CASPER, Wyo. — A trust fund that supports Wyoming’s college scholarship program needs to change its investment strategy to avoid eventually running out of money, state Treasurer Mark Gordon said.
Despite $553 million in the Hathaway College Trust Fund, its interest income has not matched the $18 million annual cost of the popular scholarships. It is projected to have a shortfall of up to $4.5 million by 2019.
In a meeting of the Joint Education Committee earlier this week, Gordon recommended the trust fund be administered slightly more like a college endowment fund than a general government fund.
It has been earning a rate of return of about 2.2 percent, about half the annual cost of the scholarships awarded through the program, the Casper Star-Tribune reported (http://bit.ly/2cTR0uw ).
Gordon said the investment income projections include interest and dividends but not capital gains, which are too uncertain to predict and not reported until October.
The program’s finances could be improved in several ways, including cutting scholarships and increasing deposits to the fund through direct appropriations, said Patrick Fleming, the state’s chief investment officer.
“Make sure that in the event that these low rates (of return) persist in the future that the Hathaway scholarship would not be in the situation where you have a negative cash balance,” Fleming said.
Gordon said he thought a 5 percent interest rate was attainable and suggested establishing it as the benchmark for the program’s operating fund.
The treasurer’s report came as part of a broader review of the Hathaway program, which includes legislation that would expand the scholarships.
The proposal would pay full tuition for very high-performing students. The new tier aims to resolve longstanding concerns that the Hathaway program has never covered all tuition expenses. The top category currently pays about two-thirds of the cost.
Another component of the bill would create a task force to study a career technical scholarship for students not planning to go to college.
Republican committee co-chairman Hank Coe of Cody said the matter was serious and more public comment was needed. The Department of Education was asked to further research the costs of the proposals.
Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com