HB775 Alabama 2010 Session

Updated Feb 27, 2026

High Interest

Summary

Primary Sponsor: Robert Bentley
Republican
Session: Regular Session 2010
Title: Prepaid Affordable College Tuition Trust Fund, investments required to produce equal return over 20 years, new enrollees prohibited, certain borrowing authorized, const. amend.
Summary: A constitutional amendment would require the PACT fund to be invested to produce 20-year, level payments, bar new enrollees after ratification, and allow borrowing to cover shortfalls.
What This Bill Does
If adopted, the amendment would direct the Wallace-Folsom Plan to invest all PACT Trust Fund assets (except amounts needed within 12 months) in investments that generate equal principal and interest payments over 20 years. It would ban new PACT enrollees after ratification and allow the Board to borrow from the Alabama Trust Fund to cover any shortfall between investment returns and benefit payments. Investments would be government-backed securities or from an entity rated A+ by AM Best and would be chosen through a competitive bid process offering the highest return; borrowing rules and repayment terms would apply, including transfers between related funds when money is borrowed or repaid.

Who It Affects
PACT program beneficiaries and contract holders affected by the new rules (and new enrollees would not be accepted after ratification; only pre-ratification contracts remain eligible for benefits).
The Wallace-Folsom College Savings Investment Plan Board, the Alabama Trust Fund, and the County and Municipal Government Capital Improvement Trust Fund, which would manage investments, borrowing, and inter-fund transfers to cover payments and repayments.

Key Provisions
Invest all PACT Trust Fund assets (except assets needed for obligations within 12 months) into investments that provide a return of principal and interest yielding equal annual payments to the PACT Fund over a 20-year amortization period.
Investments must be government-backed securities or come from an entity rated A+ by AM Best, and must be purchased through a competitive bid process from the bidder offering the highest rate of return.
No new enrollees may be accepted into the PACT Program after ratification; benefits will only be paid to beneficiaries of contracts purchased before ratification that are still in force.
If the PACT assets in a fiscal year are not enough to pay benefits, the Board may borrow from the Alabama Trust Fund to cover the balance of payments due.
If borrowing occurs, 25% of the borrowed amount must be transferred from the Alabama Trust Fund to the County and Municipal Government Capital Improvement Trust Fund.
Borrowed amounts must be repaid within 20 years; when repaid, 25% of the repaid amount shall be transferred from the County and Municipal Government Capital Improvement Trust Fund back to the Alabama Trust Fund.
The board must repay borrowed amounts in subsequent fiscal years when PACT program revenues exceed benefit payments.
The investment transition must be completed within 12 to 36 months after ratification.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Constitutional Amendments