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Save Alabama PACT Discussion Forum » Posts by Jeff and Alice
We applaud and give thanks to the whole Save Alabama PACT team, but especially our leaders, who dedicated themselves to working with the legislature and governor in finding a successful resolution. As a military family assigned away from our home state, we are extremely grateful for the hard work you did to secure the promise we paid for over ten years ago.
Great job and thank you, thank you, thank you!
We had a good email exchange with Sen Tom Butler who is solidly on board with HB 228.
Scott, you didn't buy a contract with the state of Alabama. We did. The only question to be resolved is whether the state of Alabama will honor its contract with us. That's up to the elected officials to decide - but if they can't honor the commitment in our contract, we'll sue. Parties fail to honor contracts all the time - and courts enforce terms of contracts. That's part of the reason we have courts.
In short, we have a contract; you don't. We have standing in a court; you have no standing.
You purchased your own investments and made your own choices. We prepaid college tuition - there is no comparison. Back in 1991 you made a decision which left you with no legal recourse.
Literally - not imaginary, Scott - our boys' CONTRACTS (a legal term with implied enforcement) are on State of Alabama Sealed letterhead, signed by an Officer of the State, for the consideration of PREPAID College Tuition.
If you've got something that looks like that, Scott, I say you should take it to court and see what you can get for it.
Great post KB!
What the average citizens don't understand is that we have paid enormous sums of money for these contracts...not a buck or two for a "lottery ticket" or a "chance" at a college education for our kids. Sure, there are some folks who just started making installment payments on their PACT contracts when this collapse hit --- but many more of us have completely paid off contracts.
In our case, we paid $26,000 in a lump sum after getting a life insurance settlement when Alice's dad passed away. We could have put that money into a lake house somewhere, taken nice vacations, bought new cars, boats, jet skis, or blown it away like lots of our friends and neighbors seem to do...but instead...
...we PRE-PAID college tuition for our kids.
And the literature literally (not figuratively) guaranteed our kids would receive that college education, and precisely what they'd get was spelled out. In a contract.
And this wasn't from some obscure investment company that had a lot of fine print in the details - it was from the state of Alabama, on a sealed and signed contract.
If we had wanted to go the "investment" route - trying to time the markets and pick investments that would grow to keep ahead of tuition inflation - we'd have done that. It wold have been MUCH cheaper for us to try that, and potentially, we'd have been sitting on a much bigger pile of money when the market tanked.
But we didn't. When it came to our boys' college education, we wanted the conservative, guaranteed route. We trusted the state of Alabama and gave them ALL of our money, up front, to pre-pay - 17 years in advance - for our kids college.
Our oldest is ready for college in two years. We WILL have our PACT contracts honored, or the state WILL answer in a lawsuit. Period.
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.
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.
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.
Agreed. The proposed rule amendments are unacceptable. They fail every test. They will not solve the fiscal problem long term (what happens when the actuarial data further decline, and more "cuts" are needed?); they don't comply with the law which enacted PACT; they don't pass the "moral" test of honoring all contracts equally.
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.
The proposed changes are unacceptable.
The changes do not solve the fiscal problem with PACT; the changes don't comply with the law that established PACT; the changes don't honor the terms and conditions of purchaser's contracts.
Most Alabama voters are not PACT holders - only some of us are.
If our issue becomes a partisan political issue, or a "position" staked out by a particular partisan candidate, we lose support of roughly half the Alabama voters immediately. That's why we need to resist our issue being seen as "partisan" or "political" and keep the focus, as we have, on its morality.
You all are doing a great job advancing this message. Everybody agrees that fixing PACT is a moral imperative. That's exactly where we want to be.
Ultimately there WILL be a political solution to this mess, but we need to steadfastly avoid tying our cause to any particular candidate or party.
The day will come as we head into the elections and we need to be prepared to answer the question: who do we endorse?
We endorse nobody, no party. We can debate the merits of specific plans among us, but the bottom line is our standard: whatever proposed solutions we examine or score, it MUST honor the moral imperative inherent in our contracts: that every purchased PACT contract will be honored as specified, without compromise, according to the original terms of the contract. Any plan that does not meet this standard, we do not support. Any plan that does meet that standard, we support.
And yes, candidates will run commercials that say "Save Alabama PACT supports the xxxxxxx plan!" And there's nothing wrong with that. We support plans, not candidates.
If they want to wear our tee shirts, that's wonderful. But don't let them claim an endorsement.
The more telling fact is that PACT is still paying contracts in full each month. If that is the case, then the program must honor all contracts in full from now on, since it was clearly established (by Ms. Ivey last year) that the fund was insolvent over its life...i.e., it has been known and publicized by the state that the fund is insolvent - yet it continues to pay current contracts at no change.
Failure to honor all contracts as currently paying contracts are being honored creates legal "haves" and "have nots" - a violation of equal protection under the law. The state MUST honor all contracts fully now.
It shouldn't be surprising that a lawsuit was dismissed. If the suit's premise is failure to pay an existing contract, that hasn't happened yet. The only evidence that suggests contracts might not be paid in the future is Mrs. Ivey's letter from last year which simply warned of that possibility. I don't see how a court can entertain a suit until a contract tuition payment is actually missed.
We may have our first troll here (someone with no relevant business except to cause trouble or use the website as subterfuge for another cause).
I think referring to registered users as a "nut" or "nutcases" crosses a line of civility that shouldn't be tolerated.
Pactpatriot, Ms. Ivey is the state treasurer, and was the state treasurer during the collapse of this fund's value. As holders of contracts with the state, we trusted the treasurer to manage the program on our behalf - our contracts are literally signed by Ms. Ivey herself. That the board entrusted a third party investment firm to invest our contracts in, mainly, stock equities, with no guarantee, placed our contracts at risks equal to (or greater than) private 529 college savings plans, but without the individual autonomy to manage and rate risk ourselves. In short, we entrusted our prepaid tuitions with Ms. Ivey, and on her watch, the fund became insolvent.
All of this places Ms. Ivey at the center of the problem, but also, we hope, at the center of a possible solution. The market's rebound helps, but she's absolutely right: we need to address out of control tuition inflation too.
You're correct that the legislature will be part of the solution to this problem, as they created the law that created PACT - and can fix the problem.
As for your comment regarding PACT "never being a true guaranteed program" you apparently didn't read our contracts or the marketing literature or the annual statements of benefits that were sent - under Ms. Ivey's signature - to our home.
Our contracts are for prepaid college tuition, and the terms of those contracts very clearly define what our boys will receive in return for the 26,000 dollars we submitted to the state. What the original authorizing legislation states is immaterial - we all know how this will resolve in a lawsuit, when that time comes. That's why Ms. Ivey - and others - are working so hard to find a solution that avoids litigation.
We think Ivey is closer to the problem than most others - in a good and bad way. She's associated with the mismanagement, but she's probably also got a better perspective of the actual problem, which is two-pronged: both the investment strategy AND the insane rate of public university tuition inflation in Alabama.
Both will have to be addressed in fixing PACT for current contract holders. The market is helping, but cannot do it even with returns that exceed averages...because longer term, university tuition inflation that is 5-7 times the current rate of overall inflation cannot be tolerated. Our universities are criminally mismanaged and our state officials need to investigate and hold accountable those who run them.
Just want to say thanks to whoever keeps the news items up to date...you're doing a great job! It's encouraging to see we're not alone and other states have similar problems - and how they're addressing them.
Kudos to Ian Gaston for saying exactly what we all need to be saying every chance we get: "I paid in advance for four years' worth of college for my grandson, and that's what I want." he said. "They can take it out of whose ever pot they want. It's all the state of Alabama."
Exactly. We didn't "invest" our money, we pre-paid the state for college tuition. The STATE screwed this up by concocting a scheme of entrusting our kids' college tuition with third party, unaccountable investors. Contract holders had absolutely no say in how this program was run or what was done with our money. We have annual statements that reiterated the terms of what we'd purchased, with no indication whatsoever that it might not be there when we need it.
Tell the citizens of the state of Alabama - our elected officials screwed up. They designed a program that took huge amounts of money from your fellow citizens to pay in advance for college for their kids - and then they lost it in a stock market gamble. If anybody is being "bailed out" it's your elected officials, not the contract holders.
We've read recent articles quoting politicians who've spoken at various meetings of Save Alabama PACT. Two points emerge from these articles that we feel need to be addressed:
First, it's not our "job" at Save Alabama PACT to find, or even help find, the solution. The politicians would love for us to promote a specific solution, which they can then sharp-shoot as being unworkable. Once we, in Save Alabama PACT, have "our" solution, the politicians can distance themselves from the problem (their problem) - they're off the hook, they did their best, whatever - but we're left empty-handed when "our" solution fails. This is unacceptable.
Politicians or candidates running for election or re-election would like us to endorse their candidacy. If they lose - will their political opposition continue to work with us for a solution? We need to avoid any hint of political endorsement or sponsorship of any plan contingent upon an election. We're non-partisan and apolitical. Our problem is the State's problem, not any specific politician.
Our "job" at Save Alabama PACT is to state the problem clearly and what will be needed to satisfy our contracts (in other words, the clearly stated words in our contracts). We are the "face" of a problem, not the solution.
Second, several politicians and candidates have suggested we (PACT contract holders) will ultimately need to "share" in the "burden" of any solution. This is nonsense.
PACT contract holders already contributed their share - when they sacrificed (and continue to sacrifice every month) by giving the state of Alabama tens of thousands of dollars for their children's college tuition.
Whatever solution emerges from the political process in the State, it must not further burden contract holders in any way - we've paid our share, we've already done "our part." Elected officials must undertake the challenge of finding a solution that honors the commitment we've already made without further burdening PACT contract holders.
The universities can safely present the PACT problem as the legislature's, not theirs. Yet, faced with enrollment numbers like these, the universities also feel no need to control costs - demand for their product is high and appears cost is no object.
Thanks Rebecca.
We noticed a link for a blog out on the Latest News link on the home page that takes you to a "LeftinAlabama" self-described "progressive" blog.
The purpose of this blog is to advance a "progressive" left-wing agenda, specifically attacking Treasurer Kay Ivey.
Our concern is that by linking to (fairly described) extreme websites, we are endorsing or otherwise promoting this attack on an elected official.
We believe it is in Save Alabama PACT's best interest to avoid promoting blogs or websites of those who wish to use the PACT problem to promote a specific political agenda. We should remain scrupulously non-partisan, lest we alienate voters (taxpayers) who would see our cause as either "conservative" or "liberal", "Democrat" or "Republican".
While we cannot control what others write about PACT, or how they wish to use it to advance their cause, we don't have to provide links. In either case, the blog isn't "news" at all.
Alice's dad, Al Bloodworth, a WW II Navy veteran of the Pacific campaign, passed away seven years ago. We decided to honor his memory by using the insurance proceeds and the remains of his estate to purchase prepaid college tuition contracts with the State of Alabama for our two boys. We could have replaced a car, gone on a very nice vacation or even made down payment on a lake house with that money. But we felt the best way to honor Al would be to use that money to forward finance his grandkids' education.
The $26 thousand dollars we committed to PACT was, we thought, the "safe" alternative to trying to time the market, which was doing very well back then, and a prudent hedge against runaway college tuition inflation. What caught our attention was the marketing: "lock in tomorrow's tuition at today's rates."
We think Al would be proud of the decision we made, though we're not sure he would be pleased to see what the State of Alabama has subsequently done with our commitment to our boys' future.
When you think of the PACT program, you should remember the magnitude of sacrifice made for every one of those tens of thousands of contracts. Each is a dedication, sacrifice and substantial commitment to a child's future by a parent or grandparent. The very least the State of Alabama can do, the very least, is honor this commitment in good faith.
We don't know what the solution to the actuarial shortfall is, nor is it our place to "help" our political leadership figure it out. We only know that political manipulation and power pushes dishonors the commitment we made in Al's name to our children.
That's an excellent point BamaPactMom.
There's a small but vocal minority out there that believe we "took our chances like anybody else" with these contracts ("contract" being the state's word choice, by the way). Some posts I've read here would suggest we should be treated as if we bought lottery tickets to fund our kids' college education.
We need to point out that the average contract holders spent tens of thousands of dollars per child, making a significant sacrifice, forgoing vacations, new cars, a boat, maybe a down payment on a lake house - in the spirit of doing the "right thing" for our kids and grandkids. We've been model citizens who did what the State advocated.
Perhaps they will realize we're not asking for something for nothing. We simply want the State to make good on its obligation, as stated in the program marketing materials. These are contracts, not investments.
That's why I also believe we need to reiterate the alternative to inaction by the legislature and governor is litigation - named, class action litigation. We also need to avoid advocating for any particular solution, but insist the legislature and executive do its job in solving the problem they've created.
We should be careful not to get drawn in to the legislature's or treasurer's hand-wringing - they ran for office, they sought these positions, they need to start acting like leaders.
"Remember! We have one great power - the POWER TO VOTE!"
Most Alabamians don't hold PACT contracts, but those of us who do also have the power to sue the state. This we will do, if the politicians don't fix PACT. In fact, there are a number of suits already filed, which has gotten us the attention we have.
The courts - not the ballot box - will force the state to honor its obligation. Ultimately the politicians will find the least painful method of accomplishing this - but they may not do it until a court orders them.
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Save Alabama PACT Discussion Forum » Posts by Jeff and Alice