Alabama court reconsiders prepaid tuition ruling

Associated Press

MONTGOMERY, Ala. (AP) — The Alabama Supreme Court on Wednesday reopened a lawsuit over whether Alabama's prepaid college tuition program can pay less than full tuition for students.

The court, in a 7-0 decision, told a lower court to look at whether state officials can retroactively apply a new law passed by the Legislature to allow reduced tuition payments.

"I'm taking it as a positive sign," said Patti Lambert, co-founder of Save Alabama PACT and a member of the board that oversees the tuition program.

For two decades, parents paid money into the Prepaid Affordable College Tuition plan when their children were small and then when they finished high school, they got four years of tuition at an Alabama university. The program invested the money paid by parents and used the earnings to pay tuition. But it ran into trouble in 2008 when the stock market plunged, and it no longer had the assets to cover full tuition for all participants.

The Legislature committed an extra $548 million to the program in 2010, but it wasn't enough to keep paying full tuition. The program's board reached a settlement with many parents to pay tuition at fall 2010 rates rather than current rates, with parents making up the difference. Some parents objected and challenged the settlement in court. The Supreme Court voided the settlement in March, saying it violated a state law providing for full funding of the program.

In April, the PACT board got the Legislature to pass a law removing the full funding provision and giving the board new powers to reach a settlement.

The Supreme Court on Wednesday granted a request by the PACT board to reconsider its ruling.

The court's decision told Montgomery Circuit Judge Johnny Hardwick to review whether the new law can be applied retroactively to the settlement like the PACT board contends. Then the Supreme Court can review his decision.

Doyle Fuller, an attorney representing parents who supported the settlement, said, "This keeps the settlement alive, which in my opinion keeps the PACT program alive."

He said the PACT program can't afford to pay full tuition and is likely to collapse within two years without the settlement or another similar to it.

Parents who objected to the settlement maintain the new law unconstitutionally strips them of their vested rights in the PACT program.

"This retroactive argument, in our opinion, is taking away (their) rights," said Wally Walker, an attorney representing parents opposed to the settlement.

Walker said he was not surprised by Wednesday's ruling, saying the Supreme Court correctly ordered the case back to the trial court, where it must be litigated first before eventually returning to the high court.

"In Alabama, the Supreme Court is not the place you start," Walker said, "it's the place you finish."

Young Boozer, who serves as state treasurer and PACT board chairman, applauded Wednesday's ruling.

"This is a positive development for the PACT program and moves us closer to a final resolution that will preserve substantial benefits for all PACT contract beneficiaries," he said in a statement. "We look forward to taking the next step in the process of having the settlement approved."

The PACT program had $419 million in assets at the start of fiscal 2012 and about 39,000 participants. During the previous fiscal year it paid $81 million in tuition for 15,200 college students, state records show. The PACT board has been paying full tuition while asking the Supreme Court to reconsider its March ruling.

Only three Supreme Court justices participated in Wednesday's decision because six justices recused themselves. Two retired justices and two judges from the Alabama Court of Civil Appeals filled in for them to reach the 7-0 decision.