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AUSTIN — Texas Comptroller Susan Combs, under pressure from lawmakers, announced Friday that she will recommend dropping plans to slash refunds to parents and others who invested in a state prepaid-college-tuition program.
Combs’ decision would reverse an unpopular policy adopted in May under which people who paid into the Texas Guaranteed Tuition Plan would receive only the money they put into the plan if they requested a refund. Under that policy, they would not receive earnings, no matter how long their money had been invested.Combs’ latest recommendation is expected to be approved by the Texas Prepaid Higher Education Tuition Board when it meets Thursday. The Republican comptroller heads the board.In a telephone interview, Combs said she acceded to lawmakers’ wishes to revert to the former policy until the Legislature meets in 2011 to discuss long-term solutions. The board had tightened up the refund policy to keep the fund solvent in the face of rapidly rising tuition costs and lower-than-expected investment returns. "The Legislature indicated to us that they wanted to decide the solution for the problem, and I’m going to defer to them," Combs said. If the board adopts Combs’ recommendation, families will no longer need to decide by Nov. 30 whether to cancel their contract to receive tuition-based earnings. Combs will also present recommendations to let families that canceled during the opt-out period resume their contract if they choose to."My concern over the solvency of the plan has not changed," Combs said. "As I have said since January 2007, we face a situation in which Texas taxpayers would have to fund a projected deficit in the guaranteed-tuition plan." Combs called for an interim study by lawmakers to prepare recommendations for the 2011 Legislature. State Sen. Jane Nelson, R-Flower Mound, wrote Combs to strongly object to the board’s May decision. More than 40 Democratic members of the House also urged Combs to rescind the policy.One of them, Rep. Marc Veasey, D-Fort Worth, said he wanted to review the comptroller’s decision before commenting. He said he is skeptical of anything that the state’s Republican political leaders do. "I need to look at it closely," he said.From 1996 to 2003, state residents could invest in the Texas Tomorrow Fund, later renamed the Texas Guaranteed Tuition Plan. Through lump sums or installments, people were allowed to lock in tuition and required fees at about what they paid when enrolling in the program. No matter how much tuition increased, the state constitutionally guaranteed full payment. Additional costs were expected to be covered by gains the state earned from investing the money. Parents and other investors were notified of the rule change in late August. Under the original policy, if students were at least 18 or had graduated from high school, investors could receive a refund equal to the current average tuition and fees of the colleges in their plan. For many investors, that was thousands of dollars more than they paid in, because of tuition increases at state universities. In 1996, the parent of an infant would have paid $8,320 to cover tuition at a four-year public college. Because of tuition increases, that benefit is worth about $27,600 today. The program hasn’t accepted enrollment since 2003, when the Legislature deregulated tuition at public colleges. Staff writer Gene Trainor contributed to this report.DAVE MONTGOMERY, 512-476-4294
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