PACT’s good faith participants must be protected
By By Rep. Robert Bentley, R-Tuscaloosa, Guest Columnist
In recent weeks, we have learned that the Alabama Pre-Paid Affordable College Tuition Program (PACT) is in peril. What began in 1989 as a guaranteed and safe savings plan for future college enrollees has now gone sour, and fingers are being pointed in many directions. My objective is not to cast blame, but to find a solution that protects those who entered the program in good faith and to prevent breaking the bank in the future. After all, the word “pact” means agreement, covenant or compact.
I am not an expert in the PACT program, and my comments do not reflect the views of my House or Senate colleagues. But I have an interest in the PACT program because the University of Alabama lies within the legislative district I represent. Ten and one-half percent of the PACT’s participants are currently enrolled on the Tuscaloosa campus.
The assets of the PACT program have dropped almost 50 percent since September 2007, from just under $900 million to about $460 million posted at the end of January 2009. There are 48,000 people currently signed up in the PACT program. One figure tossed out last week is that some $50 million will be needed to cover next fall’s PACT members. Even though that is a minute figure in comparison to the billions spent for the stimulus proposal, it’s real money to everyday Alabamians who are struggling to make ends meet in today’s economy.
Maybe the PACT program was not well conceived at its very outset. Any person who is familiar with the ups and downs of a country’s economy knows that booms are followed by busts, and the potential for this program to enjoy financial success ad infinitum was unlikely. And the fact that the PACT program is so tied to the stock market begs the question of why the governing board did not pursue diversity of the participants’ investments over the years.
The perfect storm has hit. There has been a reduction in the number of PACT enrollees over the last several years. There has been an increase in the price of tuition at colleges and universities in Alabama. And there has been nothing short of economic upheaval and financial failures in the last year, particularly on Wall Street.
Some of the folks who currently administer the PACT program are running away from the language used back in 1989 that this program was guaranteed to future enrollees. The original literature printed to entice parents, grandparents and guardians to sign up for PACT used the word “guarantee.” That’s a strong word, and the commitments by state officials made to lure people to this program must be honored. Simply put, we have a moral obligation to uphold the contracts between the state and PACT members-whatever it costs. Rethinking the viability of the program or shutting it down altogether once commitments are honored are the only options at this point.
Both Alabama State University and Troy University have nobly agreed to freeze tuition costs at the current level for PACT enrollees for at least three years, and I urge others to follow suit. I propose that any institution of higher learning that freezes tuition for PACT participants be reimbursed for any loss related to that freeze through the annual budgeting process. We cannot expect Alabama colleges to bear the brunt of the PACT program’s losses.
Instead of playing the blame game, I am confident that we will seek solutions to protect the parents and grandparents who made an investment in the future. As an elected official representing the University of Alabama, I will fight to honor what I consider to be a moral obligation on the part of the state to PACT enrollees.