New bill surfaces to shore up Ala. tuition plan

Published 12:00 am Thursday, April 1, 2010

MONTGOMERY. (AP) — A new idea for shoring up Alabama’s prepaid college tuition plan is picking up support in the state Legislature because it wouldn’t pit the Alabama Education Association against universities.

The House Education Appropriations Committee voted unanimously Wednesday for a tuition bill offered by Tuscaloosa Republican Rep. Robert Bentley, who is running for governor.

His proposal would use the money in Alabama’s Prepaid Affordable College Tuition plan to invest in an annuity-like product that pays a fixed return for 20 years. The difference between the return and the amount needed for tuition each year would be borrowed from a state savings account called the Alabama Trust Fund.

After about 10 years, Bentley expects the annuity’s payment to exceed the tuition costs and used to start repaying the loan. The state government would cover any shortfall, which he expects to be small.

Rep. Alan Boothe, D-Troy, didn’t oppose the bill in committee, but he warned that the current Legislature would be leaving it to legislators in the future to figure out how to cover any shortfall. He called it “kicking the can down the road 20 years.”

Alabama’s tuition plan has been looking for a rescue because its investments plunged in value last year, and it no longer has enough money to pay the tuition costs for 44,000 participants.

The House has passed a bill that would provide $236 million to PACT, but would cap college tuition increases for PACT participants in most years at 2.5 percent. That bill is supported by the Alabama Education Association and the Save Alabama PACT parents’ group.

The Senate has passed a bill, favored by universities, that would give PACT $236 million but would not cap tuition increases.

Opponents say the amount won’t be enough without a tuition cap. Universities say the Legislature shouldn’t dictate tuition to their boards of trustees, and the tuition cap would cause costs to be shifted to students not in PACT.

Bentley and other committee members said the fight between the two sides is so intense that neither bill is likely to make it through the Legislature this year.

“We must have some fallback legislation,” he said.

Brenda Emfinger, director of the PACT program, said Bentley’s legislation could work if tuition doesn’t continue to increase by double digits.

Susan Kennedy, a lobbyist for AEA, and Bill Jones, a lobbyist for the University of Alabama, said the new proposal avoids the battles of the other legislation.

“It doesn’t pit one student against another,” Jones said.

Patti Lambert, co-founder of Save Alabama PACT, said, “The bill takes us out of the middle of a war we didn’t create.”

But she said the bill is a constitutional amendment that wouldn’t take effect unless approved by Alabama voters in a referendum in the general election Nov. 2, and getting that approval will be difficult.