Alabama’s Legislature continues to deliberate on the fate of PACT. Few believe the PACT board’s December recommended action – which would prorate payments to colleges and universities, while likely shouldering contract holders with any shortfall in tuition payment, and requiring over a one-quarter of one billion dollars from Alabama’s budgets.

The proposals discussed the most thus far by the Legislature involve either taking monies from the Education Trust Fund or capping tuition payments to higher education institutions.

I maintain that: 1) Alabama must honor its entire commitment to PACT families; 2) Alabama must not rob Peter to pay Paul, in taking money from primary education to pay higher education; 3) Alabama should not prorate funding to higher education institutions, which have already had their funding cut by hundreds of millions of dollars over recent years.

The most prudent, fair way to address PACT’s shortcomings is to make PACT work most efficiently and productively as possible. PACT had suffered years of deficits prior to the recession of 2008-09, and the issues leading to those deficits still remain in PACT’s operations. PACT has the hands of too many financial advisers, nine in total along with the investment manager, trying to stir the pot. Further, PACT’s investment strategy has reacted too slowly to conditions within the financial markets, exasperating losses and minimizing gains. PACT must reduce costs and improve profits, before state taxpayers and educators are penalized due to PACT’s faulty structure and poor management.

Finally, there exist non-budgetary sources of monies controlled by the State of Alabama that could potentially be tapped to supplement funding for PACT, while protecting Alabama’s already strained budgets and taxpayers. Alabama’s $2.6 billion Alabama Trust Fund or the $340 million Unclaimed Property Trust Fund are logical sources of funding that might secure Alabama’s contractual commitments to PACT families, and protect taxpayers as well as those dependent upon the state.

Regardless of the method by which we honor PACT, it is incumbent upon our legislators that they do in fact extend the state’s promise to the 45,000 PACT families which await such a sign of good faith in upholding PACT’s promise.