Private firm begins MPACT audit; state leaders in disagreement
JACKSON, MS (Mississippi News Now) - Auditors from a private firm out of Michigan were at the state treasurer's office Wednesday loading up information and financial documents as they begin the process of examining Mississippi's Prepaid College Tuition Program.
"Our program has continued to down spiral," said State Treasurer Lynn Fitch.
Fitch requested an actuarial audit and froze the program to new enrollees because of what she says are red flags in the program's sustainability. With a current $94 million shortfall and yearly return investments averaging just more than 4%, well below the calculated 7.8% needed to stay afloat, Fitch says the program needs to be evaluated.
MPACT, as it's called, has been under funded since 2001 and is currently operating at a 76.8% funding level.
"That's the nature of the beast when you're depending on investment income. Some years you do really well. Some years you don't do so well," said Lieutenant Governor Tate Reeves.
Reeves oversaw the program during his eight years as treasurer and says freezing it is a rash decision and that defined benefit plans, like MPACT, often operate below full funding.
"Virtually every defined benefit plan has been under funded in American for the last 15 years," said Reeves.
For the nearly 23,000 families enrolled in MPACT, if the program shuts down, state statute requires their benefits be paid if an individual is currently enrolled or within five years of enrolling at a college or university. All others would receive a refund plus interest. With a shortfall, that would require tax dollars.
"We've never put a dollar of state money into this plan and I wouldn't anticipate ever having to," said Reeves.
Fitch says she doesn't want to have to use taxpayer money either but that's the direction the program is headed.
"I don't think that's fair to go to the taxpayers and say can you subsidize this program. Can we get it out of the general fund?" said Fitch.
As of Thursday morning, Fitch says no one has withdrawn from MPACT and more folks are asking to enroll. She says that's evidence her office is doing what's needed.
"This is a very well thought out, methodical process," said Fitch "It's not the purpose to shut the program down at all. It's the purpose to do an actuarial audit and really do a pass over on is it sustainable, what do we need do and how do we restructure," said Fitch.
The audit and the freeze could last several months before the program's future is decided.
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