The Prepaid Affordable College Tution program is seeking new alternatives of funding from the state for current participants.
A bill to rescue the PACT program was given a second reading Thursday, April 17, before the Senate and is expected to receive a vote on Tuesday.
The bill would call upon state funds to ensure that the PACT program functions as was originally intended. It would allow all current participants to receive their guaranteed full tuition payments.
"The bill will transfer PACT out from under the Board of Directors that now serves at the pleasure of the State Treasurer over to the Retirement Systems of Alabama," said Margaret Gunter, director of communications and governmental relations for the Alabama Commission on Higher Education.
After receiving phone calls from the governor and state treasury, CEO of Retirement Systems of Alabama, RSA, David Bronner agreed to help the PACT program under the condition that it be funded.
Lindy Beale, member of the Legislative Counsel at RSA, said Bronner refused to take over the program just for it to fail with no funding.
According to the bill, the Teachers' Retirement System Board of Control would have administrative authority over all matters and decisions pertaining to the PACT program.
Alabama Sens. Roger Bedford, D-Russeville, and Jimmy Holley, R-Elba, are co-sponsors of the bill and introduced it to the Senate Finance and Taxation-General Fund Committee April 14, and 15 where the bill received a 10-2 vote.
The bill requires the governor to annually request money to be set aside for the program and for the legislature to appropriate that amount from the state education budget or the general budget. This money will then go toward supporting the program and the participants for the present funding.
The state education budget will be discussed in the Senate this week and further decisions will be made on this issue.
"The bill doesn't say where the funding will come from, but that the legislature will fund it from whatever source is available," Beale said. "The problem is K-12 doesn't want it to come out of their funding. They want it to come from higher education funding, which was recently reduced. So, there is just no money available."
Brian Keeter, director of public affairs at Auburn University, said state appropriations to higher education in Alabama were cut approximately 20 percent this year, which amounts to a reduction of $69 million for Auburn's system.
The state's contribution to the PACT program would be treated as an interest-free loan that would be repaid by the program's excess funding amounts.
"The present funds will be moved over to the RSA for investment purposes, and any funds that would be available will still be subject to that investment cycle," said Dr. Gregory Fitch, director of Alabama Commission on Higher Education.
The bill would freeze tuition at state schools for the program's participants at the 2009 rate for three years.
In 2012, the rate will be determined depending on how well the funding and the stock market are doing at the present time.
New enrollment in the PACT program has been indefinitely suspended.
The PACT program was created by State Treasurer Kate Ivey's office to allow parents to pay for their children's tuitions ahead of time, but as the economy experienced an incredible blow beginning in the fall of 2007, the PACT program lost nearly half its value.
As the stock market collapsed, the feeling of horror ignited in the program's approximate 48,000 enrollees as the program's assets fell from $899 million to $484 million.
"These are tough economic times, and we're concerned about the economy's impact on Auburn students who participate in PACT as well as those who have other college tuition or investment plans," Keeter said. "President Gouge and the Board of Trustees are committed to keeping the economic and budget problems as far away as possible from the classroom."
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