One of the most important changes within the MET economic model has been the unfavorable ruling by the IRS with regard to the fund's tax status. To receive an after-tax rate of return of 9.75 percent, MET would have to achieve pre-tax return rates of 14.7 percent, given the federal corporate tax rate of 34 percent: .0975/(1 - .34) = .147 or 14.7%

MET proponents note that the state's money managers have accomplished a rate of return of 15 percent on their funds since 1981. Promotional literature states, "The Treasury Department averaged nearly a 15% compounded annual rate of return since 1981." [23] Treasury's money managers are paid on a performance basis, a feature that allows the state to remain competitive with private money managers in this area.

Given stable economic growth and low inflation, Mr. Bowman notes that the state's money managers have achieved an average 15 percent rate of return in the 1980s. A strong, bull market has undoubtedly helped, but how would slow economic growth, high inflation and/or a weak, bear market affect the ability of the state's money managers to achieve an average 15 percent rate of return? One cannot compare the performance of the state's money managers during bull market periods with bear market periods because they were not allowed to invest in high return securities until the 1980s. MET's managers have never been tested during a bear market. Therefore, a comparison is not possible. A few private money managers have obtained an average 15 percent rate of return over an 18-year cycle, although such an accomplishment is not typical.

The issue of MET actuarial soundness is also worth noting. Treasury Department spokesman Robert Kolt has stated that MET is overfunded by $1.4 million. [24] Interestingly, this figure is similar to the sum of money generated by the most recent increase in MET's enrollment cost. Between the Oct. 2-6, application period, and later that month, when contracts were forwarded to applicants, the state increased MET's cost $176, from $7,664 to $7,840 for newborns. The increase was not announced publicly, and MET applicants learned of it only after receiving their contracts in the mail. Of the original 15,476 applicants, 8,864 enrolled in the program, generating an extra $1,560,064 for the MET fund: $8,864 X $176 = $1,560,064.

Proponents correctly note that enrollment hikes have maintained the fiscal stability of the MET fund. They fail, however, to dwell on the detrimental effect such increases have on MET's access to the middle-class.