Despite a drop in its actuarial surplus over the past year, the Prepaid College Program continues to be financially sound. The program also has implemented several of the actions we recommended in our 2003 report. The Prepaid College Board 2003 actuarial adequacy report used a revised investment return assumption and a broader sensitivity analysis than prior reports. In addition, the Prepaid College Board commissioned a study to re-assess the asset allocation in the program's investment portfolio.
However, the Prepaid College Board should conduct an experience analysis of benefit deferrals and modify actuarial assumptions accordingly, and it should base projected stock returns on the most up-to-date actuarial assumptions. It also should consider changing its investment portfolio in accordance with the results of a recent asset allocation study. If the rate of growth in university tuition rises significantly beyond current expectations or universities are permitted greater tuition flexibility, the Legislature and the Prepaid College Board may need to consider changes to the program. Changes in state policies such as accelerated high school graduation and university enrollment caps also could affect the program's actuarial soundness or pricing in the future.
The newly opened College Investment Plan may offer families options for investment returns as high or higher than the Prepaid College Plan, but some of those options also carry more risk than prepaid contracts.

Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.