The way many Mississippians pay for their child's college career could be in jeopardy. A program that's been marketed across the state for years is now on hold as an audit takes place.
The Treasurer's office points to the state's struggling economy combined with yearly tuition increases as a main factor in this, which could prove disastrous if something isn't done now.
As she presented her budget request for the next fiscal year to the joint legislative budget committee, State Treasurer Lynn Fitch was questioned by lawmakers as to why the state's prepaid college tuition program is begin frozen and audited.
"What is going to be the long term affect of this thing madam treasurer if people get scared of this and make a run on it and don't enter it again," asked Republican Sen. Terry Brown from Columbus.
The program, known as MPACT, gives parents the opportunity to lock in college tuition rates early and not have to pay for any tuition hikes later on. The questions Tuesday come on the heels of Fitch requesting the program be audited and not accept any new enrollees.
"It's an issue facing many, many states right now," said Fitch.
The issue is whether the program is financially sustainable. Since 2001, the program has been under funded. Currently, funding is at 76.8%, leaving a shortfall of $94 million dollars. To maintain itself, the program needs to keep a 7.8% annual rate of return, which has never happened. Since being created by the legislature in 1996, the average investment has been 4.3%. Last year, it was just .6%. That's all combined with yearly tuition increases across the state.
"When you look at the economy and you look at the financial crisis that we're in currently, that's a hard gap to close," said Fitch.
For the more than 22,000 families already enrolled in the program, Fitch says they have nothing to worry about because their investments are backed by the state. That means taxpayers would have to pick up the costs. With the program now frozen, Fitch hopes it can be restructured, but acknowledges it could be shut down all together.
"It's critical that we take a pause and that we look at this program because we want to be proactive," said Fitch. "We want to be very diligent. We want to make sure that we ensure the success of this program. We need to look at the strengths and weaknesses."
Fitch says this is the first time the program has undergone an actuarial audit and it could take several months before completion. Lieutenant Governor Tate Reeves oversaw the program when he was treasurer. His office says audits were done every year during his administration.
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