By Bobby Harrison
Daily Journal Jackson Bureau
JACKSON – As the 2014 legislative session gets underway, no decision has yet been made on how the state should deal with its underfunded Mississippi Prepaid Affordable College Tuition Plan.
MPACT, which was created in the 1990s, was established to allow college tuition to be purchased at a future date at today’s prices through various flexible methods, ranging from lump sum to monthly or annual payments.
But the program has not been accepting new enrollees since the fall of 2012 because of financial woes.
State Treasurer Lynn Fitch said recently the MPACT Board is scheduled to meet on Jan. 27 to discuss available options. Fitch said it would take legislative action to close the program.
Members of the MPACT Board have been reluctant to recommend closure, but based on discussions from past meetings, it might take an infusion of cash from the state to maintain the program.
At a November meeting, the board heard from a private auditing company that the plan faces an $82 million deficit and most likely will go insolvent in the early 2020s unless it receives an infusion of cash. But MPACT will face a $142 million shortfall if it is not re-opened.
Fitch, whose office oversees the program for the board, said part of what must be determined is whether MPACT can attract new members if the cost of enrollment is raised as much as might be needed to make the program solvent.
Rep. Greg Holloway, D-Hazlehurst, who serves as a legislative liaison to the MPACT Board, said he will file legislation this session that would give the board more flexibility in its investment options. He said, for instance, he believes the MPACT Board should have as many options in making investments as the Public Employees Retirement System Board.
He said he has seen studies indicating that if his legislation, which passed the House last year but died in the Senate, had become law, investment earnings would have been great enough during the past year to reduce the MPACT deficit to about $65 million.
“The legislation wouldn’t solve the problem, but at least it would have alleviated some of the problem,” Holloway said.
Numerous legislators, including Holloway, have expressed support for MPACT.
“It is a wonderful program,” he said. “It gives people the opportunity to plan their kids’ and grandkids’ future. It is excellent because it locks in the costs of college.
“It is just some things happened.”
Those things included a large drop in the stock market during the recession that began in 2008, rapid increases in college tuition in recent years to offset the cuts in state funding and a pricing structure to enroll in MPACT that many say was not adequate.
House Speaker Philip Gunn, R-Clinton, who pointed out his three children were enrolled in the program, said he is awaiting a recommendation from the first-term treasurer.
“I know she is looking hard at this,” Gunn said.
Fitch has stressed that the approximately 22,000 people still in the program are protected by “the full faith and credit” of the state, meaning ultimately the state or its taxpayers are responsible for paying the cost of tuition for enrollees if MPACT runs out of money.
Many states have opted to close similar plans. Only four states now have plans similar to MPACT.