Category / Department of Education

by Hoosier Econ

Is the Indiana 529 College Choice Plan Worth It?

For many months now I’ve been hearing and seeing commercials for a program geared towards parents that helps them save for college. The program is called the COLLEGE CHOICE 529 INVESTMENT PLAN. Per Indiana Department of Education website:

The program allows Hoosiers to plan for their children’s or loved one’s future, making contributions into an investment account for higher education expenses. Indiana also enacted a tax credit that makes the CollegeChoice Plan an even better option.

You are directed out of the state website and to a place called College Choice Advisor. To be very brief, this is the site where you sign up an account and it gives you investment options for saving /giving. That is the key component of why I think a program like this is unnecessary…..investing. Parents can easily do this on their own with more options. This website really doesn’t offer a variety like you could get with a local advisor or you’re own research.
The investing assumptions they provide are very broad and unrealistic in today’s income reality a lot of people are living in. Per the website:

If an investor opened a 529 account with an initial investment of $2,500 and contributed $100 every month for 18 years, there could be over $6,300 more for a qualified withdrawal than the same investment in a taxable account.*

There is a reason for an asterisk at the end of that statement:

Assumptions: $2,500 initial investment with subsequent monthly investments of $100 for a period of 18 years; annual rate of return on investment of 5% and no funds withdrawn during the time period specified; and taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only.

That is a big assumption. Going back to a recent comment is my philosophy of having many ranges of investment choices. The 529 doesn’t really offer much:
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Overall the 529 is a plan that allows people to throw their money in a fund and than forget about it. I think parents should be more hands on with their money they save which then leads to conversations about money responsibility.

The majority of parents will never to be able to fully fund their children’s college and their’s nothing wrong with that. Big percentage of children will not attend or finish college at all. No one knows what college will be like 20 years down the road in a traditional sense. Save wisely for helping your child in college or with something else they may strive for. Just don’t hand it over to investors to draw a 1% fee for 18 years because it sounds good.

by Hoosier Econ

2012 Female Dominated Doctor Degrees

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Photo via @Mark_J_Perry

by Hoosier Econ

Indiana State University Selling Debt

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Marketwatch.com is reporting Indiana State University is wanting to sell $20 Million in bonds so it can refund outstanding student fee bonds, and to pay costs of issuance. Fitch provided a detailed analysis and gave the university a grade of (AA-). This should make investors feel comfortable when buying the debt. Debt sale is planned for December 8th.

Here is some highlights of the article:

-As of fall 2014, the university had 11 residence halls with total occupancy for 3,660 students and a 99.5% occupancy rate, including the recently completed Reeve Hall.
-Indiana State has over $110 Million in existing bonds due to residence hall and food services upgrades
– the university’s fall enrollment headcount grew to a record high of 13,183 in fall 2014, increasing by 2,649 students (or 25.1%) over fall 2009.
– ISU’s available funds, defined by Fitch as cash and investments not permanently restricted, grew to about $157 million at the close of fiscal 2014, up 5.8% from the prior year and 39.9% from the period since fiscal 2010.

by Hoosier Econ

Ball State Students Stumble Upon Economics

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Ball State athletics has an annual budget of over $17 Million a year. After revenue is collected from tickets, teams paying the University, parking, donations, etc it still has a budget shortfall of $11 Million. Enter the students. Fees are tact on to their tuition to make up this shortfall. Students did not realize this like this one:

“Wow, I wasn’t aware of that,” Ball State freshman Macon Shroyer from Selma

All the MAC schools are doing what Ball State is doing.

The vast majority of students in the Mid-American Conference, of which BSU is a member, are “flat-out stunned” to learn how much they pay in athletic subsidies, says David Ridpath, associate professor of sports administration at Ohio University, who surveyed 3,243 MAC students.

You can read the rest of the article here.

by Hoosier Econ

Cost of Caring for Illegal Immigrant Children

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One of the ealry known costs in caring for illegal immigrant children placed in adoptive homes is $192 Million. The Washington Times is reporting the placement agency who won the contract bid is in charge of 66,000 illegal children.

The 150-page request for transportation proposals, posted online at government contractor website fbo.gov, was issued by U.S. Immigration and Customs Enforcement to MVM Inc., a large security contractor founded by a former Secret Service agent and based in Ashburn, Virginia.

MVM Vice President Christopher McHale confirmed in an email that his company did win the contract, which the website says is worth $192 million, but he declined to talk about any of the details.

Here are the requirements in the contract when harboring the children:

Want to bid for a contract to care for the illegal immigrant children coming across the border? Make sure your staff members get Hepatitis vaccines and regular TB tests and can speak foreign languages — probably Spanish but maybe Mandarin, suggesting a surprising number of the children are coming from China.

The federal government guarantees the children three meals a day, and they must take account of health, religious observance or vegetarian diets. The children also have a right to second helpings, according to contract documents issued last month seeking a transportation company to ferry the children within Texas.

This does not account for the costs local taxpayers of school districts have occurred since the federal mandated taking in the illegals since their arrival.

by Hoosier Econ

College Enrollment Declines for Second Year in a Row

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College enrollment declined by close to half a million (463,000) between 2012 and 2013, marking the second year in a row that a drop of this magnitude has occurred. The cumulative two-year drop of 930,000 was larger than any college enrollment drop before the recent recession, according to U.S. Census Bureau statistics from the Current Population Survey released today. The Census Bureau began collecting data on college enrollment in this survey in 1966.

Read the rest here

by Hoosier Econ

Numbers from Illinois Teachers Pension Fund

Illinois is a broke state and their teacher pension fund does not make things any easier on how it is contractually written. Yes, it is a contract and the state is honoring the pension as of right now. In the spirit of “States Rights” the voters of Illinois find their financial situation very pallable no matter the current conditions or what they will be facing as the physics of economics plays out. This blog is not making fun of Illinois but it also will not give pity to the residents when debt hell hits.

The Washington Times had a long article showing the ramifacations of this current penson plan that they operate on. I will post the key financial highlights of it while you can read the rest in the embedded link.

About 6,000 retired educators collecting more than $100,000

More than 100,000 retired Illinois educators had been paid back what they invested into the system just 20 months after leaving work

The pension is about $54 billion underfunded

The teacher pension’s 3 percent annual increases aren’t tied to inflation — meaning they cannot fluctuate up or down depending on the economy or budget pressures.

Illinois public sector workers will receive, on average, a $1,906 annual cost of living adjustment this year — nine times more than the average Social Security beneficiary

by Hoosier Econ

Indiana Schools Back in Session: Examination of Their Debt

Indiana public schools are swinging into full gear and with that, their financial books are starting to get published in the back pages of your local newspaper. Most of their financial information from a broad spectrum is posted on the state website and can be found in the Department of Education “School Financial Reports” portal.

The debt held by public education has swelled in recent years in municipalities. For numerous years, Indiana school boards were able to pass tax increases and spending agendas without much say from the public. Since 2008 school boards must get these items on a ballot for voters to decide.

Here are some listings of a handful of school corporations around the state and how much “total principal” they owe. Time period covered is July 1, 2012 to June 30, 2013:

Brownsburg $188 Million

Avon $236 Million

Indianapolis Public Schools $642 Million

South Madison Schools $69 Million

Greenwood Community $20 Million

Plainfield Community $127 Million

Greenfield-Central Com Schools $96 Million

Carmel Clay Schools $153 Million

Zionsville Community Schools $200 Million

Fort Wayne Community Schools $133 Million

Rochester Community $13 Million

Seymour Community Schools $22 Million

Vincennes Community $31 Million

Lake Station Community Schools $15 Million

Tell City-Troy Twp School Corp $24 Million

Fremont Community Schools $5 Million

Vigo County School $58 Million