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 today asking for a special appropriation for Fiscal Year 2017 to address funding liabilities in the Legacy Program of the Mississippi Prepaid Affordable College Tuition program (MPACT).
“Several years ago, the Board took steps to defer enrollment in MPACT so we could restructure it, make it cost-neutral to taxpayers, and improve its long-term sustainability,” said Fitch. “And, I’m pleased to report that now that MPACT is open again to enrollment, it is on a far better path. It is in good fiscal health and meeting the funding targets the Board has set.
“But, the underfunding issues of the past remain,” continued Fitch. “And, it is imperative the Legislature address this liability with a special appropriation in the coming fiscal year. MPACT is backed by the full faith and credit of the state. Kicking this can down the road will ultimately mean a bigger bill for Mississippi taxpayers.”
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.
An actuary report presented to the Board on February 23rd indicates funding for the Legacy Program is at 73.2%, with an unfunded liability of $127.7 million. 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 2015 shortfall is $12,766,291.
This is the third year the Board has asked the Legislature to address the Legacy Program shortfall with a special appropriation. The previous two requests went unanswered. If the Legislature continues to fail to provide the necessary cash infusion and all other economic assumptions are met, the Legacy Program will be insolvent by year 2025.
The Treasurer’s letter, as well as the Board’s resolution and accompanying charts, can be found here