“MPACT (Mississippi Prepaid Affordable College Tuition) is Mississippi’s 529 prepaid plan. It is guaranteed by the State to cover the cost of college tuition and mandatory fees at Mississippi’s public colleges and you can also use the benefits for private or out-of-state schools. MACS (Mississippi Affordable College Savings) is Mississippi’s 529 savings plan. It offers you the choice of several investment options that allow you to save for your child’s college tuition, as well as other qualified expenses such as fees, required books and supplies, and certain room and board costs.”
The suspension of enrollment notice posted on the state’s tuition guarantee website may be jarring for some clients, but state Treasurer Lynn Fitch offered reassurances this week that the suspension does not necessarily indicate anything wrong with the program.
Fitch’s decision to initiate the suspension by its board of directors reflects an appropriate abundance of caution about concerns involving the program’s long-term viability in the face of low investment returns.
Members of the Legislative Budget Committee expressed concerns and surprise about the suspension and questioned its necessity. Lt. Gov. Tate Reeves, who was treasurer before Fitch took office in January, said low returns don’t necessarily threaten defined benefit plans in the longer term.
Fitch said the 23,000-plus people already enrolled are protected by the state’s full guarantee, but additional enrollees need to wait for an independent actuarial analysis.
Fitch also said the programs have not been fully sound since their inception in 1996, and she cited the problems experienced by several other states’ programs as a further reasons for caution and analysis. Alabama and Texas are among the states with tuition guarantee problems.
Only one other state now has a full state guarantee behind its program: Florida.
Some states have dismantled their plans and/or restructured them.
Mississippi state law says that if the MPACT board, which includes some education officials and representatives from each of the four congressional districts, deems the program financially unfeasible and/or discontinues it, taxpayers would have to pay tuition for those enrolled or within five years of enrolling in college.
The committee members also complained that Fitch hadn’t notified anyone of the board of directors’ decision, a valid criticism. Transparency is necessary in all the decisions and transactions involving state programs’ handling investors’/citizens’/taxpayers’ funds, including the Public Employees Retirement System, which faces challenges, too.