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October 26, 2023

State Treasurer Provides Update on Distressed Institutions of Higher Education Revolving Loan Program

FOR IMMEDIATE RELEASE

Contact Treasurer’s Office:         

(334) 242-7501

alatreas@treasury.alabama.gov

MONTGOMERY – State Treasurer, Young Boozer, announced an update today to the Distressed Institutions of Higher Education Revolving Loan Program (the “Program”) being administered by the State Treasurer’s Office.  The Program, enacted by the Alabama Legislature in the 2023 regular session, authorized the State Treasurer to establish terms and conditions of the loans as well as approval of any funding of loans. 

The legislation became law on June 16, 2023, and on June 20, 2023, Treasurer Boozer sought an Attorney General’s Opinion on the State’s ability to loan monies to eligible higher education institutions pursuant to ACT 2023-560 without violating the Code of Alabama or the Alabama Constitution.  A response from the Attorney General’s Office was received on August 22, 2023, and the Program opened to receive applications on August 24, 2023.

ACT 2023-560 required an eligible college or university applicant to meet all of the following criteria: 1) has been operating for more than 50 years in Alabama, 2) has a significant impact on the community in which it is located, 3) is experiencing financial hardship which could lead to closure of the institution, 4) whose governing body has adopted a resolution authorizing the application for a loan from this program to maintain operations as it replenishes its endowment through private gifts and 5) has assets sufficient to pledge as collateral. The law also required that any loan made pursuant to this program be secured by a first perfected security interest in all collateral assets.

After the Program’s launch, the Treasurer’s Office received loan applications from Birmingham Southern College on August 24, 2023, and from Selma University on September 1, 2023.  “On Friday, October 13th, 2023, I notified leadership at Birmingham Southern College and Selma University that we will not be able to provide loans to their institutions based on their not meeting the required statutory minimum criteria,” said Treasurer Boozer.

On October 18th, 2023, Birmingham Southern College filed a lawsuit in Montgomery County Circuit Court against the State Treasurer seeking emergency relief.  The State Treasurer moved to dismiss the case. At a hearing held today, Judge James Anderson granted the State Treasurer’s motion and dismissed the lawsuit.  “I am pleased with the dismissal of this lawsuit and confirmation that I have acted in accordance with the law,” said Treasurer Boozer.

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