Alabama Distressed Institutions of Higher Education Revolving Loan Program

Act of Alabama 2023-560 created a "Distressed Institutions of Higher Education Revolving Loan Program" under which the Alabama State Treasurer could loan state funds to eligible colleges for a period ending January 18, 2027.

The bill was precipitated by the threatened closure of Birmingham-Southern College. College president Daniel Coleman had appealed to local governments and to the state for an emergency loan that would allow the institution to remain open while it sought $200 in private donations toward its permanent endowment. As it happened, the request came during a year that the Education Budget had a surplus of more than $2.7 billion, largely from federal payments relating to the COVID-19 pandemic and economic stimulus included in the American Rescue Plan Act.

The legislation was co-sponsored in the Senate by Jabo Waggoner (R-District 16) and Rodger Smitherman (D-District 18). It was introduced in the Senate on May 2 and referred to the Senate Finance and Taxation Education Committee. It earned a favorable report the next day and passed the Senate by a 33-0 vote on May 4. The House of Representatives forwarded the bill to the House Ways and Means Education Committee the same day. On May 24 the bill was returned to the full chamber with a favorable report. Three minor amendments were adopted on the floor before it was passed on May 25. The Senate affirmed the changes to the bill that day and it was enrolled for the Governor's signature.

On June 1 Ivey wrote to the legislature requesting several changes to the bill, that she claimed would "enhance the integrity of the loan program". In the letter's conclusion, she added, "I have previously said that taxpayers' public funds should not be used to bail out a private college, and I remain concerned about the wisdom and propriety of this program." The executive amendments were adopted by both chambers on June 6, the final day of the regular session. By that point, the college reported having secured $46 million in pledged donations toward its endowment campaign. The bill was signed by Governor Ivey on June 16.

In October 2023, BSC president Coleman made public that Alabama State Treasurer Young Boozer III had rejected the college's application for an emergency loan of $27 million under the Distressed Institutions of Higher Education Revolving Loan Program. He also announced that the college would file a suit in Montgomery County Circuit Court seeking to compel the loan's approval.

In the suit, Birmingham-Southern claimed that Boozer attempted to stop the legislation before it passed, lobbied for the executive amendments, and sought an interpretation from the Attorney General of Alabama prior to creating the program. The suit also alleged that Boozer harbored a personal grudge against officials of ServisFirst Bank, which holds the college's existing loans.

References

• Cason, Mike (February 23, 2023) "Alabama faces decisions about how to use $2.7 billion in unexpected education funds." AL.com
• Ivey, Kay (June 1, 2023) "Message from the Governor"
• Thrailkill, Laurel (June 6, 2023) "Lifeline for BSC: Bill approved that could provide bailout." Birmingham Business Journal
• O'Leary, A. J. (October 19, 2023) "BSC lawsuit against state treasurer says grudge harmful to college." Birmingham Business Journal

External links

• Act of Alabama 2023-560 at arc-sos.state.al.us
• SB-278 as introduced at legislature.state.al.us
• Senate Bill 278 at Legiscan.com