A Senate bill that would change the basis for future payouts under the Guaranteed Education Tuition (GET) program was sent today to the House Ways and Means Committee, where its future could be affected by a pending evaluation by the State Actuary of the proposed bill.
The House Higher Education Committee sent SSB 5749 to the Ways and Means committee, but the higher education committee chair, Larry Seaquist, has said any further legislative action probably would await the Actuary’s report at the end of the month.
GET, the state’s 529 pre-paid tuition college savings program, allows families to save on their future college tuition expenses by purchasing units at today’s price. By purchasing 100 GET “units” today, a family can cover a full year of future tuition and state-mandated fees at the state’s highest-priced public university (either the University of Washington or Washington State University) in the future, even if it doubles or triples in price. GET investments are tax free if used for qualified higher education expenses.
Faced with a major state budget crisis, the Legislature is considering granting institutions greater tuition-setting authority to help offset proposed cuts in state appropriations for higher education. Some fear that could lead to future tuition increases that the current GET model cannot sustain.
SSB 5749 would make a number of changes to the GET program. For Sen. Lisa Brown of Spokane, the bill’s prime sponsor, the most significant change would be tying payouts on units purchased in future GET accounts to the average increase in tuition, weighted by the number of students, at all public higher education institutions in Washington, rather than at the highest-priced institution.
“The GET program is an excellent opportunity for Washington families to invest in higher education for their family members,” Brown said at a hearing on the bill Monday. “However, I make modification suggestions in order to balance out the great opportunity to have a guaranteed program with fiscal responsibility down the road.”
State Actuary Matthew Smith, who presented an interim GET report to the higher education committee, stressed that GET account holders are not at risk if any future solvency issue was to occur, because the accounts are contracts backed by the full faith and credit of the state. The real risk is to the state, which must make good on the contracts.
Smith said three factors determine the program’s solvency: tuition growth, investment returns, and “purchaser behavior,” or how many GET units purchasers are willing to buy under an existing scenario. Smith said various scenarios would be discussed in his upcoming report.
Temporary fluctuations in the factors affecting the program’s solvency can be weathered under the existing program, “but if we’re talking about a decade worth or a whole new norm of tuition growth going forward, the program needs to be re-evaluated,” Smith said.
In essence, Brown’s bill would create a “GET 2” program for new enrollees, Smith said. The changes included in the Senate bill would not affect units already held by current GET contract holders, he said.
Betty Lochner, director of the GET program, which is administered by the HECB, said changes in a similar college-savings program in Texas led to a significant drop in the number of signups for the new savings program, which is one of the factors that could affect program solvency. “There’s a lot of consumer confidence that gets lost no matter what you do, unless it looks very similar to the old program,” Lochner said.
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