MONTGOMERY — State Treasurer Kay Ivey wants to shift part of the money in Alabama’s prepaid college tuition plan to public and private universities in Alabama and have them guarantee tuition for students in the plan.

Ivey’s proposal unveiled this week would move some financial responsibilities of the tuition program from state taxpayers to the universities, a change the schools are likely to oppose when the measures go before the Legislature next year.

Ivey’s duties as state treasurer include overseeing the financially troubled Prepaid Affordable College Tuition plan, but she conducted her news conference as a Republican gubernatorial hopeful.

“This is the Kay Ivey proposal as a candidate for governor,” she said.

Her proposal would guarantee that the state would honor its tuition commitments to students, and it would do that without requiring state tax revenue to bail out PACT. But it would require Alabama universities to take on a financial risk now handled by the state government.

The plan’s assets have been hit by shrinking investments and skyrocketing tuition costs. The $505 million in the plan is not enough to meet future tuition obligations, and the plan’s board, headed by Ivey, has stopped enrolling new students.

Ivey said she had not discussed her plan with university presidents, but will soon.

A majority of students in PACT choose to attend Auburn University or The University of Alabama System. Officials with both universities said they had not seen Ivey’s plan and could not discuss it.

Doubts about plan

Dr. Richard Huckaby, co-founder of the Save Alabama PACT parents group, said he was glad to see Ivey make “an awfully bold statement,” but he questioned whether universities would be willing to take on the financial responsibility.

A legislator who has been working on a solution to PACT’s problems, Rep. Greg Wren, R-Montgomery, said Ivey’s plan advances the discussion about PACT. But he says it likely won’t be a solution because of the risk it poses for universities.

Birmingham attorney Jeremy Sherer, a Democratic candidate for state treasurer, said, “In no way do Ivey’s proposals provide any financial solution for PACT, it merely passes the buck.”

In Ivey’s plan, she is asking the Legislature to pass two bills when it convenes in January: One would guarantee the state government would honor its commitment to PACT participants to provide four years of college tuition in return for their payments into the program. The other would transfer a portion of the money in the PACT plan to Alabama’s public and private universities based on their past participation in PACT. Then they would cover tuition for PACT participants who go to their schools.

PACT would continue to pay tuition for students who choose Alabama’s two-year colleges, and it would pay for students who choose out-of-state universities until May 31, 2005. After that, the program would no longer pay for students who choose to attend universities outside Alabama.

IRS approval

Besides winning legislative approval, Ivey’s plan would also require approval by the Internal Revenue Service since participants get a tax break on their benefits.