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State’s failure to refill prepaid college fund, tapping of abandoned property fund worry Treasurer

Thomas Wells | Buy at PHOTOS.DJOURNAL.COM

Thomas Wells | Buy at PHOTOS.DJOURNAL.COM

By TED CARTER

Two approaches Mississippi legislators took to help make fiscal ends meet in the 2016 session are especially troublesome to Treasurer Lynn Fitch.

One is a refusal to replenish the Mississippi Prepaid Affordable College Tuition Fund to cover a $127 million shortfall the fund incurred before Fitch suspended new sign-ups for 18 months. Fitch reopened the fund on Oct. 1, 2014 but created a separate account for it and raised required contribution levels to ensure against future shortfalls.

The other trouble spot is the taking of $14 million from the state’s Abandoned Property Fund. She cited this transfer of money that does not actually belong to the state in a strongly worded letter to Gov. Phil Bryant, Lt. Gov. Tate Reeves and Attorney General Jim Hood. The letter criticized an “abuse of state bond authority” by legislators in framing the 2016 bond issue.

Faced with a revenue shortfall that closed in on $120 million by the end of the session, legislators made big cuts in most all state agencies and departments.

At the same time, they authorized $577 million in tax relief to businesses and individuals spread over several years beginning in 2018. Those cuts followed $350 million in tax reductions over the last four years. State Economist Darin Webb has told legislators the earlier cuts are contributing to the current revenue shortfalls.

As chairwoman of the College Savings Mississippi Board, Fitch has been urging legislators the past three years to begin covering the unfunded liabilities in the prepaid college fund without success. “Putting off the necessary cash infusion, year after year, as the Legislature has, is merely kicking the can down the road,” Fitch said in her letter.

Legislators rejected a request from Fitch for $12.8 million in the new fiscal year to help close the funding gap.

She said the College Savings Mississippi Board has done its part by restructuring the prepaid college program to make it “cost neutral” to the state. “But, the Legislature cannot continue to ignore the unfunded liabilities that already exist,” she added, and noted in the near future families that paid into the find will begin drawing on it to send their children to college.

The Abandoned Property Fund raided by legislators this year is made up of assets such as tax refunds, insurance policy payouts and unclaimed bank accounts belonging to people who cannot be found. After five years, the assets are turned over to the state Treasurer’s office and put into the fund.

Fitch said it has been the mission of her office to find the beneficiaries and return the assets to them. “We’ve returned over $41 million the last four years,” she said.

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About Ted Carter

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