Oregon's College Savings Plan Takes a Hit

I have a 529 account for both of my children in the Oregon College Savings Plan.  [Why?  See my earlier post about cost disease - I am sure college is just going to get relatively more expensive and I am trying to prepare]  Luckily my kids are years away from enrolling in college because these funds have taken a hit thanks to the stock markets shedding of value (as they are years off, most of the investments are in stocks).  Surprisingly, however, The Oregonian breaks the news that the supposedly 'conservative' funds (which are supposed to be mostly invested in bonds) managed by Oppenheimer have lost 38 percent of its value!  Holy smokes, that is inexcusable.  These are the funds you switch the money to as your kids get close to enrolling in college to be safe.  There is no problem with returns in the bond market - so what happened - why would a fund manager play games with a fund that no one expects high returns from anyway?   This is bad news for Oregon's higher education aspirations, at the very moment the state is trying to maintain its investment in its kids educations.  It also seems indicative of a real problem in the culture of Wall Street (as if we needed more evidence) where ego and personal reward is more important than the business itself.