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," state treasurer Lynn Fitch says.
State treasurer Lynn 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 percent, well below the calculated 7.8 percent needed to stay afloat, Fitch says the program needs to be evaluated. M-pact, as it's called, has been under funded since 2001 and is currently operating at a 76.8 percent funding level.
"That's the nature of the beast when you're depending on investment income," Lt. Governor Tate Reeves says. "Some years you do really well. Some years you don't do so well."
Lieutenant Governor Tate Reeves oversaw the program during his 8 years as treasurer and says freezing it is a rash decision and that defined benefit plans, like M-pact often operate below full funding.
"Virtually every defined benefit plan has been under funded in American for the last 15 years," Reeves says.
For the nearly 23,000 families enrolled in M-pact, if the program shuts down, state statute requires their benefits be paid if an individual is currently enrolled or within 5 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," Reeves says.
Fitch says she doesn't want to have to use taxpayer money either but that's the direction the program is headed.