Alabama Supreme Court Throws Out PACT Plan Settlement
The Alabama Supreme Court has thrown out a settlement over the financially-troubled PACT plan.
The high court, in a 6-1 ruling, sent the case back to Montgomery County Circuit Court. The settlement called for the Prepaid Affordable College Tuition plan to pay guaranteed tuition at fall 2010 rates instead of current rates. Parents would then be required to pay the rest of the bill. But the court says the settlement is void because it conflicts with Alabama law that was passed in 2010.
The Alabama Legislature approved a bill in 2010 that is fully funds the tuition payments, and in the opinion of the court, does not violate the contracts.
In February 2011, State Treasurer Young Boozer told the PACT board that the plan needs $338 million more than what the Legislature approved. One reason is because tuition at the University of Alabama and Auburn University has increased faster than expected. The Legislature has not acted on those concerns.
The PACT plan was hit hard during the 2008 economic downturn. PACT plan assets were in the stock market at that time, but have since been moved to safer investments to avoid losses.