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Alabama legislature passes fix for PACT

(April 26, 2010) - On the last day of its regular 2010 session, the Alabama Legislature passed SB 162, a bill designed to bail out the state's Prepaid Affordable College Tuition (PACT) program.

Although not required to step in under the original PACT statute, the state will now inject up to $547 million into PACT over a 13-year period beginning in fiscal 2015 to cover the program's deficit and continue promised benefits to the program's participants.

As part of the plan, Alabama's public institutions (except the University of Alabama and Auburn University), must accept an annual cap of 2.5% in tuition increases for program participants, even if tuition goes up by a greater amount for non-PACT students. The amount of tuition that can be charged is increased with favorable investment experience.

The bill, which is supported by Alabama's Governor, also creates a separate board to assume oversight of PACT.

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