The corrections were suggested by Gov. Bob Riley.
“One part of the (original) Bill 162 passed by the legislature would have taken some of the Alabama Public School and College Authority money and put it into tuition, but none of that money is allowed to be put into anything other than bonds,” said Sen. Ted Little (D-Auburn). “Because tuition and bonds are not equivalent, there was a possibility of jeopardizing the tax-free status of bonds that have already been (issued) to build college buildings and high schools throughout the state.”
Investors who bought bonds from the state were issued a federal and state tax-free status on dividends received from those bonds each year, so the bill’s wording could have endangered future PACT funding, Little said.
Little said he introduced the bill about four months ago to alleviate the funding problems of PACT.
Little’s goal was to help cover the state’s 44,000 PACT students by allocating state bond issues.
Little said his proposal, Civic Bill 162, first designated $236 million to put into the PACT program.
Also, the bill did not require tuition caps for any Alabama institution.
However, after the bill passed the Senate, the House amended it to require that all 16 institutions of higher education must not raise the tuition for PACT students more than 2.5 percent per year, but may raise tuition for other students more than 2.5 percent, Little said.
However, this amendment will not apply to Auburn University and the University of Alabama.
Richard Huckaby, cofounder of Save Alabama PACT, said the bond issues are a respectable form of revenue to back the PACT program and provide a fair solution.
“No new money will be generated, and no money will be taken away from anybody,” Huckaby said. “This is not money taken out of a tax base or from tax payers and is not a bailout. It is simply interest being paid by the state of Alabama. Once that interest is paid, the money will be available to use for other things within the education system.”
A new 15-member PACT Board, composed of investment experts and PACT holders, will convene in June to establish goals and guidelines and to address other matters that need wrapping up, Huckaby said.
Although, Smith said Auburn University should potentially see positive effects from the compromise and her two children have benefitted from being holders of the PACT program.
“I think a lot of people have enjoyed PACT for awhile, and it’s unfortunate that it ended up (without sufficient funding),” Smith said.
Despite the differing views among those involved with the PACT compromise, many seem to agree that the state made the most reasonable decision possible in present circumstances.
“The biggest thing is that we have a solution that keeps the program close to 100 percent funded in the foreseeable future,” Huckaby said.