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Sponsor's Insight
Déjà vu or JUA all over again....or both!
We all know the tale of the tape when it comes to the State of New Hampshire's attempt to raid the private Joint Underwriting Association fund that was established with private dollars for the purpose of providing reasonable liability insurance rates for doctors. Such a program was clearly not being funded by any public tax or fee and therefore was not subject to the state's attempt to use the fund to balance the state budget.
Well, once again, a unique set of circumstances has found the State of New Hampshire looking to deplete another fund that was established with private dollars for the purpose of providing scholarships to students attending public and private colleges in NH.
A Bit of History
In 1997, the NH Legislature and Governor Shaheen enacted into law, NH's UNIQUE College Savings Plan. This savings plan has people from all over the country (96% from outside of NH) participating in it. Participants pay a fee to invest in the savings plan for their child's education and under the plan's management contract, a portion of that fee is used to provide scholarships for NH students. Since 1997, as a result of NH's UNIQUE College Savings Plan, millions of dollars have been given in scholarships to NH students. For purposes of this communication, perhaps the most important factor to be aware of is that the UNIQUE College Savings Plan does not use or expend any public tax or fee dollars. All of the money used to fund the UNIQUE scholarships comes from the investors in the savings plan.
2011 = End of UNIQUE?
Everyone knows that the State of New Hampshire has a two-year budget for fiscal years 2012-13 that is going to be exceedingly difficult to balance. The choices that the Governor and Legislators have in Concord are not easy. However, as the state seeks to find answers to this enormous economic challenge, it should not break private contracts and take money from private funds that were not funded with public dollars.
Governor Lynch presented his budget back in February and in it, stripped out the private accounts of the UNIQUE College Savings Plan and used them to balance the state budget that is supposed to be funded with state taxes and fees. Unfortunately, in March, the House's version of the budget was the same as the Governor's as it relates to the use of these private dollars for a public budget.
Today, the state budget is under review by the State Senate. Senators have shown a reluctance to go along with this "taking" of funds that not only breaks a contract between the state and the public and private colleges and universities in NH but it also strips away much needed college scholarship dollars dedicated to helping NH students access college.
To make matters worse, this week, the April revenue numbers were announced and they showed everyone that the current budget that closes in two months is likely to be about $50 million short of being balanced. As such, the UNIQUE funds expected to be disbursed for scholarship aid for the current fiscal year may also be seen as another source of the Governor's to balance his 2011 budget. Let's hope that is not the next shoe to drop.
As of this writing, Senators have been saying that the 2011 UNIQUE dollars should definitely not be used for closing this year's deficit and it is the view of just about everyone involved in this debate that it would take a legislative enactment to take those scholarship dollars away from their intended purpose. So while the current fiscal year scholarship dollars appear to be safe from a misappropriation, it is still a battle at the State House to ensure that the UNIQUE College Savings Plan maintains its contractual goals of serving low-income NH students who are trying to further their educational opportunities here in the Granite State.
One Final (not so little) Note
The word under the golden dome in Concord is that the Governor will be looking to shatter his own record! After winning election last November to a record-setting, fourth consecutive two-year term, the words echoing off of the marble floors at the State House sound a bit like he will be seeking a fifth term in 2012. And with a 68% approval rating, why not. Look for an announcement in the coming weeks.
Bruce Berke
Sheehan Phinney Capitol Group
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