Jackson, MS. In her capacity as Chair of the Board of Directors of the College Savings Plans of Mississippi, Treasurer Lynn Fitch delivered a letter and resolution to the Legislature yesterday asking for a special appropriation of $12.6 million for Fiscal Year 2018 to address funding liabilities in the Legacy Program of the Mississippi Prepaid Affordable College Tuition program (MPACT).
“The steps taken by the Board to restructure MPACT have restored the financial health of the program going forward,” said Treasurer Lynn Fitch. “Our Horizon Program is not only meeting, but exceeding our funding targets. It is cost-neutral to taxpayers and cost-effective for Mississippi savers.”
“But, the Legacy Program still carries a funding shortfall from before its restructuring,” continued Fitch. “That program is only 72.1% funded and failure to address the shortfall in funding will lead to insolvency by 2025. The Legislature can either address the shortfall in smaller yearly increments, as the Board suggests, or it can make up the shortfall upon insolvency as Mississippi students matriculate. MPACT carries the full faith and credit of the State, so taxpayers will pay for it one way or another.”
Shortly after Fitch took office as Treasurer, in the Fall of 2012, she and the Board deferred enrollment in MPACT to have its first actuarial audit performed, analyzing the long-term sustainability of the program. Contracts existing at that time, known as Legacy Contracts, continued to receive benefits throughout that time. New contracts issued after MPACT enrollment was reopened in October 2014 became known as Horizon Contracts, and are structured differently.
Pursuant to a funding policy established by the Board as part of the restructuring, when the Legacy Program fails to hit its funding target (100%), the Board will request a special appropriation of 10% of the shortfall from the Legislature. The amount of the requested cash infusion to cover the Fiscal Year 2016 shortfall is $12,646,987.
This is the fourth year the Board has asked the Legislature to address the Legacy Program shortfall with a special appropriation. The previous three requests went unanswered.
The Treasurer’s letter, as well as the Board’s resolution, can be found here. The actuarial reports can be found at http://www.treasurerlynnfitch.com/collegesavingsmississippi/Pages/MPACT-Reports.aspx.