Texas Tomorrow Fund
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The Texas Tomorrow Fund is a prepaid college investment plan operating in Texas.
There are two plans, The Texas Guaranteed Tuition Plan, and Tomorrow’s College Investment Plan. The former is a constitutionally guaranteed trust fund backed by the State of Texas whereas the latter is an investment plan managed by Enterprise Capital Management. Tomorrow’s College Investment Plan is not backed directly by the state, serving as an investment plan for tuition money, as opposed to a prepaid fund.
A recent Texas law was introduced to allow public institutions of higher education to set their own tutition and fees, rather than being forced to charge what the State thought was necessary. The State's guaranteed tuition plan was in jeopardy, for the State had no idea how expensive tuition was going to be a decade from now, and, consequently, had no idea how much to charge applicants. New enrollment for the Texas Guaranteed Tuition Plan was then closed, but the plan could restart soon (as of January 2006) with an annual enrollment period (not certain) or full period.
As an example of how much non-regulated tuition has cost the Texas Tomorrow Fund, a family purchasing 120 credit hours for a child's entrance to a public college in 2004 paid a total of $10,000 -- or about $83 per credit hour. The current payout, however, due to rising tuition costs, is approximately $190 per credit hour (Fall 2006).
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[edit] Texas Tomorrow Fund in the Texas Constitution
Located in Article 7, Section 19 of the Texas Constitution, the Texas Tomorrow Fund was added November 4, 1997 for the purpose of higher education in Texas.
The Section is as follows,
"(a) The Texas tomorrow fund is created as a trust fund dedicated to the prepayment of tuition and fees for higher education as provided by the general laws of this state for the prepaid higher education tuition program. The assets of the fund are held in trust for the benefit of participants and beneficiaries and may not be diverted. The state shall hold the assets of the fund for the exclusive purposes of providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the program.
(b) Financing of benefits must be based on sound actuarial principles. The amount contributed by a person participating in the prepaid higher education program shall be as provided by the general laws of this state, but may not be less than the amount anticipated for tuition and required fees based on sound actuarial principles. If in any fiscal year there is not enough money in the Texas tomorrow fund to pay the tuition and required fees of an institution of higher education in which a beneficiary enrolls or the appropriate portion of the tuition and required fees of a private or independent institution of higher education in which a beneficiary enrolls as provided by a prepaid tuition contract, there is appropriated out of the first money coming into the state treasury in each fiscal year not otherwise appropriated by the constitution the amount that is sufficient to pay the applicable amount of tuition and required fees of the institution.
(c) Assets of the fund may be invested by an entity designated by general law in securities considered prudent investments. Investments shall be made in the exercise of judgment and care under the circumstances that a person of ordinary prudence, discretion, and intelligence exercises in the management of the person's affairs, not for speculation, but for the permanent disposition of funds, considering the probable income from the disposition as well as the probable safety of capital.
(d) The state comptroller of public accounts shall take the actions necessary to implement this section.
(e) To the extent this section conflicts with any other provision of this constitution, this section controls."
[edit] Fund in Debt
A recent article in the Daily Texan has reported that the Texas Tomorrow Fund program is in debt due to rising tuition. By the year of 2029 the program could be in a hole as deep as $3.3 billion, running completely out of money by 2018, due to the difference in tuition rates between the state's projections and the actual cost of tuition at major public universities (UT Austin is at $7630 and the state projects $5332). This gap is currently paid by the University out of tuition from non-Tomorrow Fund students, and as more students enroll using the Fund, universities must raise tuition to balance out the lack of income from Tomorrow Fund students.
[edit] Restarting the Program
An article in the Dallas Morning News reported that the Texas Tomorrow Fund will be reopened for new enrollment under the name Texas Tomorrow Fund II. Under this program there will be three categories from which parents will be able to buy semester hours in 1/100th of a semester sections. The most expensive are flagship schools, four-year public institutions, followed by two-year community colleges.
