By Bobby Harrison/NEMS Daily Journal Jackson Bureau
Last week, state Treasurer Lynn Fitch, a first-term Republican, announced that the board that oversees the Mississippi Prepaid Affordable College Tuition Plan had halted enrollment in the program while a study was conducted on the financial viability of the plan. Fitch answered three questions from the Daily Journal’s Bobby Harrison about MPACT and its future.
Q. Can you explain a little about the history of the Mississippi Prepaid Affordable College Tuition plan, how it works and why enrollment in the program was halted?
A. The Legislature created MPACT in 1997 as a way for families to prepay college tuition costs. It is operated by a Board of Directors chaired by the state treasurer. Since 2001, the program has been under funded. Current funding is at 76.8 percent, leaving a shortfall of $94 million. To maintain adequate funding, the program must keep a 7.8 percent annual rate of return. But the average is 4.8 percent. Last year it was just 0.6 percent. It’s critical that we take a pause and figure out how to strengthen MPACT.
Q. How many people already are in the program and what happens to them? What is the status of Mississippi’s other college savings plan – the Mississippi Affordable College Savings Plan? How does it work?
A. There are 22,293 participants enrolled in MPACT. They are not affected by the audit. Their plans are guaranteed by the full faith and credit of the state. MACS is the state’s 529 Savings Plan and has 12,741 participants and 142.8 million in assets. MPACT is a guaranteed prepaid tuition plan, while MACS is a tool to save for all college expenses including tuition, books and housing. MACS has open enrollment year-round and is not affected by the audit.
Q. Obviously, you cannot predict the future, but do you believe MPACT will remain a viable program and, if so, do you believe it will need to be changed? When will the study be completed, and, after then, when might enrollment resume?
A. There are many options, but we won’t know any answers until we receive the actuarial auditor’s report. They were here (last) week gathering information. It will take several months to get a report and then determine what needs to be done to strengthen the program. This is a positive, proactive move. I am looking out for the MPACT contract holders and the taxpayers of Mississippi so they are not strapped with this $94 million dollar shortfall.