In light of the uncoming study by RSA (Dr. Bronner), this older article like older suits and dresses, may become fashionable again....

2 tout annuity plan to rescue PACT

Thursday, April 09, 2009
By BOB LOWRY
Times Staff Writer bob.lowry@htimes.com

Beason, Bentley push bill to protect 48,000 enrolled

MONTGOMERY - Two legislators said Wednesday they plan to sponsor a bill to save the state's prepaid college tuition program through an annuity plan.

Sen. Scott Beason, R-Gardendale, and Rep. Robert Bentley, R-Tuscaloosa, said they are having legislation drafted that would protect the 48,000 who are enrolled in the program now but phase it out within 20 years.

Their plan calls for what Bentley called "an annuity-like" program that would be administered by the state treasurer's office.

"We don't see any support out there for a bailout," said Bentley.

Gov. Bob Riley and leaders of the PACT program are discussing having the Legislature set aside money each year to help the program, freezing tuition increases for participants for the next three years, and limiting the amount that tuition can rise after three years.

Under the Beason-Bentley plan, the fund's assets, currently at roughly $435 million, would be invested as an annuity with the treasurer being the annuitant.

"We would want to get 4 percent a year or about $33 million a year for the program," Bentley said, with the money being invested in fixed assets.

Since that wouldn't be enough to fulfill the annual obligations, Bentley said the legislation would also generate an estimated $26 million a year by eliminating in-state tuition for students who enroll at some Alabama colleges within a 50-mile radius of the state border.

That would affect many Alabama universities but not Auburn University or the University of Alabama - the two major PACT participants.

"Actuarially, we've looked at it," said Bentley.

"There will be a decrease in participants every year until it's phased out."

Bentley said he and Beason had already talked with several large insurance companies that have assured them their plan would work.

Beason said people are looking for a solution that does not take money from the education trust fund or depend on the Alabama Retirement System.