The Texas Tomorrow Fund is a prepaid college investment program operating in Texas.
There are two plans:
The Texas Guaranteed Tuition Plan (TGTP) The Texas College Savings Plan (formerly the Tomorrow's College Investment Plan).
The former, TheTexas Guaranteed Tuition Plan, is a constitutionally guaranteed plan administered by the Board that allows individuals to prepay college tuition and required fees at Texas public two- and four-year colleges and universities at today’s cost. The latter, the Texas College Savings Plan, is a qualified 529 college savings and investment plan offered through the state and managed by NorthStar Financial Services Group, LLC.
The Texas College Savings Plan is not backed directly by the state; However, Texas voters approved a constitutional amendment in 1997 that guarantees the plan’s benefits with the full faith and credit of the state.
In 2003, the 78th Legislature passed House Bill (HB) 3015, amending Texas Education Code §54.0513 to allow governing boards of public universities to set different designated tuition rates, rather than being forced to charge what the State thought was appropriate. The State's guaranteed tuition plan was in jeopardy, for the State could not effectively predict how expensive tuition was going to be a decade from now and, consequently, could not accurately peg charges for applicants. New enrollment in the Texas Guaranteed Tuition Plan was then closed.
As an example of how much non-regulated tuition has cost the Texas Tomorrow Fund, a family purchasing 120 credit hours for a child's entrance to a public college in 2004 paid a total of $10,000 — about $83 per credit hour. As of fall 2016, the payout, due to rising tuition costs, was approximately $300 per credit hour.
Texas Tomorrow Fund in the Texas Constitution
Located in Article 7, Section 19 of the Texas Constitution, the Texas Tomorrow Fund was added November 4, 1997, for the purpose of higher education in Texas.
The Section is as follows,
"(a) The Texas tomorrow fund is created as a trust fund dedicated to the prepayment of tuition and fees for higher education as provided by the general laws of this state for the prepaid higher education tuition program. The assets of the fund are held in trust for the benefit of participants and beneficiaries and may not be diverted. The state shall hold the assets of the fund for the exclusive purposes of providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the program.
(b) Financing of benefits must be based on sound actuarial principles. The amount contributed by a person participating in the prepaid higher education program shall be as provided by the general laws of this state, but may not be less than the amount anticipated for tuition and required fees based on sound actuarial principles. If in any fiscal year there is not enough money in the Texas tomorrow fund to pay the tuition and required fees of an institution of higher education in which a beneficiary enrolls or the appropriate portion of the tuition and required fees of a private or independent institution of higher education in which a beneficiary enrolls as provided by a prepaid tuition contract, there is appropriated out of the first money coming into the state treasury in each fiscal year not otherwise appropriated by the constitution the amount that is sufficient to pay the applicable amount of tuition and required fees of the institution.
(c) Assets of the fund may be invested by an entity designated by general law in securities considered prudent investments. Investments shall be made in the exercise of judgment and care under the circumstances that a person of ordinary prudence, discretion, and intelligence exercises in the management of the person's affairs, not for speculation, but for the permanent disposition of funds, considering the probable income from the disposition as well as the probable safety of capital.
(d) The state comptroller of public accounts shall take the actions necessary to implement this section.
(e) To the extent this section conflicts with any other provision of this constitution, this section controls."
Fund in debt
The 78th Legislature passed House Bill (HB) 3015 mentioned earlier, contributed to a rise in the costs of state tuition as tuition deregulation became effective September 1, 2003, and universities began increasing designated tuition in spring 2004. Due to this, the program stopped accepting new participants.