After a report from the state Actuary affirmed the fiscal soundness of the Guaranteed Education Tuition (GET) program, the House Ways & Means Committee last Thursday recommended passage of an amended bill that would leave intact the current basis for determining future payouts under the college savings program.
The new version of SB 5749 endorsed by Ways & Means would require GET’s governing body to adopt an “actuarially sound and prudently predictable” payout factor sufficient to cover the program’s long term obligations. It also gives the state Actuary a defined role in that process.
Responding to concern that escalating tuition rates at higher education institutions might someday force the state to cover some of the cost of tuition payments guaranteed under the GET program, the Senate in early March passed a different version of SB 5749. It would implement a less-generous GET-payout formula for future enrollees in the program.
However, Thursday’s report from the state Actuary estimated a less-than 1 percent chance the existing GET program would require help from state resources to meet its financial obligations over the next 50 years.
Both the current GET program and the proposed “GET 2” alternative passed by the Senate could withstand unfavorable tuition and investment growth for many years if the program prices future GET units with a long-term tuition growth assumption of 9.5 percent, according to the report. However, the report noted that GET’s program solvency could also be negatively impacted by declines in “consumer confidence,” or the willingness of people to invest money in a new GET program in the future.
GET, the state’s 529 pre-paid tuition college savings program, allows families to save on their future college tuition expenses. By purchasing 100 GET “units” today, a family can cover a full year of resident undergraduate tuition and state-mandated fees at the state’s highest-priced public university in the future. GET investments are tax free if used for qualified higher education expenses.
The GET 2 proposal supported by Senate Majority Leader Lisa Brown of Spokane would base payouts on units purchased in future GET accounts on 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.
In earlier testimony, Brown said the GET 2 proposal would allow the state to continue providing an excellent opportunity for Washington families to invest in higher education for their family members, but would also ensure that the program remains fiscally sound in the future.