Texas Tomorrow Fund Short $3 Billion

Carole Keeton McClellan Rylander Strayhorn, you have some ’splainin’ to do:

The Texas Tomorrow Fund’s prepaid college tuition program is severely underfunded and could be short as much as $3.3 billion to meet its obligations over the next two decades, Comptroller Susan Combs warned Thursday.

That means the shortfall for the fund is as much as five times bigger than previously estimated.

It also begs the question, “how in the hell do you miss by that much?” I mean, I understand that an “estimate” is an “estimate,” but this is insane.

Of course, newly elected Comptroller Susan Combs is the one who will have to deal with all this flack. But, since she’s only been in office about a month and this all happened on former Comptroller Carole Keeton Strayhorn’s watch, it’s really not her fault. (Make a note: I absolved one Republican of responsibility for something bad.)

Note this:

The 158,000 young Texans enrolled in the program are guaranteed a set tuition rate. So the shortfall would have to be made up by universities and in the state budget.

Made up by universities how? By selling a few extra licensed ball caps? No, by hiking tuition more. That’s ironic, because the more they hike tuition, the more the fund will come up short.

More:

In a letter to Gov. Rick Perry and legislative leaders obtained by The Dallas Morning News, Ms. Combs offered a “sobering” evaluation of the program based on the results of a study by a group of outside experts who reviewed the financial integrity of the tuition fund at the request of the comptroller.

“While no one can accurately predict the future performance of the Plan with absolute certainty, I believe these estimates are sobering. To that end, I look forward to working with each of your offices on this important issue,” Ms. Combs said in her letter.

Going back to what I said earlier about tuition hikes, I do wonder how much the tuition hikes are responsible for the massive shortfall? Although the people who bought into the fund did so at “fixed rates,” I wonder if the accounting is such that, although the plans were paid for at the old rates, the funds are considered insufficient to cover tuition at the new rates? If so, it’s still a shortage, but more of an “on paper” shortage caused by a lack of price controls on tuition. If, however, there is no adjustment made for hiked tuition and the fund is short that many billion to cover tuition under the “old” rates, then it is actually far worse.

Either way, you can bet your bottom dollar that we’re going to be pouring a couple billion out of the surplus right into the Texas Tomorrow Fund to keep it fully solvent.

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