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2009 May 3 - 12:00 am

MONEY TREE: Bill Offered To Fund Depleted Prepaid Tuition Program in Ala.

MONTGOMERY, Ala. (AP) — A bill introduced in the Alabama Senate would use state funds to shore up the financially ailing prepaid college tuition plan and make sure the 48,000 participants receive all tuition payments.

Democratic state Sen. Roger Bedford and Republican Sen. Jimmy Holley introduced the bill. Lt. Gov. Jim Folsom Jr., who serves on the board of Alabama’s Prepaid Affordable College Tuition Plan, said the two legislators acted at the request of board members.

The board includes two Republicans who are considering running for governor, State Treasurer Kay Ivey and two-year college Chancellor Bradley Byrne, and the Democratic lieutenant governor, who is running for re-election. Folsom said board members wanted one senator from each political party to sponsor the legislation to remove any arguments about politics.

“It was strictly a bipartisan effort,” he said.

But he added that the legislation still has opposition from some universities because it would limit how much they are paid in tuition for the program’s participants.

The prepaid tuition program allows parents or grandparents to pay a fixed amount for a child in anticipation of getting four years of tuition at a state university upon graduation from high school. For nearly two decades, the program’s board invested the money and used the earnings to pay tuition. But the program has lost more than half of its assets due to the turmoil on Wall Street.

The legislation would freeze enrollment and not let any new participants enter.

It would turn over control of the program, including investment of its assets, to the state pension fund, the Retirement Systems of Alabama. It would also require the Legislature to appropriate money each year to meet the program’s obligations if the assets didn’t earn enough — something that is likely to happen for several years.

The bill would freeze tuition at its current rate for program participants through 2012 and allow the state to pay below the normal rate in years beyond 2012. State colleges would have to accept the amount as full payment.

Gordon Stone, executive director of the Alabama Higher Education Partnership, said the lobbying group is concerned about the Legislature using money out of the education budget to fund the tuition program and about the state capping tuition payments for participants. He said setting tuition should remain the responsibility of universities’ boards of trustees.

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