Tuition miscue

Press-Enterprise 2/1/07

Paying today's tuition rates to attend a California university 15 years from now might appeal to parents nervous about the rising cost of higher education. But a proposal to let Californians prepay college tuition is risky public policy that would shackle limited state funds to yet another long-term obligation.

AB 152 by Jim Beall, D-San Jose, would let parents buy a unit of college tuition at the current University of California or Cal State tuition rate, plus a modest premium. Parents who pay for college tuition in 2007 or 2008 could send their child to college in 2025 at those rates, regardless of subsequent tuition hikes.

Beall says the program would give families a hedge against soaring costs. Tuition and fees at the University of California, for example, have quadrupled since 1991.

But California has too many unfunded spending commitments as it is. The nonpartisan legislative analyst's office, for example, estimates the unfunded liability for health benefits for retired state employees at $40 billion to $70 billion over the next 30 years.

Under Beall's bill, taxpayers could be liable for hundreds of millions of dollars more. The state would have to honor the prepaid tuition costs, even if the program were in the red.

And similar schemes have faltered in other states. As written, AB 152 would repeat many of the mistakes that undermined programs in Colorado, Ohio, Texas, West Virginia and Kentucky. All of those states have either closed the plans to new investors or face looming deficits.

Parents already have access to many savings options whose interest over time would hedge against rising tuition rates. While the goal of making college more affordable for Californians is worthy, a plan that puts tuition guarantees ahead of sound state budgeting deserves a failing grade.