2014Annual Report Table of Contents
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2014ANNUAL REPORT TABLE OF CONTENTS About Our Founder 1 Chairman’s Message 2 Florida Prepaid College Board 4 Florida Prepaid College Plans 6 Florida 529 Savings Plan 12 Financial Summary 15 Board Members 18 Service Providers 20 ABOUT OUR FOUNDER, MR. STANLEY G. TATE Mr. Stanley G. Tate was instrumental in the creation and early development of the Florida Prepaid College Program. It was his vision to provide Florida families with an affordable means to save for their children’s future college education. Mr. Tate served tirelessly as Board Chairman from 1987 to 2005. In recognition of Mr. Tate’s service, Governor Jeb Bush signed House Bill 263 into law on June 26, 2006, renaming the program the Stanley G. Tate Florida Prepaid College Program. Highlights of Mr. Tate’s leadership include: • More than 58,000 tuition and dormitory contracts sold in the first year. • In 1989, two years ahead of schedule, Mr. Tate presented the State of Florida a check for $600,000, repaying a start-up loan made by the Legislature to help launch the program. From that point forward, the program has remained fully self-supporting. • In 1990, the Florida Legislature created the Stanley Tate Project STARS scholarship program to be administered by the Stanley G. Tate Florida Prepaid College Foundation. Project STARS helps economically disadvantaged students who are at risk of dropping out of school by providing them with the opportunity for a college education. • In 2002, under Mr. Tate’s leadership, the Board created the Florida 529 Savings Plan to provide families another way to save for college tuition, fees, housing and other college expenses. • At the Florida Cabinet meeting on November 8, 2005, Governor Jeb Bush and the Florida Cabinet issued a resolution recognizing Mr. Tate’s exemplary record of professional and dedicated service to the families and children in Florida. • While Mr. Tate served as Chairman of the Board, more than 1 million Prepaid Plans were purchased, and more than 142,000 children used their plan benefits to attend a college or university. In addition, 15,472 scholarships were awarded to Stanley Tate Project STARS students, helping Florida’s children build a better future through a college education. Ase w move past our 25th anniversary, we thank Mr. Tate for his extraordinary dedication and commitment to public service. The Board is excited to carry on the program’s strong tradition and Mr. Tate’s vision for the next 25 years and beyond. 11 CHAIRMAN’S MESSAGE n the heels of its 25th anniversary year, the mission of the Florida Prepaid OCollege Board remains as important as ever: to help Florida families save for future higher education expenses by providing cost-effective, financially sound college savings programs. Today we are the largest, most successful and longest continuously running prepaid college tuition program in the nation. In many ways our mission is even more important today than when we first began, given the rising costs of tuition and increasing concerns over student loan debt. I am honored, therefore, to present the Florida Prepaid College Board Annual Report for the fiscal year ending June 30, 2014. It is a testament to our success in helping families provide their children with the lasting gift of a college education. More than 1.6 million Prepaid Plans have been purchased since the Stanley G. Tate Florida Prepaid College Program was introduced over a quarter century ago. Here are a few additional highlights: • More than 378,000 students have attended college using Prepaid Plans. • More than 131,000 students attended college during the Academic Year 2013/2014. • Approximately 20,000 students are using the benefits of their Prepaid Plans at a private, out-of-state or technical school. The Florida 529 Savings Plan, launched in 2002, also continues to grow each year – offering families another way to save for future higher education expenses. Our Florida 529 Savings Plan has been ranked among the best performing college savings plans by both Morningstar and SavingforCollege.com. 2 Here are a few additional highlights: • More than 39,000 active Florida 529 Savings accounts. • Market value increased more than $71 million (up 23%) from 2012/2013 to 2013/2014. • 49% increase in new accounts opened from 2012/2013 to 2013/2014. On average, students in Florida leave college today with more than $24,000 in student loan debt. That debt becomes a financial hindrance for years to come and is a reminder of why saving for college is so vitally important for future generations. Ase w reflect in this annual report upon the successes of the past year, we eagerly accept the challenge and opportunity to continue providing expanded and affordable college savings plan options. 3 ABOUT THE FLORIDA PREPAID COLLEGE BOARD The Florida Prepaid College Board is an agency of the State of Florida. The seven members who make up the Board are appointed and serve on a volunteer basis. They are responsible for establishing policy and monitoring performance for the Florida Prepaid College Plan and Florida 529 Savings Plan. The Executive Director and staff manage the day-to-day operations of the Board and its programs. The Board’s first priority is always the safety of the money entrusted to it by Florida families. Saving for college is one of the most important investments a parent or grandparent can make for a child. The Board is committed to helping Florida families save for one of the most important aspects in their children’s lives – receiving a college education. The Florida Prepaid College Board is committed to helping Floridians save for future MISSION qualified higher education expenses by providing a cost-effective, financially sound Prepaid College Plan and other college savings programs. STATEMENT THE IMPORTANCE OF SAVING FOR HIGHER EDUCATION Though future college costs are uncertain, you are doing a smart thing by planning ahead, and there are several important reasons why you should start saving today: Education Pays: Today, individuals with a bachelor’s degree earn an average of $23,700 a year more than those with only a high school diploma. In fact, a recent Georgetown University study estimates that a student with a bachelor’s degree can earn $1.6 million more in their lifetime than a student with only a high school diploma. Higher Employment: It’s projected that by 2018, 59% of jobs in Florida will require post-secondary education. In 2013, the unemployment rate for bachelor’s degree holders was 4%. For those with only a high school diploma, it was 7.5%. Peace of Mind: Knowing that your child will have something set aside can help you avoid the stress that others experience when high school graduation is right around the corner. Avoiding Debt: Student loans are now the #2 source of debt in America, behind only mortgages. Planning now will help your child to begin life after college without this burden, effectively jump-starting their career. Time: The earlier you start saving, the more opportunity you have to spread your payments and lower the monthly contribution necessary to reach your savings goals. 4 WHAT OUR CUSTOMERS ARE SAYING Florida Prepaid is a benefit of living in Florida – no other state has a college savings plan that KIM FIELDS, is comparable. who purchased a 4-Year Florida University Plan ELIZABETH STEVENS, I just wanted the peace of mind of knowing their mother of two Prepaid college tuition is taken care of and that I don’t have to Plan beneficiaries worry about it. We both came out of college without any loan LAURA CLARK, debt, and that was important for us that the boys who purchased 2 + 2 experience the same. So for all of us, the stress is Florida Plans for her gone. This was a huge relief. sons, age 7 and 4 Graduating from college with no debt was such a REBECCA SHEFFIELD, huge burden avoided, and it helped me start out in the who purchased a 2 + working world on more solid footing than many of my 2 Florida Plan for her peers. It was a no-brainer for me to do the same for my 10-month old daughter daughter. Some of life’s events you just can’t plan for, but COLE DAVIS, because of Florida Prepaid, I never worried about Prepaid Plan beneficiary paying for college. attending Florida State University 5 FLORIDA PREPAID COLLEGE PLANS The Florida Prepaid College Board has offered families an affordable and secure way to save for tuition and most fees, and dormitory housing at Florida’s 12 State Universities and 28 Florida Colleges, for more than 25 years. The Florida Prepaid College Plan is guaranteed by the State of Florida§. The value of a Prepaid Plan may be transferred to most private and out-of-state colleges and select technical schools. SECURE INVESTMENTS A conservative investment strategy is used for Prepaid Plans, with customer payments invested based on a Comprehensive Investment Plan, which is structured to ensure the Board’s obligations for tuition, the tuition differential fee, local fees and dormitory costs, as applicable, are met. The Board has adopted an asset allocation policy which limits the amounts of equities to 15 percent of the market value of the total portfolio, or the most current actuarial reserve balance as determined by the Board’s actuary, whichever is less. Fixed income investments include U.S. Treasuries, asset-backed securities and corporate bonds. Equity investments include large capitalization growth, large capitalization value, small capitalization core, mid capitalization core, international developed market and S&P 500 index stocks. 2013-2014 OPEN ENROLLMENT * Open Enrollment for the Florida Prepaid College Plan was November 1, 2013 through February 28, 2014.