By Bobby Harrison/NEMS Daily Journal
JACKSON – State Treasurer Lynn Fitch said the first phase of a study of a program that allows people to lock in college tuition costs does not quell concerns about its solvency.
When asked during a Friday news conference if there is a possibility that the Mississippi Prepaid Affordable College Tuition Program, known as MPACT, could be shut down, the Republican treasurer said, “That would be an option, absolutely.”
Fitch, who held the news conference to discuss a number of issues, including her goal to require the teaching of personal finance to high school students, said her office had recently received the first phase of a study of MPACT.
The study, commissioned by the MPACT Board, was conducted by Michigan-based Gabriel Roeder Smith & Company, an actuary firm.
It cited several problems with the program, including the fact that because of rising tuition more might need to be charged to those entering the program.
Under MPACT, which was started in the late 1990s, the cost of tuition can be purchased for a future student at today’s prices.
The program is administered by the treasurer, though there is a separate governing board.
This past fall the board closed the program to new enrollees because of concerns about its funding level and ordered the actuarial study.
Fitch said earnings on the plan’s investments for the past year were less than 1 percent. The assumed rate of return on investment is 7.8 percent, yet, it has produced a rate of return of only 4.3 percent since inception.
Fitch stressed that the investments of current enrollees – about 22,000 – were safe because they were back “by the full faith and credit” of the state.
But Fitch has said she wants to ensure the program is sustainable because she does not want to have to go to the Legislature to ask for funds for MPACT. Fitch said the actuaries will make recommendations later this year to the board on the future of MPACT.
“This is a long process,” she said. “It is an important process … We are talking about our children.”
At one time there were more than 20 states with similar plans. But with investment earnings not reaching expectations and with college tuition increasing at a much higher pace than inflation, Fitch said many states have either shut down their programs or made changes. She said only three other states now have plans like Mississippi’s that has the full backing of state’s resources.
Fitch said a separate college savings plan operated out of the treasurer’s office is thriving, and she urged parents and grandparents to look into that program.
Plus, she said the goal is to continue MPACT or some other program that promotes a college education.
“I think we have to explore every opportunity we can to get people in college,” she said.