Court tosses PACT settlement

Published 12:01 am Saturday, March 17, 2012

The Alabama Supreme Court Friday tossed out a settlement over the state’s financially troubled Prepaid Affordable College Tuition Plan saying it violates state law by giving parents only partial tuition payments.

The settlement was designed to end a class action lawsuit filed by parents and grandparents against the financially insolvent program.

The court issued a 6-1 decision saying the settlement is void because it conflicts with language in a 2010 state law by giving families only tuition payments equal to 2010 levels.

State Treasurer and PACT Board Chairman Young Boozer said PACT is solvent under the settlement, but without it faces a shortfall of hundreds of millions of dollars.

“I’m a little bit surprised and a little bit perplexed. I’m disappointed with the decision,” Boozer said of the court’s decision.

Boozer said the PACT board plans to ask the justices to reconsider the ruling.

“We’re going to ask them to approve the settlement,” Boozer said.

“The ultimate objective here is to try to get the greatest value that we can possibly get to the contract holders and the students. That’s what we plan on doing,” Boozer said.

The proposed settlement called for PACT to pay tuition equal to 2010 levels and for families to make up the difference.

The court ruled that settlement conflicted with a 2010 law that said the PACT board could make changes that “would not violate the contractual relationship existing between a PACT contract holder and the PACT board.”