Texas lawmakers adjourned without fixing the state’s prepaid college tuition program, which now faces a $600 million shortfall and could go broke as early as 2014 by some estimates.
If that happens, state taxpayers may have to cover the shortfall because the state constitution guarantees payment to those who bought in.
“This thing is going to smack everybody in the face,” said Keith Oakley, a former state representative who supported the fund’s creation and bought contracts for his children. “I just don’t know when.”
The issue didn’t get traction in the legislative session because the state’s budget shortfall loomed large over many issues and programs.
“Everything was put on hold because of the financial crisis the state was facing,” said Oakley, who serves as legislative director for the Tomorrow Fund Families, which is working to help families who rely on the contracts.
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The comptroller’s office didn’t have the data available this week to determine how recent market improvement has lessened the shortfall, but at one point it was projected at more than $1 billion.
[Comptroller spokesperson RJ] DeSilva said the plan’s current unfunded liability should be available in the 2011 annual report after August.
The fund now has about $1.4 billion in assets, he said.
Because the program is constitutionally backed, the state would eventually have to devise a way to cover the shortfall, he said. “It’s a legislative decision in terms of addressing it,” he said.
But don’t worry, I’m sure the next Lege will clean up this mess, too. Hopefully they’ll have fewer “emergencies” to distract them from the task.