MPACT audit overdue, if college fund underfunded

Published 2:23 pm Friday, September 28, 2012

Since 1996, Mississippi has been selling future college educations at current prices. The Mississippi Prepaid Affordable College Tuition Plan, or MPACT, now has 22,293 participants and it holds more than a quarter of a billion dollars in trust.

Those are impressive numbers. But are they impressive enough?

State Treasurer Lynn Fitch isn’t so sure.

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According to Fitch, even with $265.1 million in trust, MPACT is only 76.8 percent funded, leaving a $94 million shortfall. MPACT is shy of where it needs to be financially because its investment earnings last year were just 0.6 percent, far below the nearly 8 percent earnings it needs to stay ahead of tuition increases. Indeed, MPACT has not earned as much money as it has needed to since 2000.

Staying ahead of academic costs makes or breaks MPACT.

In creating MPACT, the Mississippi Legislature promised participants if their investments did not grow to cover the cost of tuition in the future, state taxpayers would make up the difference.

Now that that difference is approaching $100 million, Fitch is concerned. So are MPACT’s trustees, who last month voted unanimously to shut down enrollments, at least temporarily. They also ordered an actuarial audit — the first in the program’s history.

Fitch’s actions surprised some officials, notably her predecessor, Lt. Gov. Tate Reeves. …

That may be. But after more than a decade of MPACT coming up short, we respect Fitch’s approach. “This is a very well thought out, methodical process,” Fitch said of the audit. “It’s not the purpose to shut the program down at all.”

The purpose, she said, is to determine if MPACT is sustainable. That is a $94 million question that needs answering.