OUR OPINION: MPACT resumes despite many daunting questions

The planned resumption of business in the fall for the Mississippi Prepaid Affordable College Tuition plan offers a measure of reassurance for owners of accounts in the system, but it leaves so far unanswered questions about how much more money will be required to initiate enrollment and what the prospects are for long-term survival of the program.

The program was suspended in 2012 because of concerns about its viability and the return on its investments supporting the tuition guarantees purchased by approximately 22,000 for their children and grandchildren.

Mississippi Treasurer Lynn Fitch, who is chairwoman of the College Savings Plan Board, presided at Monday’s meeting when the decision to re-open enrollment in the fall was made.

Fitch said the plan will be re-opened with increases in the cost to buy into MPACT, but those changes will not be formalized until later in 2014.

Mississippi Public Broadcasting earlier reported that two actuaries told the savings board in late 2013 that “new enrollees could have to pay 20- to 30-percent more in order to close a roughly $80 million shortfall in the program.”

Fitch on Monday did not cite any range of increases, but she said increasing the cost alone will not close the gap.

Investors are covered by the state’s full faith and credit, which means any shortages in the program must be covered, but the better outcome would be changes to make the program sustainable. She said those issues need to be decided at some point by the Legislature.

MPACT was created in 1997 by the Legislature. It allows parents and grandparents to pay current tuition for their children’s and grandchildren’s higher education. Prepaid plans in many states were created as insurance against tuition increases, which have been an ongoing fact in Mississippi.

MPACT is not alone in its problems. Many of the other prepaid plans nationwide have either failed or have been scaled back.

Alabama’s Prepaid Affordable College Tuition (PACT) program suspended its enrollment in 2009. The program had offered a four-year package and one-year package covering tuition and fees at any Alabama public college or university. In 2013, the Alabama Supreme Court ruled that PACT can pay participants less than full tuition. It was not fully state-backed.

The outcome for MPACT appears uncertain, with hard decisions ahead for Mississippi’s elected leaders.