Administration and Finance

Q: Who administers the Florida Prepaid College Plan?

A: The Florida Prepaid College Plan is administered by the seven-member Florida Prepaid College Board. Members of the board include the Chief Financial Officer of Florida; the Attorney General of Florida; the Deputy Commissioner of the Florida Board of Education, Division of Colleges and Universities; the Deputy Commissioner of the Florida Board of Education, Division of Community Colleges, or their designee; and three members appointed by the Governor and subject to confirmation by the Florida Senate.

Q: Where is the Board investing the money when I prepay tuition?

A: The Florida Prepaid College Board invests its funds in a variety of investment vehicles. The Board has a comprehensive investment plan that is approved by the Governor, State Treasurer, and State Comptroller. This plan, including the asset allocation guidelines and investment plans for each of the investment managers forms the basis for the Board's investment strategy. Currently, most of the funds are invested in fixed income issues (mostly government-backed securities), with the balance split equally between large-cap growth equities and large-cap value equities. The Board reviews the performance of its investment managers on a quarterly basis. Any revisions to this plan must be approved by the Board and resubmitted to the Governor, Treasurer, and Comptroller for their approval. The Board's investment strategy has resulted in an annualized rate of return close to 11 percent.

Q: Does the Board set up an individual account for my money?

A: No. The Florida Prepaid College Plan does not create an individual savings account for each account owner. Rather, it oversees a trust fund that combines the contributions of all participants. However, the plan does maintain records of individual participants and their contributions for purposes of providing refunds, tax reporting, and administering the tuition and dormitory payment when the student enrolls in college.

Q: What happens if the Legislature repeals the law that established this plan?

A: The law may only be repealed if the Legislature makes a factual determination that the plan is financially infeasible. It should be noted that the plan has been actuarially sound since its inception and is projected to stay actuarially sound into the foreseeable future. While it is unlikely that the law establishing this plan will be repealed, all account owners of prepaid college contracts would receive the amount paid into the plan, plus interest at the rate prevailing on savings accounts offered by banks and savings and loan associations, if the plan was repealed. Also, all beneficiaries within five years of college enrollment will have their contracts fully honored.

Q: What if interest rates or inflation change dramatically?

A: Participants in the Florida Prepaid College Plan need not be concerned with interest rates or inflation. The tuition, local fee, and dormitory guarantees will be honored no matter what happens to interest rates, inflation, or college tuition and dormitory costs. No other investment plan can guarantee that it will keep pace with the increased cost of college housing and fees.

Q: May funds paid into the plan be forfeited as a result of bankruptcy of the account owner?

A: Account owners' payments to the Florida Prepaid College Plan are exempt from forfeiture by section 222.22, Florida Statutes. This exemption may be recognized by a bankruptcy court if claimed by the debtor.

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