PACT facing more funding problems - Montgomery Alabama news.

PACT facing more funding problems

Posted by Max Reiss – bio | email

MONTGOMERY, AL (WSFA) – Alabama's Prepaid Affordable College Tuition (PACT) program is in financial trouble again. But this time, the program doesn't need to ask for money immediately.

Young Boozer, Alabama's State Treasurer said the program is working at a burn rate of $80 million per year.

"It is projected to go to zero by 2015" Boozer said.

The state legislature gave the program a bail out of sorts by funding it with $548 million dollars last year. Boozer said the program is going to need more help during next year's legislative session. 57% of students who have utilized the PACT program have attended Auburn and Alabama, the state's largest universities.  Boozer said so long as those institutions keep raising their tuitions, the program will continue to struggle.

"We're going to need someone to step up in the legislature."

If the state can't fulfill its contract obligations, then it will refund the money of those who have paid for contracts.

Miriam and Buddy Finch who attended the PACT board meeting in Montgomery bought three contracts when the program started back in 1990.

"We bought them because we didn't know how to pay for our grandchildren's educations" said Miriam Finch who drove from Vestavia Hills to be at the meeting.

They each said a refund is unacceptable.

"I don't want my money back. I want my kids to be educated. I want my grandchildren to have an opportunity for the good life" Buddy Finch said.

During the meeting, the fund's consultant from the firm Callan, said the board couldn't have done anything differently to avoid the shortfall. He said the crash in the stock market led to the dire state of PACT.

"It's a liability problem and it's also a gap problem. It's that the gap between the rising cost of tuition and the return on the portfolio is huge" the State Treasurer Boozer said.

The program will require around $338 million dollars in order for it to continue. It stopped new enrollment in 2009 and the program was initially planned to be funded fully until 2032.

For Miriam Finch, she doesn't want her youngest granddaughter to have anxiety over how she'll pay for college.

Finch said, "I think it will be a disservice. I think it will be remembered if they don't follow through."

There are 41,000 contracts through PACT. Boozer said the funding issue will be more prevalent when the PACT board approaches lawmakers for appropriations during the 2012 legislative session.

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