Tuesday, March 6, 2018

MPACT needs mo' money

State Treasurer Lynn Fitch issued the following press release.


Legislature Must Address MPACT-Legacy’s Shortfall or Face Insolvency by 2026

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 today asking for a special appropriation for Fiscal Year 2019 to address funding liabilities in the Legacy Program of the Mississippi Prepaid Affordable College Tuition program (MPACT).

“I’m pleased to report that the steps the Board took to restructure MPACT have put the program on the right path,” said Treasurer Fitch. “MPACT’s Horizon Program is cost-neutral to taxpayers, a better deal for Mississippi savers, and in good fiscal health. Our actions to defer enrollment set MPACT up for long-term sustainability.”

“But, the underfunding issues of the Legacy Program remain,” continued Fitch. “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. Delaying this special appropriation 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 actuarial report presented to the Board on November 11,, 2017 indicates funding for the Legacy Program is at 69.4%, with an unfunded liability of $135.4 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 this shortfall is $13,545.549.

This is the fifth time the Board has asked the Legislature to address the Legacy Program shortfall with a special appropriation. The previous requests all went unanswered. If the Legislature continues to fail to provide a cash infusion and all other economic assumptions are met, the Legacy Program will be insolvent by year 2026.

The Treasurer’s letter, as well as the Board’s resolution are attached.

30 comments:

Anonymous said...

Of course it does. Our legislature can’t do simple math. None of them. Neither can the state-wide office holders. Math is a foreign language to them all. This should disqualify all of them from any future elected offices.

Anonymous said...

I don't get it. Don't the parents invest money for eventual college tuition payment for their kids in this program? Why does the state have to kick anything in?

Anonymous said...

Thank Tate Reeves for this mess.

Anonymous said...

Lynn Fitch is going around the state preaching financial literacy. Can you say irony.

Anonymous said...

Here is how it works.....parent throws in some money. Our state guarantees that money will grow faster than college tuition inflation. If it doesn’t, the state makes up the difference.

So the taxpayers are on the hook if the state can’t make colleges reign in the growth of college costs beyond what the state can earn from its investment managers.

No moron would take that bet except elected officials with no skin in the game. They get to make that bet on our behalf. And then go preach about financial conservatism and financial literacy?

Anonymous said...

Same people that approved this also approved SLRP. They also killed the bridge funding program. They also passed tax breaks for wealthy business owners. They also mis-project budget estimates EVERY year. Why is any of this a surprise?

Anonymous said...

Good thing PERS is on solid financial footings

Anonymous said...

@7:13 that's MACS, this is MPACT. If only there was a website explaining the program...

Anonymous said...

Same people that approved this also approved SLRP.

Nope. As with SLRP, all established when the legislature was under the iron fisted majority control of Donkeycrats.

But that ruins your narrative, doesn't it?

Anonymous said...

Why does the state have to kick anything in?

Just like PERS the model assumed unrealistic growth rates for the underlying investments.

Anonymous said...

Nice try 726, but wrong. Thank Marshall Bennett for this fiasco, and his compatriot, Ronnie Musgrove.

Fitch should have 'noticed' this need before now, and for that she should answer. But the ridiculous concept was part of those 90's dot.Com bubble stock market craze that promised everybody everything. SLURP, PERS so called cola, all to be paid out of 'wonder money'.

Anonymous said...

Lynn is the current chair of PERS Board......I missed her press release on this issue

Nothing but politics, which she doesn’t do very well.

Anonymous said...

@9:19 then why can’t we “repeal and replace” now that we have “the party of fiscal responsibility” running things?

Kingfish said...

Republicans have had plenty of opportunities to do something about SLRP but have taken a pass.

Anonymous said...

Simple. College costs have risen 5x the inflation rate over the last 15or20 years. Got to keep those admin and prof salaries 5x that of non-college affiliated working people.

Anonymous said...

Sorry 9:52, Bennett kicked off the program but Reeves had 8 long years to make the moves necessary (that Fitch HAS done) to place MPACT on more stable footing when it was obvious it was not working. Instead he spent all those years using the CollegeSavings Mississippi advertising budget to establish free name recognition in advance of his run for Lite Guv. Fitch DID notice this before now, took action and is still working to resolve the problems. Catch up before commenting further.

Anonymous said...

If Tate Reeves has no responsibility in this tell me why Lynn caught as treasurer her first year, but Tate did not correct the issue for the 8 years he was Treasurer prior to Lynn? Looks like Tate was not doing his job to me.

Anonymous said...

Everything Fitch touches goes in the crapper. Sometimes she didn't do it, but she could have stopped it. Look at history.

Anonymous said...

9:19 every year the legislature does not kill SLRP they are complicit. Party affiliation has no bearing.

Anonymous said...

I remember when Fitch hosted the 529 1-mile fun run early on in her term at the Renaissance. They gave every top finisher in his/her age group a $529 investment in the MACS program. My daughter was around 4 or 5 at the time. There were so few people registered for this run that you basically only had to finish it to win $529. They don't give out as many of these "scholarships" now, but this was easy money. Thanks taxpayers!

Anonymous said...

7:59 how many letters or emails or phone calls have you written or placed to your Senator and House reps demanding that they end SLRP?

Anonymous said...

If Lynn had just left MPACT open and continued to accept contracts AND payments, MPACT would not be in this shape - Just ask the State Auditor. Fitch is separating the two funds which should be one fund, which would have the money to make the payments due. MPACT, like any other college savings fund have their money invested in the stock market, which goes up and down. Ask Lynn about her missed bond payment on the state's bond debt. She lied and it took the Governor and AG to call her on the carpet before she got the state
in real trouble. Both bond rating companie have launched an investigation into this matter. Keep watching and wait for the FEDS to come to town!

Anonymous said...

Fitch has fixed and continues to fix MPACT. The Legacy program was closed to new participants and then replaced by the structurally responsible Horizon offering. Fitch did stop it when it comes to MPACT. Look at history.

Anonymous said...

Someone could look at California or New York or Iowa and find out why their college tuition plans work well and ours does not.

Anonymous said...

"Fitch should have 'noticed' this need before now, "

Read it again. It seems this is the fifth year she had made this request, and the legislature has ignored it each time.

FWIW, my kids have their college money in 529 plans in another state without any guaranteed payout. If there is some guaranteed payout it's no wonder the state is hosed.

Anonymous said...

"Yes, sir, Mr. 8:17 AM, I agree with you 1,000 percent. I'll file a bill today killing that program. And thank you for calling. You betcha."

Anonymous said...

I've dealt with her enough not to like nor respect Lynn Fitch, but this is mostly on Tate not her. She inherited the mess that is MPACT (thankfully, it is a relatively small mess) from Tate. She tried to stop the gushing bleeding and has asked the Legislature to make up the shortfall quite a few times. Because it would draw light to his poor job as Treasurer, as Lt. Governor Tate won't agree to appropriate the money to shore up the shortfall.
That said, if Lynn were really courageous or conservative, she'd have ended new enrollments in the program instead of changing the rules for new enrollments. MS is now one of only 3 or 4 states with an MPACT type program. PERS is enough of a liability over the taxpayers' heads; we don't need MPACT too. Also, MACS is the one of the worst performing market-based college programs in the country. It needs to be overhauled.

Anonymous said...

Hey, 8:03am, you really should not speak of things you know nothing about. The awards in that race were paid for by sponsorships and race entries and other proceeds FROM THE RACE. NOT BY TAXPAYERS.

Anonymous said...

One more of many reasons to vote for ANYBODY BUT TATER!

Anonymous said...

The MACS plan does not have a clawback provision dealing with recovery of income taxes for which contributions were tax exempt. I rolled my kids’ money to a Vanguard 529 plan years ago because I couldn’t track returns in MACS and the TIAA-CREF fees were outrageous. No accountholder is bound to leave their money their with such poor returns and options.

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