| The recent years of tuition deregulation and poor stock market performance have left the Texas Tomorrow Fund, a state-guaranteed prepaid higher education plan that was later renamed the Texas Guaranteed Tuition Plan, nearly broke and destined to use as much as $2.1 billion of tax dollars to pay for the college tuition costs for more than $100,000 Texan students. As R.G. Ratcliffe reported in the Houston Chronicle, the state's last three comptrollers disagree on the reasons for the program's insolvency. “The taxpayers of Texas voted this in, and the taxpayers of Texas have obligated themselves to pay this out over time,” Combs said. “You can't pull a California and send (parents) an IOU. You have a hole, and you must get a shovel and start filling in.” Combs said the fund will run out of money between 2015 and 2017. The state will have to completely pay for the tuition and fees of children who have the contracts for the next 15 to 20 years. The Texas Tomorrow Fund was created by the Legislature in 1995 at the urging of then-Comptroller John Sharp, now a Democratic candidate for U.S. Senate. Voters in 1997 approved guaranteeing the college contracts with the state's credit. Some, like former Lt. Gov. Bill Ratliff, opposed establishing the fund and backing it with the state's credit. “I did my best back then to warn that there would come a day when we'd have to increase the cost of higher education,” Ratliff said. “It just seemed to me that it was likely to create some serious problems in the future.” Sharp said there were no problems with the fund at the time of its creation. He said actuaries set the price of the contracts based on the cost of education at the time and investment earnings. Sharp said the price of the college plans could have been adjusted over time with increased tuition costs and fluctuations in the investment market.
Sharp puts the blame on current Comptroller Susan Combs, who first took office following Carole Strayhorn in 2003 and closed the program in 2007. When tuition was deregulated in 2003, then-Comptroller Carole Keeton Strayhorn suspended new enrollment for the plan. The cost of college tuition at a state university rose by an average of 23 percent that year. Combs closed the program after taking office in 2007. The Legislature in 2007 created a new college fund called the Texas Tuition Promise Fund. Its cost is much higher — $39,400 to buy an infant a four-year college plan — and the investments are not guaranteed by the state. Sharp said the original prepaid tuition program has financial problems because Combs closed it to new enrollment. Sharp said pensions and Social Security need new members to remain solvent over long periods. “If you want to know why the shortfall is there, the name is Susan Combs,” he said. Combs said Sharp is wrong. She likened the idea of using new enrollees' money to cover a shortfall with previous participants to a Ponzi scheme. She said the problem is the price of the contracts was set too low and the investments for the plan did not cover the cash-out payments. “(New enrollees) don't help the hole,” she said. “The hole is the hole is the hole.”
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