried about maintaining the integrity of the office, so they "had to go home, buy a flash drive, come back to the office, try to download documents and keep them."
Marshall, a Democrat, made her statements during a taping of "Face to Face With Jon Ralston," which aired Wednesday and repeats at 11 a.m. today and 10:30 p.m. Saturday on Las Vegas ONE. It also airs at 5:30 a.m. Sunday on KLAS Channel 8.
Krolicki, a Republican who was elected lieutenant governor in November, appears in another segment of the Ralston show. Krolicki called Marshall's statements reckless and said he was proud of his accomplishments with the college savings fund.
"We did the right things for the right reasons," he said. "We created a multimillion-dollar program that's helping kids and families pay for college."
Marshall said that after she took office, she asked the treasurer's staff why they had deleted e-mails and purged file cabinets of documents, including contracts with vendors for various state programs.
"The only phrase I heard was 'button things up,' " she said.
Krolicki told the Las Vegas Sun last week that his office followed protocol with all records, destroying only unnecessary documents. "If it's clutter, you get the clutter out of the filings cabinets," he said.
State law requires the treasurer to preserve records for one year to 30 years, depending on the nature of the documents.
Marshall said the only documents Krolicki left behind in the office were related to personnel. Otherwise, her office was left "without a scrap of paper," even documents that would have been just a few days old when she moved in.
She said she has had to call companies that did business with the state to ask for copies of contracts. "I had to call every single vendor and ask, 'Do you have a contract? Could you send it?' "
With one of those asked-for documents in hand, Marshall said she uncovered a change in a contract for a college savings fund that will result in less revenue to the state. That change was made Dec. 28, in Krolicki's last days in office.
The Nevada College Savings Plan is among dozens of similar funds run by states around the country to help families save money for college.
Nevada's program started in 2001, and today uses investment companies and boasts almost $3 billion in investments. Its growth is tied to the amount contributed by families and the return on investment.
In exchange for being allowed to manage the funds, asset managers pay fees to the state. As the funds grew, so did the fees. In 2002, for example, the state received $352,000. Last year, the total was $1.7 million.
The total for 2007 was expected to be even greater, Marshall said. But with the contract amendment, she said, the total amount collected will be smaller.
One reason is that instead of fees increasing as the funds swelled, the amended contract allowed one of the companies, UPromise Investments, to rewrite a 20-year contract and pay a one-time fee of $1 million. UPromise will not have to contribute in the future.
Marshall says she has set up a meeting with representatives of UPromise to discuss the changed contract.
Liz Kennedy, spokeswoman for the company, said it "looks forward to our initial meeting with Treasurer Marshall to offer any information or assistance she may require."
Another of the asset managers will see its fee rise more slowly. Under the amended contract, the Vanguard Group will pay $1.5 million a year, plus an adjustment for inflation. Assuming an inflation rate of roughly 2 percent, the state will earn fees from Vanguard this year of about $1.5 million plus $30,000.
Under the old contract, with UPromise still paying, the total fees collected amount would have been close to $2.1 million, according to Marshall's staff.
Both Marshall and Krolicki have asked state Attorney General Catherine Cortez Masto to investigate Krolicki's handling of the college fund. Marshall has also asked Cortez Masto to look into the "potential destruction of public records" that may have happened under Krolicki's time as treasurer.