• Registered: 08-10-2009
  • Posts: 71

Topic: My plea to tap the Alabama Trust Fund

I know that the mission of Save Alabama PACT is not to figure out how to save PACT, but dadgumit someone has to continue to point out what is blatantly obvious. Ivey, Byrne, Riley, your representatives and our media should all take the time to review the financial status and obligations of the Alabama Trust Fund. Please click on the hot link. There are only a few documents and most of what you need to know is included in the 1st and 3rd.

Here are the facts (as of 9/30/09):
- The balance is $2.6B. This comes from 65% of all Oil & Gas royalties.
- The Trust's principal cannot be touched w/ only one exception - proration, but even here only 25% of 16.5% (or 4%) of the balance can be accessed without having to be repaid. At most this could amount to about $100M of the $2.6B. The remaining $2.5B is currently unearmarked and untouchable.
- The remaining 35% of O&G royalties goes toward city, county, and state Capital Improvement initiatives. This is in addition to the $2.6B in the Trust.
- The income generated by the $2.6B goes to the General Fund to fund prisons, mental health programs, public safety, etc.  This is all supported from income and not tapping into the $2.6B balance, even though Ivey wants to scare everyone into thinking that these absolutely necessary initiatives are funded by the $2.6B. This is simply not true. They are fully supported solely from interest and dividend income. (Yes, a little less principal would result in a little less interest, but that too can be adjusted.)

Taking a few hundred million from the unearmarked $2.6B principal residing in the Trust Fund would save PACT without harming any of the Trust's existing obligations. Don't believe me. Read the linked documents for yourselves. If Ivey and others truly want to keeps PACT's moral and legal obligations, and do not want the PACT Board's recent proposal to ever see daylight in court, then Ivey needs to fess up that the money in the Trust can be tapped without detriment to its current obligations, our legislators need to understand this issue better, and our media needs to start asking the right questions and stop believing what they are spoonfed by Ivey. Read the documents.

  • Registered: 08-10-2009
  • Posts: 71

Re: My plea to tap the Alabama Trust Fund

I just re-read the proposals discussed in the Birmingham News Article from last September that caused Ivey to react to a potential raid of the Trust Fund. In addition to the $300M proposed by Ford to be withdrawn to support PACT's legal obligations over the next 11 years, there were other proposals to remove $1B+ to fund road, highways, and bridges.

This might surprise many of you, but I totally agree w/ Ivey here! It would be a travesty to remove $1B for improvements to transportation infrastructure during these trying times. But, it would also be a travesty to NOT remove $300M (spread over 11 years) to support the state's existing legal obligation to PACT owners.

These issues have to be thought of, and reacted to, separately by us, our legislators, the media, and most importantly the voters who ultimately have to approve any withdrawal. It's vital that voters would have to understand that PACT has to be paid and procrastination would only increase the debt through exhorbitant legal bills.

Message to Kay: Please recognize that the state has to fund this, and the only available funding is in the Trust Fund. Our colleges and universities have no obligation, or even any reason, to accept a discounted tuition payment, and PACT contract owners should not be forced to accept less than 100% reimbursement. Make this right. Publicly support a $300M withdrawal to support a legal obligation while remaining adamant about not raiding the Trust for pet projects. You alone have the power and visibility to rally the troops to support this effort, just as you alone seem to have the power to literally be blocking the schoolhouse door for many of us.

  • Registered: 06-26-2009
  • Posts: 28

Re: My plea to tap the Alabama Trust Fund

The ATF may provide a means of solving this problem, but that is the responsibility of elected officials to decide.  They have to sell this plan to the citizens of the State, not us. 

If we become advocates of raising taxes or tapping the rainy day fund, then it looks like "our plan" and not the politicians' plan.  They are elected to solve the problem and sell the solution to the citizenry.

  • Registered: 08-10-2009
  • Posts: 71

Re: My plea to tap the Alabama Trust Fund

Jeff and Alice wrote:

The ATF may provide a means of solving this problem, but that is the responsibility of elected officials to decide.  They have to sell this plan to the citizens of the State, not us. 

If we become advocates of raising taxes or tapping the rainy day fund, then it looks like "our plan" and not the politicians' plan.  They are elected to solve the problem and sell the solution to the citizenry.

I am both a PACT owner AND a citizen of Alabama. I have vested interested in PACT being funded AND how it is funded. I don't want my taxes raised, I don't want our colleges and universities to accept a discounted payment, AND I certainly don't want to accept a reduced reimbursement.

The Trust Fund is a logical solution and perhaps the only viable solution. It's certainly the only one I've considered that makes sense. Showing support for this from the SaveAlabamaPACT group would show legislators that they could expect MANY VOTES - both for the proposal and for them when they rerun for office.

Sitting back and hoping, writing letters, and making phone calls has gotten us a horrible proposal from the PACT Board. My suggestion is to keep making those calls and writing those letters, but express your support for a proposed withdrawal from the Trust Fund.

This is a decision each person has to make. I've made mine.

  • Registered: 03-28-2009
  • Posts: 257

Re: My plea to tap the Alabama Trust Fund

What do all you people think of a lottery?  No new taxes. Funding for schools...PACT

  • Registered: 06-26-2009
  • Posts: 28

Re: My plea to tap the Alabama Trust Fund

A lottery is nothing more than a State tax on mathematically challenged persons - typically the least educated and least able to understand that they are throwing their money away.   Say what you want about it being "fun" and whatnot, the majority of those who play, lose money - else it wouldn't be a revenue generator for the state. 

The citizens of Alabama have repeatedly and vocally opposed a lottery, even if it was intended to fund education.   Both of us would vote against a lottery - and any politician who endorsed a lottery - even if it was intended to fund PACT.  We feel that strongly against it.

Aligning PACT (or Save Alabama PACT) with a lottery would align the majority of Alabamians against us.

We don't disagree with KB's last sentence - each of us is a citizens and can have an opinion of our own.  But Save Alabama PACT (as an organization) needs to be careful about endorsing any particular plan, as this will inevitably put us in the middle of a political fight.  We maintain our role must remain simply to judge whether a plan would be effective - whether it would solve the problem - rather than form an organizational opinion as to the "goodness" of any proposed solution.

  • Registered: 03-28-2009
  • Posts: 257

Re: My plea to tap the Alabama Trust Fund

I'm in no way endorsing a lottery.  I might mention that in the last meeting of Madison County with all reps and senators, etc., present, mention of it got a very loud applause.  I, myself, have an open, not a closed, mind.  I see all that money going to Tennesse, Georgia, Florida and especially Mississippi and feel it's such a shame that it doesn't benefit our own state.

  • Registered: 08-10-2009
  • Posts: 71

Re: My plea to tap the Alabama Trust Fund

In no way do I want this thread to morph into a lottery debate, but I would like to point out the key difference in supporting a withdrawal from the Trust Fund vs using lottery money to fund PACT. The Trust Fund money has already been collected. The fund is growing and only the interest, not the principal, is earmarked for other causes. Using the Trust Fund money would not impact taxpayers, would not ask our university presidents to accept a tuition haircut, and would not ask for an additional 'donation' from PACT owners. There is no 'good' vs 'bad' debate (unless you listen to Ivey, and really who does any more?) regarding a withdrawal from the Trust Fund.

Yes, the Trust Fund could also be used for other causes, but the State already has a legal obligation to fund PACT contracts so let's get those paid for first. (They'll have to be paid anyway and getting it done swiftly will bypass costly legal bills.)

I understand an argument that SaveAlabamaPACT should remain neutral on the source of PACT funding, but I also understand that many legislators need to know what proposal will be supported before they publicly throw their weight behind it, not after. This is politics, and the laws of common sense don't always (ever?) apply!

  • Registered: 06-26-2009
  • Posts: 28

Re: My plea to tap the Alabama Trust Fund

Among the education constituency, the lottery has alway enjoyed tremendous support, for much of the reasons you cited above.  But when put to a voter test in Alabama at large, the initiative has failed.  Surveys and polls can tell us why, but that's all beside the point.  People who vote in Alabama don't like the lottery.  On this issue, our mind is closed, as is the minds of a majority of Alabama voters.

Our concern is that SAP - this organization - will become identified with a lottery initiative, which will alienate half or better of the population at large, and our hopes for getting our contracts funded will be tied to a losing initiative.  When the lottery loses, WE lose.

Similarly, someone might propose a "PACT Tax Hike" that raises taxes across the board to pay for this offset.  Do we want SAP to be aligned with a "Tax Hike" initiative, such that if it loses, WE lose?  I don't think so.

Similarly, the "Raid the Rainy Day Fund" initiative can be demonized - and if we're championing "Raid the Rainy Day Fund" - and it fails - WE fail.

We should be in the business of SCORING proposals on whether or not they would WORK - in terms of honoring our original contracts, as stated.  That's all.  We should be silent on endorsing any plan or candidate with a plan - other than to say "Plan A" would be acceptable in meeting the terms of our contract, or "Candidate X's plan" would satisfy the terms of our contract.

As such, a lottery MAY BE a part of an acceptable solution; a tax hike MAY BE a part of a solution; an offset from the ATF MAY BE part of the solution; requiring Alabama public universities to accept reduced payment from PACT students MAY BE part of an acceptable solution.

More than likely, the political solution will be a "stone soup" of some or all of these. 

Our job here is to assess these proprosals for sufficiency, in terms of satisfying our contract, our personal preferences notwithstanding.

  • Registered: 01-04-2010
  • Posts: 2

Re: My plea to tap the Alabama Trust Fund

Jeff and Alice- I couldn't agree more. I think that we need an open-minded approach to ensuring that all PACT contracts are fulfilled without alienating other Alabamians.

KBinHoover- You seem to be hung-up on the Trust Fund. You must believe that this is the ONLY way for the state to meet its obligation. Unfortunately, everything I've read about the tapping into the ATF says that the state would have to pay that principal back. How on Earth would they be able to do that?

Just some food for thought.

For my money, I'd like to see some buy-in from universities that have been raising tuition at astronomical rates since PACT began and have us turn our efforts towards them once this legislative session has concluded.

  • Registered: 08-10-2009
  • Posts: 71

Re: My plea to tap the Alabama Trust Fund

taxpayer wrote:

KBinHoover- You seem to be hung-up on the Trust Fund. You must believe that this is the ONLY way for the state to meet its obligation. Unfortunately, everything I've read about the tapping into the ATF says that the state would have to pay that principal back. How on Earth would they be able to do that?

Sorry that I'm "hung up" on what I believe to be the best viable solution. It's obviously not the only solution. We could wait on the university presidents to all step forward and agree to help fix a problem that they didn't create, and while we're waiting we can watch the PACT Board talk the courts into asking us to each pay more tuition even though we already have guaranteed tuition. We can even hope that a lottery would be proposed and passed.

I'm not sure what you have read about tapping the ATF, so it might be helpful if you could provide a link to a requirement that principal must be repaid. Using the ATF to fund PACT would require a new section of code, and it could be written to require whatever our legislators want it to require. I doubt that it would require repayment, but Rep. Craig Ford is planning to sponsor such a bill and could better address this than me. Here is his contact info.


taxpayer wrote:

For my money, I'd like to see some buy-in from universities that have been raising tuition at astronomical rates since PACT began and have us turn our efforts towards them once this legislative session has concluded.

A tuition cap is not a bad idea, but it's been talked about since at least last August and has gained no momentum with the larger universities. I'm all for it but it is not something that can be done without agreement from universities and they are struggling with their own financial problems already. The ATF money is already sitting there. Let's ask for voter approval to use it. If tuition can later be capped then less ATF money will be used, but why wait until a cap issue is resolved to move forward with using ATF money?

I'm not against any idea that will pay my guaranteed tuition. I am against a potpourri of ideas that get endlessly tossed about while nothing really gets done. ATF is simply one alternative that could move quickly. I just hope it could move quicker than the PACT Board's proposal through our courts.

Please don't take anything I say to be politically-motivated or argumentative w/ other contract owners. We all simply want this fixed immediately, and we're all in this together!

Last edited by KBinHoover (01-05-2010 6:20:35 pm)

  • Registered: 06-26-2009
  • Posts: 28

Re: My plea to tap the Alabama Trust Fund

We all simply want this fixed immediately, and we're all in this together!

Amen to that!  We're all impatient for a solution.

Just realize that our "hammer" is the lawsuit.  If the Ivey proposal goes forward as is, we must resort to the courts.  Both ourcontracts state that the PACT is obligated to pay tuition at a rate up to the average of the four highest public schools in Alabama, and there is no provision for scholarship offset.  Anything less than that amount is a breach of contract.

  • Registered: 01-04-2010
  • Posts: 2

Re: My plea to tap the Alabama Trust Fund

Jeff and Alice wrote:

We all simply want this fixed immediately, and we're all in this together!

Amen to that!  We're all impatient for a solution.

Just realize that our "hammer" is the lawsuit.  If the Ivey proposal goes forward as is, we must resort to the courts.  Both ourcontracts state that the PACT is obligated to pay tuition at a rate up to the average of the four highest public schools in Alabama, and there is no provision for scholarship offset.  Anything less than that amount is a breach of contract.

Is the Ivey proposal that you refer to the rules that passed at the last PACT board meeting? My understanding is that Ms. Ivey actually voted against that proposal. I thought that she released her own proposal earlier in December.

There seems to be a lot of misinformation floating around. I would appreciate some clarity.

  • Registered: 08-10-2009
  • Posts: 71

Re: My plea to tap the Alabama Trust Fund

taxpayer wrote:

Is the Ivey proposal that you refer to the rules that passed at the last PACT board meeting? My understanding is that Ms. Ivey actually voted against that proposal. I thought that she released her own proposal earlier in December.

There seems to be a lot of misinformation floating around. I would appreciate some clarity.

You are absolutely correct (but somehow I suspect you know more about this than you are pretending). Ivey voted against the Board's proposal, and offered her own solution instead. But, her solution to have universities accept a discount appears to be a longshot, given that she hasn't even discussed this w/ university presidents. I found it interesting that Ivey did not make this proposal in her role as Treasurer, but rather on her Guvnah campaign trail, and advertised a call on the topic only to her support group rather than to PACT contract owners.

Please let me know when you have contacted Rep. Ford and determined under his proposal if the state would have to repay the Trust Fund.

Last edited by KBinHoover (01-06-2010 9:33:41 am)

  • Registered: 08-10-2009
  • Posts: 71

Re: My plea to tap the Alabama Trust Fund

If the money is truly no longer needed by Forever Wild as argued here, then let's divert that $10M/yr toward the state's legal obligation to fund PACT.

Any argument that the Trust Fund can't support Alabama's legal obligations should begin w/ a review of current funding of non-legal obligations. I don't know any taxpayers that would care if this $10M/yr was redirected.