Robbing Peter to pay Paul works out pretty well for Paul, but Peter is getting pretty tired of it.
Peter, in this case, represents Alabama families who want their children to attend college to have a better chance at a better life; and Paul represents Alabama’s colleges and universities.
Alabama’s Prepaid Affordable College Tuition (PACT) plan was established by former Gov. Jim Folsom Jr., and former state treasurer George Wallace Jr., as a way to help families plan for their children’s future. Enrollment in the program allowed families to make payments to the state with the promise that their children’s tuition would be paid when they went to a state college.
The state invested the funds with the hope that enough money would be earned to keep the program going on a sustainable basis, benefiting both the state’s families and colleges.
The plan worked well until the recession of 2008 and the accompanying plunge in the stock market. That created a perfect storm that threatened the funds ability to continue. Lower tax revenues led to inadequate funding for colleges and universities, who raised tuition to cover expenses. The troubles in the stock market meant less revenue coming in from the payments made into the fund.
The state treasurer’s office, which oversees PACT, responded by ending enrollment in the program and instructing parents to pay the difference between what the fund could pay and what the colleges were currently charging for tuition in order to stretch available dollars to cover its enrollees, currently about 35,000, with about 10,000 of those currently in college.
Parents understandably felt cheated — they had enrolled with the understanding that tuition would be paid in full, and that’s what they expected.
An agreement to pay tuition at 2010 levels was challenged in court, and a new legislative act requiring colleges to accept that amount is under review by the Alabama Supreme Court.
Folsom has blamed the investment strategy, arguing that a shift from fixed assets and government bonds into the stock market placed the funds at too great a risk. He may be right, and a review of what went wrong might be instructive to help officials in the future avoid making the same mistakes in the future.
But in the present, the state has an obligation to those families and students in the program to honor its promise of pre-paid tuition.
Today’s economy is not the same as 2008. The stock market has improved, and tax revenue at the state level has largely recovered. In fact, both the Alabama Education Association and the state superintendent of education are saying it’s time to give state teachers a raise. AEA is pushing for a 10 percent raise for K-12 employees, and some in the state are pushing to add an entire new grade level to the public school system — a “Pre-K” program, which they say is needed to prepare young children for kindergarten. And even during the recession, the state provided millions of dollars from state tax revenue to three of the state’s private schools — Lyman Ward, Talladega College and Tuskegee Institute.
We hope the court rules in favor of reduced tuition for PACT enrollees, and if it does, that it will be enough to solve the problem. But if it doesn’t, it seems only fair that fulfilling the promise of prepaid tuition should also be temporarily considered as part of the state’s education budget. It’s only fair. Peter has been robbed enough.
This is a question of priorities. Yes, we would love to see teachers get raises, we would love to add another level to state education. We would love to see the state’s nationally admired reading program fully funded. And we would love to continue support for private colleges as well, with the caveat that more transparency be available for the taxpayers who provide the money.
But we believe the state should first live up to its promise to the PACT participants, and see that their needs are met.
In school buildings all across Alabama, we teach about character. It seems that keeping your word is one definition of character, and Alabama should do just that.