Save Alabama PACT group meeting Thursday in Dothan

By: Jim Cook | Dothan Eagle
Published: September 22, 2009

Deana Stinson has two children in college using money from state Prepaid Affordable College Tuition program contracts to pay their way, and she has another child in high school who also intends to use a PACT contract.

That’s why reports about the possible insolvency of the program, which allows families to pre-pay their children’s college tuition at a set rate, have deeply upset her.

“I’m concerned about this issue because I have three children and four nieces and nephews, who have PACT contracts,” she said. “My parents purchased the contracts for all seven of their grandchildren, which was no small sacrifice on their public educators’ salaries. We have counted on the kids’ tuition being covered since they were small children. I expect that the State of Alabama will do the right thing and honor their contractual agreement with the PACT contract holders.”

Stinson and other members of Save Alabama PACT will meet with local legislators and candidates for the Alabama Treasurer’s Office on Thursday at 6:30 p.m. in the Community Room of Evergreen Presbyterian Church.

PACT is a good program for parents because by locking in their child’s college tuition at a set rate and paying it now, they can avoid added costs caused by tuition increases in the future. The folks who organized the plan expected that the money received from increasing numbers of parents buying into the plan, plus returns on investments, would allow the plan to meet its obligations.

The program ran into trouble during the financial meltdown of 2008 when many investments made by the plan lost half their value. With rapidly increasing tuition costs piled on to this problem, it soon became obvious that the plan would have trouble meeting its obligations. PACT administrators have now decided that the plan will only pay tuition for fall semester and spring semester next year. The Alabama Legislature will determine the future of the plan next year.

According to the Retirement System of Alabama, in order to make the program whole, it needs a one-time cash infusion of $641 million or $52 million per year for 11 years -- for a total of $931 million.

About 48,000 Alabama residents currently hold PACT contracts. About 800 Dothan residents have contracts with PACT, and Stinson said a surprising number of rural Wiregrass residents hold contracts too.

“There are 42 just in Abbeville and 29 in Clayton,” she said.