State legislators appear to be backing away from a proposal to close the state’s prepaid tuition program.
A senator in charge of a key committee says she doesn’t favor ending the 15-year-old Guaranteed Education Tuition plan, or GET. And in Olympia on Thursday, two of the most highly-regarded state financial experts underscored that the program is stable today, and on a path to full recovery in the next two decades.
Earlier this month, a legislative advisory committee recommended closing GET to new money and ending the program over time because it is underfunded by more than $600 million, and because GET has an undue level of influence over how tuition is set at state universities.
Majority Senate leader Rodney Tom, D-Medina, who chaired the advisory committee, said Thursday he’s deferring any decisions about GET’s future to Sen. Barbara Bailey, R-Oak Harbor, who chairs the Senate Higher Education Committee. And Bailey said she wants to preserve GET.
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“We want to look at ways to reform it, make it viable for the future,” said Bailey, who called it “a great program for our middle-class families planning for the future.”
Meanwhile, state treasurer James McIntire told the House Higher Education Committee on Thursday he believes “we really already have reformed the GET program.” McIntire also is a member of the GET committee, which establishes the program’s policies and sets the price for GET units.
GET ran into trouble at the start of this decade after Washington’s four-year universities raised tuition by double-digit amounts. The price of a GET unit was based on the anticipated increase in tuition prices, and “double-digit tuition growth was quite a shock to the system,” said state actuary Matt Smith.
In the last year, the GET committee raised unit prices significantly and added a $19 “recovery fee.” GET units now cost $172 apiece; 100 units buys a year at the most expensive four-year school in the state.
That price reflects a belief that the state’s share of the cost of higher education, which has already shrunk, will continue to decline in the coming years, McIntire and Smith both said.
The Legislature now pays for about 30 percent of the cost of instruction for undergraduate, in-state students at the University of Washington — the state’s most expensive school — and the GET committee forecasts that number will drop to 24 percent in six years, Smith said.
Although GET is only about 80 percent funded, and the number “looks a little bit scary,” McIntire said, it’s not: “Most states would be delighted to have an unfunded liability this small” for a pension program, which works much the same way as the GET program, he said.
“Is this something for parents to be concerned about? No.” McIntire said.
Smith said if the state were to keep tuition at today’s rates for two years, the unfunded liability would evaporate. If the state were to fund 50 percent of the cost of instruction by 2018 or 2020, as some legislators have proposed, GET’s financial woes would also be erased. But McIntire, a former state legislator, said he knew of no way to hold future legislators to such a promise, “short of amending the Constitution.”
Both McIntire and Smith said that allowing differential tuition — higher tuition rates for some popular programs — would be catastrophic for GET, because it would increase the payout value.
McIntire recommended terminating differential tuition, which was approved by the Legislature in 2011 and then suspended for a year when legislators realized it could have a devastating effect on GET.
House Bill 1043 would remove differential tuition authority at state universities and community colleges for resident undergraduates.
“It (GET) is still a reasonable investment tool for families that are risk-averse,” McIntire said. “I think it is run appropriately, and priced appropriately.”
Katherine Long: 206-464-2219 or email@example.com. On Twitter: @katherinelong.