Basic Information

Date Introduced
Jan 12, 2010
Subject
Prepaid Affordable College Tuition (PACT) Program
Status
Enrolled

Summary

Prepaid Affordable College Tuition (PACT) Program, separate board of directors, members, duties, annual appropriations from Education Trust Fund to PACT Fund for fiscal years for certain period of time, certain specific appropriations made to PACT Trust Fund for certain years, Sec. 16-33C-4.1 added Secs. 16-33C-3, 16-33C-4, 16-33C-5, 16-33C-6, 16-33C-7, 16-33C-8, 16-33C-10, 16-33C-11, 16-33C-12 am'd.; Sec. 16-33C-9 repealed
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Last Action

Apr 22(Forwarded to Executive Department on April 22, 2010)

Sponsor

Sen. T.D. Little [Democrat, 27]

Cosponsors

(Democrat: 3;Republican: 0)

Sen. Lowell Ray Barron [D, 8] (Sponsor date - Jan 12, 2010)
Sen. Hinton Mitchem [D, 9] (Sponsor date - Jan 12, 2010)

Committees

Senate Fiscal Responsibility and Accountability
House Education Appropriations

Related Bills

No related bills.

Fiscal Notes

Fiscal Notes for SB162 (Regular Session 2010)

SB162 for Education Appropriations - Dated 02/24/2010

Committee: Education Appropriations	Sponsor: Little (T)
Analyst: Jason Isbell	Date: 02/24/2010

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FISCAL NOTE

Senate Bill 162 as substituted by the Committee on Education Appropriations appropriates from the Education Trust Fund (ETF) to the Prepaid Affordable College Tuition (PACT) Program's Trust Fund the following amounts for the following fiscal years:

Fiscal Year	Amount
2014	$19,592,531
2015	$19,957,666
2016	$20,347,990
2017	$19,023,438
2018	$19,697,076
2019	$20,448,628
2020	$84,052,287
2021	$32,980,384
Total	$236,100,000

These amounts are either equal to or, in the case of FY 2021, less than, the difference between the "base year" debt service (which is the amount paid by the ETF in FY 2013 for Alabama Public School and College Authority (APSCA) debt service) and the APSCA debt service for the then-current fiscal year.

This bill also limits the annual percentage increase in mandatory fees and tuition rates charged by public institutions of higher learning to PACT contract holders. If earnings of the PACT Program's Trust Fund exceed 5% for two consecutive years, public institutions of higher learning may increase the mandatory fees or tuition rates charged to PACT contract holders by an amount not to exceed 2.5% plus the percentage rate earned in excess of 5% by the PACT Program during the first of these two consecutive years, or the percentage increase in the fees or rates charged to all other students, whichever is less. In any other year, public institutions of higher learning may increase the mandatory fees or tuition rates charged to PACT contract holders by an amount not to exceed 2.5% annually, as compared to the mandatory fees or tuition rates charged to PACT contract holders on September 30, 2009, or the percentage increase in the fees or rates charged to all other students, whichever is less. In no event, however, shall any increase in mandatory fees or tuition rates be allowed above the 2.5% increase if the payment of such fees or rates would cause the actuarially-calculated funding status of the PACT Program's Trust Fund to fall below 90%.

Additionally, this bill (1) repeals current law that would require PACT Trust Fund assets to be transferred to the Alabama Commission on Higher Education (ACHE) upon the dissolution of the program; (2) provides that any funds remaining in the PACT Trust Fund once all PACT obligations have been met shall be transferred to the ETF; and (3) requires the PACT program to be dissolved and the provisions of this bill to become null and void once all benefits or obligations owed to PACT contract holders have been paid.

This bill also provides for the Alabama College Education Savings (ACES) Program and the PACT Program to be governed by separate boards of directors. Under current law, both programs are governed by the same ten-member board. This bill would allow the current board to continue its oversight of the ACES Program while creating a fifteen-member board of directors to oversee the PACT Program. Membership of the PACT board would be inclusive and reflect the state's diversity. Appointed members of the PACT board would be required to be experts in the field of investments, or in a similar field. Additionally, members of the PACT board would have the fiduciary responsibility to implement an investment strategy designed to maximize investment returns in a manner that correlate with future projected benefit payouts.

This bill also provides that no member of the PACT or ACES Boards would be held personally liable for any losses, damages, or claims which have arisen or may arise from an act or omission of the board member, so long as the board member acted in good faith.

This bill could increase the meeting reimbursement expenditures of the PACT Program, paid from the PACT Program's Trust Fund, by a small, unknown amount depending upon the frequency and location of PACT board meetings.

This bill also prescribes additional duties of the PACT board, including: (1) the preparation of both quarterly and annual reports; (2) the requirement that any PACT-related investment or administrative contract be approved by a majority vote of the PACT board after the submission of a Request for Proposals; and (3) the establishment by the board of specific investment guidelines designed to limit the impact of extreme market fluctuations on the assets of the PACT Program's Trust Fund.

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Richard J. Lindsey, Chair Education Appropriations

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SB162 for Fiscal Responsibility and Accountability - Dated 01/26/2010

Committee: Fiscal Responsibility and Accountability	Sponsor: Little (T)
Analyst: Jason Isbell	Date: 01/26/2010

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FISCAL NOTE

Senate Bill 162 as introduced and as amended and reported by the Committee on Fiscal Responsibility and Accountability appropriates the following amounts for the following fiscal years from the Education Trust Fund to the PACT Trust Fund. These amounts are the difference between the PSCA debt service for FY 2013 and the lower debt service amounts for the listed years:

Fiscal Year	Amount
2014	$19,592,531
2015	$19,957,666
2016	$20,347,990
2017	$19,023,438
2018	$19,697,076
2019	$20,448,628
2020	$84,052,287
2021	$32,980,384
Total	$236,100,000

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T. D. "Ted" Little, Chairperson Fiscal Responsibility and Accountability

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