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For Immediate
Release
8/31/09
Education Chair Seeks to Reform Tuition Account
Program to Avoid Taxpayer Bailout
HARRISBURG – In an effort to ensure the law creating Pennsylvania's Tuition
Account Program (TAP) is both transparent and protects taxpayers from a bailout
should the fund fail to meet its fiduciary responsibilities, Senator Jeffrey
Piccola (R-15), Chairman of the Education Committee, will be introducing
legislation calling for reforms to the program that establish parameters in the
event of future financial shortfalls.
Piccola's legislation is in response to recent correspondence from
Pennsylvania Treasurer Rob McCord to the General Assembly regarding the
announcement of administrative steps the Treasury is taking imposing asset-based
fees to help alleviate the actuarial deficit of $222 million. In his
correspondence, Treasurer McCord stated: "Despite its statutorily-required name,
the Guaranteed Savings Plan is in fact not expressly backed by the ‘full faith
and credit' of the Commonwealth." He continued by explaining "many account
holders and members of the public continue to believe the Commonwealth will
provide subsidies for any shortfall" and emphasized that he is seeking "clarification and reform" believing Pennsylvania
"must stand behind this
valuable program" concluding that he believes members of the General Assembly
share his "commitment to live up to the guarantee that is implied in this 529
program's name."
"This program was never intended to be the subject of a taxpayer bailout
despite any dire economic conditions, even a deficit caused by the poor
performance of the stock market. The authorizing statute of 1992 contains
language that it does not have the full faith and credit of the Commonwealth
standing behind it," said Piccola. "There is absolutely no way the
taxpayers of this Commonwealth can be responsible for any deficit this program
may incur."
Piccola's legislation will specifically include provisions to avoid the risk
of a taxpayer bailout, such as further strengthening the prohibition against the
State Treasurer pledging the taxing and credit powers of the Commonwealth and
removing "guaranteed" from the name of the program. Other provisions will
require the program to be subject to an annual audit by the Auditor General and
require the Treasurer to annually communicate to account owners that the program
is neither explicitly nor implicitly backed by the Commonwealth.
"The intent of my reform proposal is simple -- ensuring the taxpayers and
general public have a clear understanding of the nature of this program and that
this Commonwealth expressly will not stand behind any shortfalls or bailout the
program should investments fail to meet future obligations," Piccola said.
Contact:
Colleen Greer
(717) 787-6801
Additional Information:
Education
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