HIGHER EDUCATION
Combs reverses course on tuition savings plan
Comptroller says decision should be made by Legislature.
By W. Gardner Selby
AMERICAN-STATESMAN STAFF
Saturday, October 31, 2009
State Comptroller Susan Combs reversed course Friday, signaling that college-age participants in the state's original prepaid tuition plan who seek refunds will receive both the amount of their original investment and their accumulated earnings.
This year, a Combs-led board stirred unease by deciding to change the refund options for the Texas Guaranteed Tuition Plan, once called the Texas Tomorrow Fund. The plan's 108,000 contract holders were given a Nov. 30 deadline to request refunds that included earnings or lose the option of receiving them.
 Susan Combs
said she would ask that original policy be restored. |
That demand is expected to dissolve next week, although contract holders or beneficiaries who are younger than 18 or not yet high school graduates still have a one-time opportunity to quit the plan and get their investment, plus earnings and minus administrative fees.
Participants were never in danger of losing pre-purchased tuition credits.
Combs announced Friday that she will ask the Texas Prepaid Higher Education Tuition Board, which is meeting Thursday, to restore the plan's longtime refund approach, enabling beneficiaries who are 18 years old or high school graduates to receive refunds with earnings, less administrative fees.
Combs, a Republican poised to seek re-election next year, acted on an outcry from contract holders and more than 40 legislators who said the board's decision should have been left to lawmakers. Previously, Combs had defended the move, initiated in May, as a permissible step toward shoring up the plan, which is projected to run short of money to pay benefits as soon as 2015.
"When Texans want to comment, I think it's my job to be responsive," Combs said, noting that she previously served in the Legislature. "I'm trying to balance fiscal responsibility with being responsible to the citizens of the state. I hope we have struck a balance they will appreciate. ... I do not view this as a political hot potato."
About 5,290 contracts have been canceled in response to the deadline, accounting for $88,547 in refunds. Combs said she plans to present recommendations next week to allow families who bowed out of the plan because ofthe deadline to resume their contracts and receive credits for charged administrative fees.
The 1995 Legislature created the plan at the recommendation of then-state Comptroller John Sharp. However, it stopped enrollment when lawmakers deregulated tuition in 2003.
In a letter copied to legislators, Combs told Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus of her plans to ask the board to postpone any change in the refund policy until lawmakers have a chance to meet and fund a solution. Combs said later that she hopes the Legislature studies how best to pay for the plan.
"I believe the Legislature needs to start funding the plan in 2011 to fix the projected plan deficit," she said.
A financial adviser to Combs has said that unless investment circumstances improve, lawmakers will need to pony up $65 million for 2015 and about $434 million in 2016-17 to help cover contracted tuition payments.
State Rep. Jim McReynolds, who had asked Attorney General Greg Abbott to review the legality of the board's May action, hailed Combs' move.
"Praise be to God," the Lufkin Democrat said.
Rep. Scott Hochberg, D-Houston, who led more than 40 Democratic legislators to urge Combs to reverse course, said, "It's important that the state keep its word when it offers a savings fund like the Texas Tomorrow Fund."
wgselby@statesman.com; 445-3644
