CHICAGO — In a further reshuffling of Illinois’ finance team, debt manager Phil Culpepper will move over to the Illinois Housing Development Authority to the post of deputy executive director, while the Illinois Student Assistance Commission’s chief financial officer, John Sinsheimer, has stepped into the newly created position of state director of capital markets.

The IDHA board is expected Friday to approve the appointment of Culpepper as deputy executive director and chief of staff to executive director Gloria L. Materre, who was appointed to the post last month by freshman Gov. Pat Quinn.

The authority opened in 1967 to create and preserve affordable housing across the state. It issues debt to support single- and multifamily housing and other programs.

The moves follow Quinn’s appointment earlier this month of his longtime associate and senior fiscal adviser David Vaught to the post of director of the Office of Management and Budget. He replaced Ginger Ostro who became a senior policy adviser to ISAC.

Sinsheimer, 57, is a veteran of both private and public sector financial management positions. He will report directly to the governor. Culpepper and his predecessors reported to the director of OMB.

Sinsheimer has served as CFO at ISAC for the last three years. He previously was associate vice president for finance at the Illinois Institute of Technology. He also held fiscal positions at Children’s Memorial Hospital in Chicago and Encyclopedia Britannica and worked for 12 years in global banking at the former First Chicago Bank.

Sources said he was recommended for the post by the chairman of the ISAC board, Don McNeil, who has close ties to the governor dating back to college.

“It’s a challenging time and I am excited to be a part of that,” Sinsheimer said yesterday. “My goal is to work to finance the state’s needs in the most effective manner.”

Culpepper had been candid about his wish for a new challenge in a more senior role after two and a half years steering the state’s debt issuance during a period that saw Illinois’ ratings drop due to the recession’s impact and lawmakers’ reliance on one-time measures to balance recent budgets.

“I love my current position but I’ve been interested in a new challenge in which I can serve in a more executive role,” he said. “I think going to IDHA will be challenging as the agency returns to the capital markets, but I’m very excited about working with Gloria.’

Culpepper, 34, took over as the state’s debt manager in spring 2007 after serving as a bond analyst at the Illinois State Toll Highway Authority. Though not widely known at the time by local public finance bankers, he quickly grew into the role, market participants said.

Several investment banks were interested in hiring Culpepper, according to sources, but state ethics rules that took effect July 1 appear to bar him from working for one year after leaving his post for firms that have done business with the state.

Past rules barred only a decision-maker with influence over contracts from going to work immediately for firms to which that person could influence the award of business, but the new rules expand the definition to anyone materially involved in the process. The new law also eliminated a waiver employees could seek.

The new finance team takes over as the state is grappling with a financial and cash-flow crisis and has a series of debt issues in the works.

In a published report late yesterday, Vaught said Illinois faces a $900 million shortfall in the current budget and that additional cuts, borrowing, and an income tax increase would be sought to address it when a new legislative session begins in January. 

The state next month plans to sell $1.5 billion to $2 billion of general obligation refunding bonds as part of a debt restructuring plan intended to save $530 million.

The state has named Citi and Morgan Stanley as co-book-runners. The co-senior managers include PNC Financial Services Group Inc., Siebert Brandford Shank & Co. and Banc of America Securities-Merrill Lynch.

The $54 billion 2010 budget signed by the governor wiped out a $12 billion deficit with $2 billion in spending cuts and one-time measures that include borrowing $3.4 billion to cover the state’s pension payment, up to $2 billion in debt restructuring, and pushing the payment of $3.8 billion of fiscal 2009 bills off to fiscal 2010.

Quinn had sought an income tax increase but lawmakers rejected it.

Illinois’ $20 billion of GOs are rated AA-minus with a negative outlook by Standard & Poor’s, A by Fitch Ratings, and A1 on negative watch by Moody’s Investors Service.

State legislators returned to work yesterday for their brief annual veto session. House lawmakers advanced campaign finance legislation that would impose first time limits on contributions.

Quinn also wants lawmakers to restore funding for college scholarships administered by ISAC.

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