Submitted by MQSullivan on Fri, 09/25/2009 – 6:44am.
A true fiscal conservative protects the taxpayers even when it will raise the ire of those around them. Comptroller Susan Combs inherited a structurally-flawed college program known as the Texas Tomorrow Fund.
In recent days she has taken difficult, but necessary, actions to protect the integrity of the fund. More importantly, she has protected the taxpayers who will ultimately bear any risks the fund’s structure might create.
The change in policy stops the payment of financial benefits to participants who cancel their contracts with the fund. In plain English: the Tomorrow Fund cannot be used as a taxpayer-backed, all-purpose savings plan. The fund was designed to let parents lock in tuition rates at Texas’ colleges with a structured savings plan.
From day-one it was about providing for college, not funding vacations or supplementing investment portfolios. Whether the Tomorrow Fund should have ever been created is a separate issue and beside the point, it exists. It is the comptroller’s responsibility to keep the fund solvent; otherwise, taxpayers are on the hook for making good on the contracts as the tuition bills come due.
When Comptroller Combs announced the policy change, she was criticized by some with varying motives. The plan should, and does, allow folks to take out their money if the child no longer needs the funds. At the same time, the contracts for those using this savings plan specifically allow the rules for withdrawing the money to be altered.
There are two important points for those currently in the fund:
- If you use it for a child’s college education, despite stock market conditions the investment remains fully protected by the state constitution, and
- It is probably an even better deal than originally intended when one considers the rising cost of tuition over the last decade.
But it should be such a deal only if used for the purpose intended: to save for college. Unfortunately, some have sought to use the Texas Tomorrow Fund as little more than a taxpayer-backed hedge fund. The old rules allowed people who canceled their contracts to not only get their money back, but also substantial interest from the taxpayers. That is unsustainable. Read the rest of this entry »