HATTIESBURG — Despite a rising deficit, Mississippi’s college savings program has a sound long-term prognosis, says State Treasurer Tate Reeves.
The program lets Mississippi families buy all or part of their children’s public college education at present-day tuition. The Mississippi Prepaid Affordable College Tuition Program invests that money with the goal of earning 7.8 percent a year.
More than 25,000 Mississippi families have put college savings into MPACT, one of 18 such state-run programs in the United States.
At the end of fiscal year 2007, MPACT was 95.2 percent funded. By the end of 2008, that had fallen to 84.3 percent. During fiscal 2008, the program lost $40 million while families put in $20 million. In the process, MPACT’s market value dropped from $207 million to $192 million.
While 2009 numbers have not been released, Reeves, who administers the program, estimates that the percentage of the program funded has sunk to the mid-to-low 70s.
That shouldn’t worry the families who have put money into the program, he said.
“It really means very little to the people who have put their money in, because our money is guaranteed by the state,” said Reeves. “The state is obligated to make the payments to the colleges.”
It would be a problem though for taxpayers if the program were shut down. As of December 2008, they would have to foot a $48.7 million fund.
Sen. Tom King, R-Petal, who sits on the Senate Education Committee, said nobody has suggested ending the program.
“I think it’s a very good program. It puts money back for our kids for college, which is vital to this state,” he said.
Reeves estimated that, even in the unlikely case of no market recovery, the program will be able to fund its families through the early 2020s.
“If the market never recovers for the next 15 years, then I think Mississippi’s got bigger problems than whether it can fund its prepaid college savings plan,” he added.
The Associated Press