SEATTLE — The state treasurer says a plan by Senate Republicans to cut college tuition could hurt Washington's prepaid college-tuition program, but lawmakers say his criticism is politically motivated.
Treasurer James McIntire expressed his "deep concerns" about the plan to decrease tuition at the state's colleges and universities in a letter he sent to lawmakers on Monday, The Seattle Times reported (http://is.gd/NiEo7D ).
McIntire said the tuition cut could leave the state vulnerable to lawsuits from investors in the Guaranteed Education Tuition program.
Republican lawmakers say McIntire's letter was politically motivated and the Democrat is playing politics.
McIntire said it would be nearly impossible to manage the prepaid tuition fund, Washington's 529 college savings plan, if the state starts setting tuition based on inflation.
"The program, the statutes, the contract — everything about that program was designed around tuition going up," McIntire said in an interview Monday. "If all of a sudden you have a decline, do we know if that's a one-time effect, or not?"
McIntire serves on both the State Investment Board, which invests the money, and the GET committee, which manages the program. He said he wrote the letter out of a sense of fiduciary responsibility for GET.
Sen. John Braun, R-Centralia, the chief architect of the plan to cut tuition, said he was disappointed by McIntire's letter and pointed out that state Actuary Matt Smith's analysis showed the proposal could make GET more financially sound because tuition hikes would grow more slowly.
"We are doing things that fundamentally help GET holders," Braun said.
GET is sold in increments called units, and 100 units are guaranteed to be equal to a year of tuition and fees at the state's most expensive public university at any given time.
The 17-year-old state-run program is a way of prepaying for college tuition, but investors pay a premium in exchange for the guarantee. Currently, one GET unit costs $172 and can be redeemed for $117. A new price and payout value is set annually.
If tuition is cut, the payout value of each unit would also be cut. Braun's bill would provide a kind of "stock split" in which GET investors would gain more units to make up for the tuition cut — under one scenario, they'd gain roughly 33 percent more units. The value of their account would remain the same.
Information from: The Seattle Times, http://www.seattletimes.com