Tuesday, June 21, 2011

Alabama judge promises ruling by August in prepaid tuition suits

MONTGOMERY, Alabama — A Montgomery judge said Monday he will decide by August on a proposal to settle litigation surrounding Alabama's troubled program that was meant to allow families to prepay college tuition.

Montgomery County Circuit Judge Johnny Hardwick listened to more than seven hours of testimony about the Prepaid Affordable College Tuition plan or PACT.
Hardwick must decide the future for tens of thousands of recipients of prepaid college tuition contracts.
"I am trying to put myself in the position of people who put money in the program," Hardwick said.
The hearings follow a proposed settlement that PACT contracts are to be paid at the Fall 2010 level, with additional funding to be paid by the contract holder. Shortfalls in the Educational Trust Fund Budget mean the contracts cannot be fulfilled as originally written.
The deficit in the Educational Trust Fund stems from an increase in college tuition statewide, as well as an economic downturn. In the current state, the Education Trust Fund budget will reach the "point of no return" in 2014, meaning current contract holders will not receive the full amount of tuition paid toward their PACT program.
"Our obligations exceed our assets," Boozer said.
The Legislature started the PACT program 21 years ago with parents paying in a fixed amount of money when a child was small and then expecting that upon graduation from high school, the child would get four years of tuition paid at a state university. The program invested the money to pay tuition, and it worked well until 2009, when it was hit with plunging stock values and tuition prices that rose faster than program officials had anticipated.
That led to lawsuits from some parents seeking to get the tuition they were promised.
More than 60 contract holders filed objections to the settlement. Many of those appeared Monday at the hearing.
David Howle of Heflin holds two contracts with PACT. He said he and his wife took a chance when they invested, and they trusted that the state would come through on its promises.
Ricky Murphy of Woodland also purchased two contracts. He said, "I don't think this is fair, because these are all different, based on individual preferences." He was referring to the differing costs of attending different schools.
George Beck, an attorney representing the parents, said, "How can we go to them and say you can't get what you contracted for?"
State Treasurer Young Boozer said the settlement is the best deal possible under the circumstances.
"This is part of the compromise," he said. "I'm trying to provide the greatest benefit to contract holders."
"We've got to get something resolved, get it locked down, then put a long-term financial plan in place."
No new contracts are being added.
The proceedings lasted until 8:30 p.m. Monday as contract holders were allowed to voice their objections to the settlement. The hearing began at 1 p.m.

No comments:

Post a Comment