53.8 F
Oxford

MPACTProgram

On March 24, the Board of Directors for the College Savings Plans of Mississippi voted to reopen Mississippi’s Prepaid Affordable College Tuition program (MPACT) for new enrollees beginning in Fall 2014.  The decision to reopen MPACT brings full circle a process the Board and the State Treasurer’s Office began eighteen months ago.
In 2012, the Board decided to defer new enrollments so that an actuarial audit of the program could be performed, something that had never been done before.  As opposed to annual financial audits, the actuarial audit was aimed at evaluating whether MPACT was sustainable over the long term based on existing pricing, contract terms, and investment and expense assumptions.
The results of the actuarial audit were presented to the Board in April 2013.  The audit’s findings confirmed that the decision to defer MPACT enrollments was a sound one.
The auditors concluded that under current pricing, and based on actual investment performance over fifteen years of MPACT’s existence, the tuition program faced serious shortfalls and ran the risk of running out of money within the next ten years.  Based on the most recent numbers (and after a very solid year of investment returns), MPACT faces a shortfall of at least $82 million.
If the program were to remain closed to new enrollees, that shortfall would grow to an estimated $142 million.  That increased shortfall would result from lower investment returns as funds currently invested are drawn down to pay the tuition of MPACT enrollees.
Once the actuarial audit and recommendations were received, the College Savings Board was faced with three options.  The Board has narrow authority under statute to “liquidate” the program, but that would likely result in an immediate liability to the State of about $60 million.  No Board member saw this as a desirable option.
The other options before the Board were to close MPACT permanently, managing only the roughly 20,000 existing accounts until they were used over the next twenty years, or to reopen the program to new enrollees.  The Board, working with my office, has carefully studied the implications of these options over the last year.
The Board has been criticized for the time taken to evaluate the best option.  But the Board has had to analyze a number of “moving parts” to make its decision, and that has entailed a lot of hard work and detailed study.  A systematic look at MPACT’s past and future performance had never been undertaken before.  That undertaking did not end with the results of the audit; in fact, the audit was just the beginning.
Given the funding shortfalls under either scenario, as well as the other findings in the actuarial audit, neither option is an easy one.  Yet, there are some principles around which we have strong consensus.
First, income and expense assumptions have to be realistic.  Last year, the Board voted to lower the assumed rate of return on investments to 7.3%.  The rate had been 7.8%, even though MPACT’s investments have averaged only 5.4% over the life of the program.  Lowering the assumed returns reflects a fiscally responsible, more conservative approach to forecasting taxpayers’ potential liability.
Second, new MPACT contracts must be streamlined and require more accurate pricing.  Before MPACT was closed in 2012, there were 248 new enrollees that year.  Those new contracts alone added an estimated $211,000 to the shortfall.  We must correct that trend.
Another example: under the old framework, MPACT allowed a mix of 11 different prepaid plans, with 54 payment options.  Some of these options were seldom used.  The Board is considering new rules that would provide a more manageable 6 plans, with “only” 22 payment options.  We are eliminating a number of other “risk” factors that could otherwise end up costing taxpayers.
The projected funding shortfall is an issue the Legislature will have to weigh as well.  In January, the Board sent a report to the Legislative leadership highlighting MPACT’s challenges.  The Board also asked the Legislature to consider the policy decisions relating to both the shortfall and MPACT’s future.  While the decision to reopen MPACT minimizes the projected shortfall, without well-above-average investment returns over the next decade, that shortfall will persist, implicating the State’s full faith and credit.
A lot of the audit’s recommendations take time to be implemented prudently.  The Board’s decision this week puts us on a road to reopen MPACT in a fiscally responsible way.  Both Mississippi’s taxpayers and our future college students will benefit from the enrollment deferral, the audit, and implementation of its findings.
Lynn Fitch serves as Mississippi’s State Treasurer. In her capacity as State Treasurer, Fitch also chairs the College Savings Plans Of Mississippi Board of Directors.
Cory T. Wilson is a Madison attorney with Heidelberg Steinberger Colmer & Burrow, P.A. Follow Cory on Twitter, @CoryWilsonMS, or email cory@corywilson.ms.

Most Popular

Recent Comments

scamasdscamith on News Watch Ole Miss
Frances Phillips on A Bigger, Better Student Union
Grace Hudditon on A Bigger, Better Student Union
Millie Johnston on A Bigger, Better Student Union
Binary options + Bitcoin = $ 1643 per week: https://8000-usd-per-day.blogspot.com.tr?b=46 on Beta Upsilon Chi: A Christian Brotherhood
Jay Mitchell on Reflections: The Square
Terry Wilcox SFCV USA RET on Oxford's Five Guys Announces Opening Date
Stephanie on Throwback Summer
organized religion is mans downfall on VP of Palmer Home Devotes Life to Finding Homes for Children
Paige Williams on Boyer: Best 10 Books of 2018
Keith mansel on Cleveland On Medgar Evans
Debbie Nader McManus on Cofield on Oxford — Lest We Forget
Bettye H. Galloway on Galloway: The Last of His Kind
Richard Burns on A William Faulkner Sighting
Bettye H. Galloway on Galloway: Faulkner's Small World
Bettye H Galloway on Galloway: Faulkner's Small World
Bettye H Galloway on Galloway: Faulkner's Small World
Bettye H. Galloway on Galloway: Faulkner's Small World
Ruby Begonia on Family Catching Rebel Fever
Greg Millar on The Hoka
Greg Millar on The Hoka
Greg Millar on The Hoka
Greg Millar on The Hoka
jeff the busy eater on Cooking With Kimme: Baked Brie
Travis Yarborough on Reflections: The Square
BAD TASTE IN MY MOUTH on Oxford is About to Receive a Sweet Treat
baby travel systems australia on Heaton: 8 Southern Ways to Heckle in SEC Baseball
Rajka Radenkovich on Eating Oxford: Restaurant Watch
Richard Burns on Reflections: The Square
Guillermo Perez Arguello on Mississippi Quote Of The Day
A Friend with a Heavy Heart on Remembering Dr. Stacy Davidson
Harold M. "Hal" Frost, Ph.D. on UM Physical Acoustics Research Center Turns 30
Educated Citizen on Buzzed Driving is Drunk Driving
Debbie Crenshaw on Trump’s Tough Road Ahead
Treadway Strickland on Wicker Looks Ahead to New Congress
Tony Ryals on parking
Heather Lee Hitchcock on ‘Pray for Oxford’ by Shane Brown
Heather Lee Hitchcock on ‘Pray for Oxford’ by Shane Brown
Dr Donald and Priscilla Powell on Deadly Plane Crash Leaves Eleven Children Behind
Dr Donald and Priscilla Powell on Deadly Plane Crash Leaves Eleven Children Behind
C. Scott Fischer on I Stand With Coach Hugh Freeze
Sylvia Williams on I Stand With Coach Hugh Freeze
Will Patterson on I Stand With Coach Hugh Freeze
Rick Henderson on I Stand With Coach Hugh Freeze
George L Price on I Stand With Coach Hugh Freeze
on
Morgan Shands on Cleveland: On Ed Reed
Richard McGraw on Cleveland: On Cissye Gallagher
Branan Southerland on Gameday RV Parking at HottyToddy.com
Tom and Randa Baddley on Vassallo: Ole Miss Alum Finds His Niche
26 years and continuously learning on Ole Miss Puts History In Context With Plaque
a Paterson on Beyond Barton v. Barnett
Phil Higginbotham on ‘Unpublished’ by Shane Brown
Bettina Willie@www.yahoo.com.102Martinez St.Batesville,Ms.38606 on Bomb Threat: South Panola High School Evacuated This Morning
Anita M Fellenz, (Emilly Hoffman's CA grandmother on Ole Miss Spirit Groups Rank High in National Finals
Marilyn Moore Hughes on Vassallo: Ole Miss Alum Finds His Niche
Jaqundacotten@gmail williams on HottyToddy Hometown: Hollandale, Mississippi
Finney moore on Can Ole Miss Grow Too Big?
diane faulkner cawlley on Oxford’s Olden Days: Miss Annie’s Yard
Phil Higginbotham on ‘November 24’ by Shane Brown
Maralyn Bullion on Neely-Dorsey: Hog Killing Time
Beth Carr on A Letter To Mom
Becky on A Letter To Mom
Marilyn Tinnnin on A Letter To Mom
Roger ulmer on UM Takes Down State Flag
Chris Pool on UM Takes Down State Flag
TampaRebel on UM Takes Down State Flag
david smith on UM Takes Down State Flag
Boyd Harris on UM Takes Down State Flag
Jim (Herc @ UM) on Cleveland: Fall Vacations
Robert Hollingsworth on Rebels on the Road: Memphis Eateries
David McCullough on Shepard Leaves Ole Miss Football
Gayle G. Henry on Meet Your 2015 Miss Ole Miss
Guillermo F. Perez-Argüello on Neely-Dorsey: Elvis Presley’s Big Homecoming
Jennifer Mooneyham on ESPN: Ole Miss No. 1 in Nation
Wes McIngvale on Ole Miss Defeats Alabama
BARRY MCCAMMON on Ole Miss Defeats Alabama
Laughing out Loud on ESPN: Ole Miss No. 1 in Nation
Dr.Bill Priester on Cleveland: On Bob Priester
A woman who has no WHITE PRIVILEGE on Oxford Removes Mississippi Flag from City Property
A woman who has no WHITE PRIVILEGE on Oxford Removes Mississippi Flag from City Property
paulette holmes langbecker on Cofield on Oxford – Rising Ole Miss Rookie
Ruth Shipp Yarbrough on Cofield on Oxford — Lest We Forget
Karllen Smith on ‘Rilee’ by Shane Brown
Jean Baker Pinion on ‘The Cool Pad’ by Shane Brown
Janet Hollingsworth (Cavanaugh) on John Cofield on Oxford: A Beacon
Proud Mississippi Voter on Gunn Calls for Change in Mississippi Flag
Deloris Brown-Thompson on Bebe’s Letters: A WWII Love Story
Sue Ellen Parker Stubbs on Bebe’s Letters: A WWII Love Story
Tim Heaton on Heaton: Who is Southern?
Tim Heaton on Heaton: Who is Southern?
Karen fowler on Heaton: Who is Southern?
Don't Go to Law School on Four Legal Rebels Rising in the Real World
bernadette on Feeding the Blues
bernadette on Feeding the Blues
Joanne and Mark Wilkinson on Ron Vernon: a Fellowship of Music
Mary Ellen (Dring) Gamble on Ron Vernon: a Fellowship of Music
Cyndy Carroll on Filming it Up in Mississippi
Dottie Dewberry on Top 10 Secret Southern Sayings
Brother Everett Childers on ‘The Shack’ by Shane Brown
Mark McElreath on ‘The Shack’ by Shane Brown
Bill Wilkes, UM '57, '58, '63 on A Letter from Chancellor Dan Jones
Sandra Caffey Neal on Mississippi Has Proud Irish Heritage
Teresa Enyeart, and Terry Enyeat on Death of Ole Miss Grad, U.S. Vet Stuns Rebel Nation
P. D. Fyke on Wells: Steelhead Run
Johnny Neumann on Freeze Staying with Rebels
Maralyn Bullion on On Cooking Southern: Chess Pie
Kaye Bryant on Henry: E. for Congress
charles Eichorn on Hotty Tamales, Gosh Almighty
Jack of All Trades on Roll Over Bear Bryant
w nadler on Roll Over Bear Bryant
Stacey Berryhill on Oxford Man Dies in Crash
John Appleton on Grovin' Gameday Memories
Charlotte Lamb on Grovin' Gameday Memories
Guillermo F. Perez-Argüello on Two True Mississippi Icons
Morgan Williamson on A College Education is a MUST
Morgan Williamson on A College Education is a MUST
Jeanette Berryhill Wells on HottyToddy Hometown: Senatobia, Mississippi
Tire of the same ole news on 3 "Must Eat" Breakfast Spots in Oxford
gonna be a rebelution on Walking Rebel Fans Back Off the Ledge
Nora Jaccaud on Rickshaws in Oxford
Martha Marshall on Educating the Delta — Or Not
Nita McVeigh on 'I'm So Oxford' Goes Viral
Guillermo F. Perez-Argüello on How a Visit to the Magnolia State Can Inspire You
Charlie Fowler Jr. on Prawns? In the Mississippi Delta?
Martha Marshall on A Salute to 37 Years of Sparky
Sylvia Hartness Williams on Oxford Approves Diversity Resolution
Jerry Greenfield on Wine Tip: Problem Corks
Cheryl Obrentz on I Won the Lottery! Now What?
Bnogas on Food for the Soul
Barbeque Memphis on History of Tennessee Barbecue
Josephine Bass on The Delta and the Civil War
Nicolas Morrison on The Walking Man
Pete Williams on Blog: MPACT’s Future
Laurie Triplette on On Cooking Southern: Fall Veggies
Harvey Faust on The Kream Kup of the Krop
StarReb on The Hoka
Scott Whodatty Keetereaux Keet on Hip Hop — Yo or No, What’s Your Call
Johnathan Doeman on Oxford Man Dies in Crash
Andy McWilliams on The Warden & The Chief
Kathryn McElroy on Think Like A Writer
Claire Duff Sullivan on Alert Dogs Give Diabetics Peace of Mind
Jesse Yancy on The Hoka
Jennifer Thompson Walker on Ole Miss, Gameday From The Eyes of a Freshman
HottyToddy.com