The following report from Chuck Gibb, our Madison County Chairman is lengthy but well worth reading:

To:           All members and supporters of Save Alabama Pact - Madison County
Subject:  Recent PACT meetings and Reports
From:      Chuck Gibb  - Coordinator - Madison County Chapter, Save Alabama Pact

Aug. 19th. we attended the PACT Board meeting in Montgomery.  The PACT board is of course the "independent" board that oversees the PACT program and is responsible for the current situation.  Afterwards there was a meeting of Save Alabama Pact with presentations by four of the Gubernatorial candidates and other politicians. I want to catch you all up on where we stand.   This is lengthy... but there is a lot to tell.

This was a scheduled meeting of the PACT Board headed by Kay Ivey.  During the meeting the "Professional" Fund managers presented the performance of the fund through last quarter and their recommendations going forward.  These reports and minutes from the meeting should be posted on the state PACT website and the Save Ala. Pact site at some point.  However, the short version is that the investments showed no significant change that would affect the current situation.  It is now (in this quarter) showing improvement as the stock market recovers but again nothing that could impact the current crisis short term.  The fund managers were optimistic about the stock market going forward. The Board voted to keep it's current aggressive strategy of investments weighted to securities with a target return of ~8.5%(?). Their reasoning was that  with the stock market recovering and the extreme need for additional revenue they had to take an aggressive approach.  They then had a report from the actuary who's job it is to statistically project requirements.  This report (which should also be posted) basically projected that the most likely (50th percentile) increase in tuition would be ~7.19% annually (I think). It also considered other requirements such as mix between 2 yr. and 4yr colleges, etc. Based on his projections the fund was shown to be out of Funds in 2015 if nothing changed. The board however chose to accept his more conservative estimate of ~7.45% tuition increase.   Although it is not clear why since they had already voted on their investment strategy.  It was disconcerting, to me at least, that they voted on an investment strategy BEFORE hearing the actuaries requirements report.    They was a presentation on the four lawsuits.  Basically the Board/State? has moved to have all of them thrown out but there have been no rulings to date.  No discussion or mention was made of the RSA report.

The RSA report is the result of a study ordered by the Governor.  He directed the Retirement System of Alabama to undertake a study to determine the viability of the PACT program. They came to essentially the same conclusions as the PACT Board contractors.  You can find this report on the SaveAlabamaPact.com website. They indicated that the program could be saved if the State provided enough funding (!).  It is important that there be this separate report for political reasons. It is also important that it was positive in tone.  The report projected three scenarios based largely on different growth projections for tuition. They show that the cost to save the program is highly dependent on increased rates of tuition in the large 4 year colleges.  These institutions have refused to date to consider freezing their tuitions for PACT participants as the 2 yr. colleges have. They proposed several scenarios for the State to fund the program.  The most likely would be an incremental level funding requiring (if nothing changes) of about 52 million a year.  It remains to be seen if the Administration and the Legislators will use the power they have to impose some restraint on tuition increases in four year colleges for PACT participants. It is a difficult political problem. The report did say that they felt the State had a legal if not moral obligation to fulfill the contracts and that failure to do so would likely result in lawsuits which regardless of the outcome would cost the State more than fulfilling it.  They also said their was no legal reason to differentiate between early contracts and later contracts with the States disclaimer. It seems unlikely at this juncture that the Governor will call a special session to resolve this unless he can be sure of a positive outcome.  So, it is more likely it will have to wait until the next regular session. Contracts are being paid for the fall sessions.

One optimistic scenario is the State imposing some kind of restraint  on the four year college tuition for PACT participants possibly through funding trade offs and an incremental supplemental funding for the program approved by the legislators.  (The issue of course is where will they find the incremental funds...)  This is only possible if we all lobby our legislators aggressively to support this!!

After the PACT board meeting members of SAVE ALABAMA PACT and other contract holders met.  At that meeting four Gubernatorial candidates presented to us;  Artur Davis,  Ron Sparks, Bradley Byrne, and Kay Ivey.  Each committed total support to seeing the PACT program saved.  Each candidate expressed optimism and confidence that the legislature would fix the program. Also presenting was an aide to Jim Folsom assuring us of his complete support and the Governor's support. Jeremy Sherer, who is a candidate for State  Treasurer was there as he has been at every organization meeting of SAP. He has unconditionally offered his support.    Richard Huckabee, V.P. of the Save Alabama Pact organization pressured Kay Ivey to let us (SAP)  put a note in the next mail out from the treasurers office to all PACT owners asking them to contact us.  She would not commit claiming privacy law concerns.  SAP has been trying to get this list of names for six months.

The content of what these candidates said is not as important as the fact that they were there.  In some cases, they were there at considerable personal inconvenience.  We are making a difference!  Each urged us to have as many of our members as possible contact their legislators and ask for their support.  They disagreed on some details but all agreed that was critical.

Some additional business and strategy was discussed.  The State organization of SAVE ALABAMA PACT is trying to get organizations formed in every county of the state.  This is a formidable task.  Reports were made by coordinators of the  local Chapters.

Many have asked us if they should withdraw their money.  We cannot advise you on this.  Having said that, I will tell you my feelings. we have four contracts but we am going to stay in to see if this gets fixed.  I believe there is a good chance the State legislature will fix this.  If I withdraw my money and they do fix it, I cannot go back and participate again.  If everyone withdraws their money we are all doomed, they will have to shut it down. The only chance for a fix is for everyone to stay in, at least for now.  I believe there will remain enough money to pay us all back for some time.  I do not currently know for how long.  We are trying to calculate that.   Similarly I would not file a lawsuit now. There is little chance of winning at this time and it only depletes the funds as they are using our money to fight the lawsuits!  But...that is me.

As you hopefully know, after our first meeting where your humble scribe was elected to head up the Madison County Chapter of SAP (Yes I know ...an unfortunate acronym...but accurately reflects how I felt when this broke!).  We have formed a board to direct our operations.  Our primary goal is  "ALL PACT CONTRACTS FULLY HONORED."   To that end we have a Membership committee focused on identifying and registering all Contract holders and supporters in the county. A Publicity and Public Relations group will help us to find the contract holders by making everyone aware of our existence and our importance to a positive outcome and in helping the public to understand the reason the State should meet it's commitments. We will have a Political Action Group focused on helping all of us insure that our legislators have our support in passing legislation to fully fund all outstanding contracts.  Finally we will have groups doing research to insure we understand the political, economic and financial issues involved.  We need more people for the board.  If you have skills in any of the above areas or are just willing to help, please let us know.  This is one time when YOU can make a difference!

We will only prevail if we have all of your ACTIVE support.  We need you to contact your legislators by phone, fax, email, mail, carrier pigeon...whatever.  Tell them you want them to "Support legislation that will insure that ALL PACT Contracts are fully honored".   We will be getting out information on how to contact them but don't wait if you know who your legislators are and how to reach them. Help us find other PACT contract holders and get them signed up. Identify supporters who may not be contract holders but support our efforts.  This might, for example be family and friends.  There are approximately 48,000 contracts probably less families but still a large number.  If each contract holder gets ten to twenty supporters that represents a LOT of votes.  We may put together a petition for you to help us get signatures.  It is only by this grass roots action that the legislature will have the incentive and courage to resolve this.

Finally I should mention that SAVE ALABAMA PACT has no funds.  Funds are needed for signs, advertising (to find PACT members), etc. The leaders are funding signs, etc. out of their own pockets.  Please go to the SAP website and make a contribution as I have done.  Even a small one will help.

We hope to have a general meeting in the third week of September.   We can see our contracts honored if each of us will act to talk to our legislators and have our supporters do the same.

My number is 256 880 6896.  You can email me at chuck@Savealabamapact.com.