TALLAHASSEE — They are desperate for money. Hurting for ideas.
And it has come to this: What about the money the Florida Prepaid College Board is sitting on?
The popular family program benefits one out of every 10 children in the state. Parents invest tens of thousands of dollars — sometimes in small monthly installments over 18 years — to lock in present-day tuition rates for their future college students. More than 1.3 million contracts have been sold since it started in 1988. That means that at any given time, the program's assets rate in the billions.
"We talked about the possibility if there was such money there, perhaps we could borrow that," said Sen. Evelyn Lynn, R-Ormond Beach, chair of the Senate higher education appropriations committee. "We're looking at everything. We're really hurting and we need new sources of income."
An analysis by Ernst & Young shows the prepaid program as of Jan. 31 with $8.8 billion in total assets, $8.3 billion in contract liabilities and an actuarial reserve of $468 million (that's what's left over after all contracts are paid).
Since the program is financially guaranteed by the state of Florida, the thinking goes, why couldn't lawmakers take some money now? After all, if the fund fails, the state must cover the cost of outstanding contracts.
"It's not the state's money," said Stanley Tate, founder and former chairman of the prepaid program now named after him. "It's specified for prepaid tuition. If they use it for another purpose, woe be to the elected authorities."
The truth is, lawmakers aren't even sure it's theirs to borrow. And yet, desperate as they are, they're talking about it.
"The argument that (prepaid officials) make is that this is not the state's legislative money to spend," said Sen. Jim King, R-Jacksonville, who introduced the idea to the Senate higher education appropriations committee. "And I'm not so sure that they're not right with that. What we're saying is, 'Wait a second, since we've got the liability and responsibility for it, why isn't it money that we can, at least some, take?' "
Sen. Dan Gelber, D-Miami Beach, serves on the same committee and says, "So long as the funds are not in jeopardy, we ought to be looking at everything and that includes pots of money that may be sitting around for years waiting."
Gelber stresses that they wouldn't want to "jeopardize the actuarial soundness of the fund," but if they could borrow money without doing so, it's worth considering. Of course, he said, a lot of people would need to sign off on such an idea.
Prepaid board chairman Ted Hoepner would not be in that line.
"We've got a legal opinion that says they can't do it," Hoepner said. "It would not be looked upon favorably to a man on the street. I don't think the university presidents or the board of governors would look favorably on it."
Certainly it could be held up as another example of lawmakers pillaging savings accounts and special funds. In six of the past nine years they swept trust funds, nearly emptied the Budget Stabilization Fund and are close to wiping out the Lawton Chiles Endowment Fund, which funds services for children and seniors.
David Del Tosto, 42, bought a prepaid contract last month for his 7-year-old son, A.J. He doesn't see too much of a problem with lawmakers borrowing money from the program, as long as they're paying interest.
"There's got to be some sort of safeguards and guarantees in place in the event they screw it up," said Del Tosto, a self-employed architect in Tampa.
King, for his part, doesn't expect the idea to fly this year.
"I think there was enough questions raised by them in my bringing it up and focusing the light on it, and it's obvious that they're really concerned," King said.
But, he said, "I don't think it's never going to happen."
Times researchers John Martin and Shirl Kennedy contributed to this report. Amy Hollyfield can be reached at (850) 224-7263 or [email protected]