Rescue plan proposed for PACT
Published 10:57 pm Tuesday, March 17, 2009
MONTGOMERY — A state representative who participates in Alabama’s prepaid college tuition program is writing legislation to rescue the financially ailing program and allow it to keep paying full tuition for participants.
Democratic state Rep. Craig Ford of Gadsden said Tuesday he’s preparing a bill that would supply about $30 million a year for at least five years. Ford figures that would cover about half of the program’s tuition obligations each year and give time for the stock market to recover.
Ford’s proposal would use money now going to the state General Fund budget. That has raised concerns from the chairman of a House budget committee.
“There is no question we need to address this. … But I don’t think the General Fund has an obligation to solve this,” said Democratic Rep. John Knight of Montgomery, who is chairman of the House Government Appropriations Committee.
Ford has two children enrolled in the program. But he said the main reason he is working on the bill is because he has been flooded with calls from parents and grandparents who sacrificed to invest in the plan, and they expect four years of college tuition for their children and grandchildren when they finish high school.
“The Legislature has got to step in and do something,” Ford said.
Ford said he plans to introduce his bill when the Legislature reconvenes next Tuesday.
For at least five years, his plan would use money from the state treasurer’s unclaimed property program, which has been going into the state General Fund budget. The unclaimed property program receives stocks, bonds, securities, insurance benefits and other items that have not been claimed by Alabamians or their heirs. It would generate about $25 million annually, Ford said.
His plan would also use $5 million annually from the state’s Capital Improvement Trust Fund, which finances the state’s economic incentives for new and expanding industries.
Knight, who has a niece in the tuition program, said Tuesday he hasn’t seen Ford’s proposal, but he doesn’t like the idea of using General Fund money that now helps Medicaid, Human Resources, Public Safety and many other state agencies.
Alabama’s Prepaid Affordable College Tuition Plan invests the majority of its money in the stock market in hopes the earnings will exceed tuition increases, but it has lost about half of its assets since September 2007. Its assets now equal about half of its future liabilities.
The board that oversees the program will meet next Tuesday at the state Capitol to discuss what it will do about upcoming tuition payments.
Lt. Gov. Jim Folsom Jr. got the Legislature to create the program in 1989 and is now on its board. Folsom said through a spokesman Tuesday he had not seen Ford’s proposal, but he is open to all ideas for dealing with the program’s problems.
Like Ford, Folsom’s two children participated in the prepaid tuition program. His daughter has already finished college and his son is a junior.
In a statement, Folsom urged his fellow board members to stand behind the prepaid tuition program, even though state law doesn’t obligate the state to do that. Folsom said the state’s promotional materials gave assurances to participants and they created a “moral duty to make good” on the state’s perceived promises.
He said the program has enough money to keep paying current tuition costs while searching for a long-term answer.