DALLAS - The state's prepaid college tuition program that tens of thousands of families bought into with the promise of paying tomorrow's college at current rates is going broke.
The program, sold as the Texas Tomorrow Fund from 1996 to 2003, could run out of money in less than five years.
Although constitutionally guaranteed, parents holding contracts for their children are now learning there's a catch, leaving some worried that the guarantee is very shaky.
While the Texas Tomorrow Fund was open, covering tuition at state universities and colleges like UT Arlington seemed like a breeze. They lock in tuition and fees for a child while they're cheaper, and the state guarantees the money will be there when that child is ready for college years later.
But, some parents, like Keith Oakley of Terrell, aren't ready for what they're now learning about the fund.
“I've been around the Legislature long enough to know that nothing is guaranteed," Oakley said.
Oakley served in the Texas House of Representatives 14 years and voted for the Texas Tomorrow Fund in 1995. He considered it such a great program for middle class families to afford college he bought contracts for his two sons. But, he's now uncertain the money will be there for both of them.
“There is no doubt in my mind that this fund is scheduled to go broke," he said.
He's right. The Texas Comptroller's office said the fund is $606 million in the hole and could run out of money as early as 2015. Lower investment returns and an increase in average tuition and fees of 72 percent since 2003 are to blame.
Yet, R.J. DeSilva, a spokesman for the Texas Comptroller’s Office, said parents should not worry.
“The fund would be running out of money, but in that case the state would knead tax dollars into the fund to cover those tuition required fees," DeSilva said. "There was a constitutional guarantee passed by the voters on that.”
But, with lawmakers looking to plug a budget gap of $15 billion to 18 billion, how firm is the guarantee or terms of the contracts?
Last year, the 97,000 families with contracts learned the fund's board, led by Comptroller Susan Combs, suddenly changed the refund policy to try and save money. It was a decision rescinded after a firestorm of protest from parents and lawmakers like State Rep. Allen Vaught, D-Dallas.
“The thought was presented, 'We're going to change the deal,'" Vaught said. "And a lot of us came together and said, 'No, no you're not. We're going to honor our word.'”
But, Oakley and other stunned parents said they learned something.
“So that constitutional guarantee doesn't mean very much if they have the authority to change the contracts," Oakley said.
Although, Vaught said that wasn't part of the sales pitch.
"Of course that wasn't marketed up front to people," Vaught said. "I think that's a bit deceptive.”
With so much uncertainty about the fund's solvency and the legislative commitment, parents who bought contracts are trying to band together for the first time.
Oakley, who is now a lobbyist, has helped found the group called, Tomorrow Fund Families, and started an Internet site to register contract holders since it cannot obtain a list from the comptroller's office because of privacy laws. The site charges a fee, Oakley says, to cover costs.
The goal, according to Oakley, is to pressure lawmakers not to make changes and fully fund the program.
“If there is no one speaking for you, then you just wake up the next day and find out that your fund has gone away," Oakley said.
The Texas Tomorrow Fund's total deficit could run $1.7 billion by 2030. If lawmakers balk at backing it, college for thousands of young Texans could be a lost tomorrow.