Since 1990, families across Alabama have paid into the Pre-Paid Affordable College Tuition Program (PACT) in order to make a child’s dream of a college education a reality.
Recently, it was revealed PACT is now facing a funding shortfall and is no longer taking applications for the program.
Tom and Mary Lou Crenshaw’s daughter Jennie is among the nearly 49,000 Alabama students depending on the program to pay their tuition and mandatory fees.
“We started paying into that program when Jennie was just a toddler, fifteen years ago. Now we don’t know whether that money is going to be there, and we are pretty upset about it,” Tom Crenshaw, a poultry farmer in the county, said.
The program, co-created by George Wallace Jr. and Jim Folsom Jr., was designed to allow family members to lock in, in advance, payment for in-state college tuition and mandatory fees.
“The original wording guaranteed us in our contracts and documents the tuition and fees would be fully paid when the time come to use it,” Crenshaw said.
“Well, some time around 1995 they changed the wording and took ‘guarantee’ out. We know we bought into PACT before the wording was changed. But we can’t get a straight answer from anyone when we call Montgomery. They won’t tell you anything.”
Lt. Governor Folsom released a public letter last month in which he said marketing materials and public statements by program officials since 1996 lead one to believe “such a commitment (to fully cover tuition and fees) was implied, if not explicitly stated.”
Folsom also stated, “people need to know the fund is not in any danger of running out of funds any time soon.”
According to the Lt. Governor’s letter, PACT has close to $500 million in assets and spends $60 million a year to fund tuition and fee costs, putting it “in a position to continue paying current costs while we seek a long-term answer to the funding shortfall.”
While the program started out with an investment strategy based on fixed assets and government securities, over the past decade the shift was made to a more risky approach based on stocks.
While this worked to the advantage of the program when the market was good, the last 18 months have seen the fund lose value in nearly half of its assets, sparking its current economic woes.
Last week, the PACT board of directors asked Folsom, State Treasurer Kay Ivey and Bradley Byrne, chancellor of the state’s two-year colleges, to develop a bill to keep the program financially strong enough to continue to make payments for its current participants in coming years.
David Bronner, CEO of Retirement Systems of Alabama, has already said RSA would be willing to oversee PACT and its investments under the right terms. While the state seeks a solution to the funding problems for PACT, Crenshaw is still trying to get that “straight answer” from the program’s administrators.
“The last two times I have tried to call, all I got was a recording. No one will return phone calls. Right now, I am just going to hope for the best. When August comes and Jennie gets ready to go to Auburn, we hope they honor what they promised,” he said. “We depended on this program to help us. As a poultry farmer, I am not exactly rolling in cash myself. There are a lot of other people who participated in this program who are in the same boat and we are all going to be very upset if the program fails us.”
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