Today, the College Savings Plans of Mississippi (CSPM) Board of Directors met to review the financial health of the Mississippi Prepaid Affordable College Tuition Program (MPACT) and found that the Horizon program is sound and operating well in its first year since reopening.
“I am very pleased by the actuarial reports we discussed today,” said Treasurer Lynn Fitch, Chair of the CSPM Board of Directors. “When we deferred enrollment to MPACT to take the time to restructure it, our goal was to reopen it as cost-neutral to taxpayers and financially sound for Mississippi college savers. Today’s reports provide evidence that we’re achieving our goals.”
Shortly after Treasurer 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 was reopened in October 2014 became known as Horizon Contracts, and are structured differently.
The actuarial reports show that the Horizon Plan has met the funding policy goals of 115%, as set by the Board and on par with other similar state college savings plans. In addition, the return on investment of about 5.5% is close to the anticipated return of 6.75%, particularly in light of the volatile market.
The reports indicate a continuing shortfall in the Legacy Plan. And, the CSPM Board of Directors approved a resolution asking the Legislature for a special appropriation of approximately $12.7 million, in accordance with the Board’s funding policy. MPACT is backed by the full faith and credit of the state of Mississippi.
“We cannot make up for any shortfalls by picking the pockets of our Horizon savers,” said Fitch. “But, the Legislature must address the Legacy Plan’s ongoing funding issues. The Board has addressed MPACT’s systemic problems so that unfunded liabilities should be a thing of the past. But, the Legislature cannot ignore the unfunded liability that already exists. Kicking the can down the road is not fair to the Mississippi taxpayers who will ultimately foot the bill.”