TALLAHASSEE — Gov. Charlie Crist on Tuesday shot down a budget-crisis solution being discussed by lawmakers to tap the reserves of the popular Florida prepaid college tuition program.
"I don't think that's a great idea," he told reporters. Asked whether that meant the idea was "dead in its tracks," Crist said: "Pretty much."
But Sen. Evelyn Lynn, R-Ormond Beach, who chairs the Higher Education Appropriations Committee, defended the discussion, saying that in these desperate budget times lawmakers are talking about everything "in your wildest imagination."
"This was only one possibility, but don't forget we are liable for that money should prepaid go under," said Lynn. "And we're not going to do that unless we get really desperate. But right now, we will easily have at least a 10 percent cut even with the stimulus money. If we do not have the stimulus money, it could easily reach 15 percent. And for higher education, that is dire."
Lynn stressed that the intent was never to "endanger prepaid contracts."
"We're trying to find the best answer, not to jeopardize what we have in prepaid," she said. "Certainly not."
The Times/Herald reported Monday that the Senate higher education appropriations committee has been talking about borrowing from the Florida Prepaid College Board, which allows parents to lock in tuition rates for their future college students by investing tens of thousands of dollars. With more than 1.3 million contracts sold since 1988, the program has billions on hand.
An Ernst & Young analysis as of Jan. 31 shows the program with $8.8 billion in total assets, $8.3 billion in contract liabilities and an actuarial reserve of $468 million. The board touts a conservative investment strategy financially guaranteed by the state.
The health of Florida's prepaid program is in stark contrast to several other states where liabilities outstrip assets. Alabama's fund has lost 48 percent of its value since September 2007 and officials are telling parents they can't guarantee the full cost of college.
The issue of borrowing from Florida's reserves struck a chord with voters Monday, and Florida prepaid officials were quick to say they're reassuring concerned parents that the money is safe.
"We're telling them that there's no legislation in place right now and we will continue to keep their plans' safety and their contracts' safety as our No. 1 priority," said spokesman Kimberly Sirmans.
After a Cabinet meeting, Crist expanded on his opposition to lawmakers' borrowing from this program even though he has supported "sweeping" cash reserves of several other trust funds.
"A lot of people have already invested in the prepaid college fund, and I think they're dependent upon it and counting on it," Crist said. "(That's) separate and apart from some of the other trust funds where people haven't invested directly in it as a family unit the way they would with prepaid college."
Sen. Dan Gelber, D-Miami Beach, says the committee's idea "wasn't anything more than a passing reference."
"I think some of the members of the committee want to look at all ideas they can," said Gelber, who is also on the committee. "But I think that's not one that's a good one, so let's move on to the next idea."
Times/Herald staff writer David DeCamp contributed to this report, which uses information from the Associated Press.