Alabama PACT Board of Directors Approves Increase for Benefit Payments
FOR IMMEDIATE RELEASE
Contact in Treasurer’s Office:
Glenda Allred
(334) 242-7501
glenda.allred@treasury.alabama.gov
MONTGOMERY – State Treasurer and PACT Board Chair, Young Boozer, announced that directors of the Alabama Prepaid Affordable College Tuition (“PACT”) Program approved an increase to the current rate paid by the PACT Program for tuition and fees at its board meeting held May 24, 2022. This marks the eighth consecutive increase in benefits since the Class Action Settlement Agreement was approved and will be effective fall semester 2022.
Under the 2011 Class Action Settlement Agreement, PACT was required to pay tuition and qualified fees at the fall 2010 rates as certified by each respective Alabama public eligible educational institution. The agreement was negotiated to allow for an increase in benefit payments if the actuarial condition of the PACT program improved. In all cases, the PACT Program pays the lesser of the school’s tuition and mandatory fees or the 2010 tuition rates as adjusted annually by the Board.
Most four-year Alabama schools are currently receiving the full cost of tuition and mandatory fees due to the increases granted by the Board over the past years. All two-year Alabama schools currently receive full tuition and mandatory fees from the PACT Program. It is anticipated that, given the Adjustment Rate approved for academic year 2022-2023, all two and four year Alabama schools will be paid full tuition and mandatory fees by the Program.
It was also announced that the Program received a $177.3 million prepayment from the State’s Education Trust Fund (“ETF”) on May 2, 2022 to fully fund the future obligations of the ETF. The Alabama Legislature approved several measures to pay future obligations in the recently completed regular session. One such obligation was a payment to PACT which fully funds obligations that were to be paid annually through 2027.
“The $177.3 million prepayment approved by the Legislature is a significant milestone for PACT. This payment coupled with the terms and conditions of the Settlement Agreement positions PACT extremely well for the remainder of the Program when the last student is projected to graduate in 2032,” said Boozer. “The Program’s adherence to the Settlement Agreement preserves value and protects the program with a sound, long term financial, plan as it was intended.”
The PACT Program originally sold 76,251 contracts dating back to 1990 and currently has 8,948 active contracts.