State may pay PACT contracts

Published 10:00 pm Wednesday, February 10, 2010

Three bills to ensure payments of existing prepaid college tuition contracts took one step toward passage Wednesday in an Alabama House Committee.

And, they went with the support of local Rep. Alan Boothe, D-Troy, who agreed the state should honor these PACT contracts, which total around 45,000 children.

The House Education Appropriations Committee, on which Boothe serves, voted unanimously to approve the bills that will guarantee all current contracts and end the 20-year-old PACT program when all current contracts are honored, according to the Associated Press.

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The first bill will provide funding from the Alabama Education Trust Fund to uphold those contracts by using money the state currently pays into a bond program, once that bond is paid off in the next few years.

“Instead, that payment will go into the PACT program, not to a bond company,” Boothe said.

This is anticipated to cost at least $236 million, the AP reports.

This bill also includes a provision that keeps universities from raising tuition for PACT participants by more than 2.5 percent unless funds for the program increase by more than 5 percent over the next two years, the AP reported.

That’s a move university officials throughout the state are opposed to, including Troy University.

Although Troy University was the first in the state to place a cap on tuition increases for PACT students, lobbyist Marcus Paramore said this was a decision the university willingly made.

“The university is opposed to any mechanisms by the legislature to cap tuition or create tuition policies outside what the Board of Trustees can do,” Paramore said.

“That’s why the Board of Trustees was set up statutorily. One of their jobs was to set policies, not the legislature.”

Boothe agreed.

“I don’t think it’s fair for the legislature to start telling universities what their tuition ought to be,” Boothe said.

The tuition agreement for Troy University’s PACT students keeps tuition at the rate it was approved in fall 2009 until 2012.

That means any students under the PACT agreement will pay $193 per credit hour at Troy University despite any tuition increases the school incurs through 2012.

“We fully support the PACT program and finding a viable solution to all parties,” Paramore said. “Saying that, we chose to freeze our tuition, but it was a Board of Trustees policy. It was an act we did to try to help the program and help the program not spend as much money, but it was a Board of Trustees decision and not a Legislature decision.”

Troy’s Senior Vice Chancellor of Student Services and Administration Richard Federinko said there are between 400 and 600 PACT enrolled students on a given semester at the university.

*The Associated Press contributed to this report.