Fitch Suspends College Tuition Program
JACKSON, Miss. (AP) — State Treasurer Lynn Fitch has told lawmakers that she suspended the state's prepaid college tuition program because it is struggling financially and an audit will show whether it needs to be overhauled or scrapped.
"We're just talking a pause to determine the strength of the program ... where do we strengthen the program and where do we go from here," Fitch told members of the Joint Legislative Budget Committee on Tuesday.
Flitch said the audit could show the program needs to be overhauled.
Until the audit is completed, Fitch says the Mississippi Prepaid Affordable College Tuition program will not enroll any new participants.
Fitch said the nearly 22,293 people enrolled in the program are protected but that new enrollment in the program is being halted.
Fitch said MPACT is only 76.8 percent funded, leaving a $94 million shortfall. She said investment earnings last year were only 0.6 percent. Actuaries said it must earn 7.8 percent a year to stay in the black, with college tuition increasing about 7 percent a year.
The program was created in 1996 to allow families to purchase the cost of tuition for a future student at today's prices.
Lt. Gov. Tate Reeves, who previously served eight years as treasurer and oversaw the program, said after the meeting that he was surprised by the decision to halt new enrollment. He said such defined benefit plans must be viewed in the long term and not by earnings for any one year.
He said those factors should be weighed against the importance of producing more college graduates in the state.
The plan has the backing of the state, meaning if it does not produce the revenue to pay college tuition for enrollees, it is the state's responsibility to make up the difference.
Fitch said at one time there were more than 20 states with similar plans. But with investment earnings not reaching expectations and with college tuition increasing much faster than inflation, she said many states have either shut down their programs or made changes. Only one other state, Florida, now has a plan like Mississippi's that has the full backing of state's resources, she said.