The state of Oregon has hired OppenheimerFunds Inc. to replace Strong Capital Management as the manager of $132 million of its 529 assets, Dow Jones reported Wednesday.

The state became the first to fire one of its managers when state directors decided to fire Strong for the firm's connection to the widening probe of mutual fund practices on Wall Street.

The transition is expected to be completed by midsummer and fees under the new plan are expected to be 20 percent to 65 percent lower than what Strong had charged.

However, the deal is contingent on Oppenheimer certifying to Oregon "that it has no outstanding issues or problems with market timing or late trading." To date, the fund firm has told Oregon's college-savings board that neither state nor federal regulators are investigating it.

Oppenheimer also manages a $225 million college-savings plan for New Mexico. An Oppenheimer spokesman said the company was "happy" that it was able to manage money for Oregon.

In the meantime, Oregon state Treasurer Randall Edwards, in a written statement, said that the board will maintain "its unique ability to fire providers of the plan for any reason - the provision the board exercised when firing Strong."

Two of the three firm that manage some part of Oregon’s $260 million 529 plans have been investigated by regulators for improper mutual fund trading practices. Strong managed $132 million and MFS, which recently paid regulators a hefty fine, managed $100 million for the state.

The state’s third provider, State Street Corp.'s Schoolhouse Capital, manages $5 million in 529 assets. However, Schoolhouse hasn't been named in the mutual-fund probe to date.

Oregon plans to discern exactly where to put another $23 million in broker-sold 529 assets, which were also managed by Strong. Oppenheimer is taking over management of the no-load, direct-sold portion of the college-savings assets. 

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