By Bobby Harrison/NEMS Daily Journal
JACKSON – The MPACT Board and state Treasurer Lynn Fitch expressed hope Tuesday that the program that allows parents to purchase college tuition for their children at current rates can be resumed by next January.
But new enrollees to the program may be required to pay more to participate.
The board of the Mississippi Prepaid Affordable College Tuition Plan announced in September it was stopping new enrollment until an audit could be done of the plan’s long-term sustainability. At the time, Fitch would not commit to resumption of the plan.
On Tuesday, auditors with Michigan-based Gabriel Roeder Smith & Company told the board that the plan had problems that must be resolved, but that there are many reasons to continue MPACT.
“We think it’s a good program,” said Kenneth Alberts, who made the presentation for GRS. “We would like to see it reopened, but it is important that you get the costs fixed.”
Fitch said she is “looking forward to getting the program reopened and revitalized.”
The plan currently has an unfunded liability of $79 million and would be financially insolvent in the mid-2020s if it were not reopened. At that point, the state would have a legal obligation to about 22,000 current enrollees.
Based on the report of the auditors, changes must be made to the program for new enrollees or problems will persist. “We think with some small changes we will have a program that is sustainable over the long term,” Alberts said.
Committees are being formed from the MPACT Board to study what those changes should be.
Senate Universities and Colleges Committee chairman John Polk, R-Hattiesburg, said the goal is to have the changes made so that enrollment can resume in September, normally the beginning of the enrollment period. Staff with the Treasurer’s office said that might not be possible because changes must be advertised to the public in a process that can take up to 60 days under state law.
Higher Education Commissioner Hank Bounds, who serves on the MPACT Board, said the issues should be addressed “with a sense of urgency. I think it is that important.”
The basic problem is that MPACT is not earning enough on its investments to pay the costs of tuition, which have risen significantly in recent years to offset cuts in state support. The earnings have averaged only 4.8 percent over the life of the program even though the goal is for investment earnings of 7.8 percent.
Plus, it was pointed out that MPACT pays for 128 credit hours – the number required to earn a degree in most college majors. In many cases it is taking students longer to complete the 128 hours and MPACT essentially is paying for five years of college instead of four.
“If 50 percent of the students are getting an additional 20 percent of the benefits, that is a tremendous cost in the plan,” Bounds said,
Only four states now have plans similar to MPACT that have the financial backing of the state if the plan lacks the funds to meet its obligations.