Solving PACT problem

Published 4:26 pm Tuesday, May 26, 2009

Those who purchased Prepaid Affordable College Tuition contracts continue to hear conflicting information with regard to how the state’s PACT problem should be resolved.

On the one hand, the State Treasurer continues to say publicly that the only solution is an infusion of cash.

On the other hand, the legislative response has lacked clarity, providing upwards of 10 bills or resolutions, none of which has consensus support for passage in both the House and Senate. PACT purchasers have yet to see a single well-conceived and comprehensive solution to the issue.

Why so much confusion?

Unfortunately, the public isn’t getting much reliable information about just how big this problem is or what kind of investment strategy will bring PACT back to full health.

Isn’t it most responsible to seek expert and independent observations and strategic advice so that we know how big the hole is before we start filling it?

So, what are the facts as we know them? We know the PACT investment portfolio has improved since February and is valued near $500 million.

We know that that is not enough value to honor 20 years of commitment to contract holders, but is certainly enough to pay out contracted benefits for this coming fall and spring semesters. We know that something must be done to fix PACT.

Where do we go from here? First, we go to an independent third party to examine the problem and offer a second opinion on how to fix PACT.

Second, the PACT Board needs to affirm publicly that it will continue honoring contracts for the coming year while a comprehensive solution is pursued.

Finally, the Governor, the PACT Board, the State Treasurer and the Legislature should be working together to agree on a solution. Heading in this direction, we can develop a fact-based solution that a majority in the Legislature can support.