SB162 Alabama 2010 Session

Summary

Primary Sponsor

Hinton Mitchem

Democrat

Co-Sponsors

T.D. “Ted” LittleLowell Barron

Session

Regular Session 2010

Title

Prepaid Affordable College Tuition (PACT) Program, separate board of directors from Alabama College Education Savings (ACES) Program, members, duties, annual appropriations from Education Trust Fund to PACT Trust Fund for certain fiscal years, certain specific appropriations made to PACT Trust Fund for certain years, tuition limited at certain colleges, limited liability of PACT Board and ACES Board, Sec. 16-33C-4.1 added; Secs. 16-33C-3, 16-33C-4, 16-33C-5, 16-33C-6, 16-33C-7, 16-33C-8, 16-33C-10, 16-33C-11, 16-33C-12 am'd.; Sec. 16-33C-9 repealed

Summary

SB162 creates a separate PACT Board to govern Alabama's Prepaid Affordable College Tuition program, reorganizes ACES governance, and tightens how tuition increases are handled while advancing full funding through 2027.

What This Bill Does

The bill sets up a dedicated PACT Trust Fund and a PACT Administrative Fund, with specified appropriations from the Education Trust Fund to support PACT through 2027 and beyond if necessary. It shifts governance to a new PACT Board, defines its composition and duties, and redefines related terms and authority for both PACT and ACES programs. It tightens rules on tuition and mandatory fees charged to PACT participants, tying increases to fund health and actuarial soundness, with caps and contingencies. It also reorganizes ACES governance, requires annual reporting, and provides transition rules, including dissolution once all obligations are paid.

Who It Affects

• PACT contract holders and designated beneficiaries: their contracts and payments are governed by new rules, with potential changes to tuition/fees, guaranteed funding, and procedures for benefits, substitutions, or refunds; there are new protections and reporting requirements.
• Public colleges and universities and K-12/education funding entities: funding allocations from the Education Trust Fund shift to support PACT and K-12, while schools must operate under new rate/approval constraints and investment governance; the 70/30 funding split directs resources between K-12 and postsecondary education, and colleges/universities face updated financial oversight under the new boards.

Key Provisions

• Section 1-2: Establishes annual appropriations from the Education Trust Fund to the PACT Trust Fund (and related allocations) for fiscal years 2015-2027, with amounts specified and a mechanism linking these appropriations to APSCA debt service differences and a 70% to K-12/30% to postsecondary allocation split.
• Section 3: Adds additional annual appropriations (2016-2027) to the PACT Trust Fund, with the goal of making the PACT Program 100% funded according to the program actuarial professional.
• Section 4: Caps on PACT-related tuition and mandatory fees at public institutions, allowing increases only if they do not reduce funding below 90% of required levels; increases may be limited or formula-driven based on fund performance and 5% earnings thresholds; exceptions apply for certain constitutional boards and for institutions setting their own rates.
• Section 5: If an actuarial report certifies full funding is no longer necessary, the PACT Board can certify that no future appropriations are required.
• Section 6: Any remaining funds in the PACT Trust Fund after all obligations are paid must be transferred to the Education Trust Fund in the following year.
• Section 7-8: Creates new governance for ACES (and PACT) with detailed board compositions, terms, qualifications, compensation rules, diversity requirements, investment authority, and reporting obligations; defines and distinguishes the ACES Trust Fund, Administrative Fund, and related funds.
• Section 9-10: Provides orderly transition from the old PACT board to the new PACT Board (effective June 1, 2010; first meeting before July 1, 2010) and repeals the prior dissolution provision (Section 16-33C-9).
• Section 11-12: Encourages limit on annual increases in PACT-related costs to historical averages; allows financially beneficial changes by the PACT Board if they comply with contracts, with some changes requiring Legislative Council approval before July 21, 2011.
• Section 13: Dissolution of the PACT Program once all benefits/obligations are paid; Section 14-15: Non-severability and immediate effectiveness upon passage.

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

Subjects

Prepaid Affordable College Tuition (PACT) Program