Dissolving Florida Prepaid

Whats the angle here? Even after reading the whole article, its hard to tell.  The relentless cynic in me believes its just an angle of attack in line with de-funding government programs regardless of how effective they are.

In point of fact, Florida Prepaid is $500 million dollars over budget.  They have $10 billion in assets for $9.5 billion in liabilities (expected tuition fees for program participants).

What should be a startling reminder that government can still get it right, instead finds itself in the same crosshairs that target programs like the joint-strike fighter’s second engine or effulgent streams of pet project programs funding research on the mating habits of manatees or buffalo grass chiggers.

So why do it? It’s “in the black” as the St. Petersburg Times reports. And it sends and keeps a relevant number of Floridians in state schools.

Nearly 20 percent of undergraduate students at Florida universities have a prepaid college plan.

Perhaps a less cynical approach is the fear that the schizophrenic tides in the American market might devastate the fund, so better safe than sorry.

First, the program doesn’t invest participants contribution in stocks, they put their money in government securities – and if those fail we have bigger problems than our state tuition program being in the red.

Next and last:

The program was built on the assumption of tuition increases no greater than 7 or 8 percent annually. But tuition went up 15 percent last year and could go up another 15 percent this year.

[Florida Prepaid founder Stanley] Tate, too, has warned that tuition increases threaten the program’s viability. But he said that three years ago, the program built in assumptions of 15 percent increases.

So that means the program founder, a Miami-based businessman, prepared for the catastrophic impact of the 2008 collapse, and what it would do to tuition, before it happened. Meaning the program was fully prepared for the recent and future expected shocks to the price of in-state tuition.

In the end, the Florida Prepaid College tuition program looks less like the reaching hands of a menacing Big Government Goliath and more like the desperate dogmatic small government onslaught of ideologues.

Source

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