Alabama Distressed Institutions of Higher Education Revolving Loan Program: Difference between revisions

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'''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 '''Alabama Distressed Institutions of Higher Education Revolving Loan Program''' is a public loan made available by state law. The legislation 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 million in private donations toward its permanent endowment. As it happened, the request came during a year that the Alabama education budget had a surplus of more than $2.7 billion, largely due to an influx of federal funds relating to the [[COVID-19 pandemic]] and economic stimulus included in the [[American Rescue Plan Act]].


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]].
==2023 law==
During the [[2023 Alabama legislative session]], State Senators [[Jabo Waggoner]] (R-[[Alabama Senate District 16|District 16]]) and [[Rodger Smitherman]] (D-[[Alabama Senate District 18|District 18]]) co-sponsored '''Senate Bill 278''', creating a loan program which would be available to any eligible college before it expired on January 18, 2027. According to the law, the program would be administered by the [[Alabama State Treasurer]].


The legislation was co-sponsored in the Senate by [[Jabo Waggoner]] (R-[[Alabama Senate District 16|District 16]]) and [[Rodger Smitherman]] (D-[[Alabama Senate District 18|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.
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 [[2023 Alabama legislative session|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]].
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."


Ivey's suggested executive amendments were adopted by both chambers on [[June 6]], the final day of the [[2023 Alabama legislative session|regular session]]. By that point, Birmingham-Southern reported having secured $46 million in pledged donations toward its endowment campaign. She signed the bill on [[June 16]] and it was enrolled as '''Act of Alabama 2023-560'''.
==Treasurer's denial==
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 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.
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 held the college's existing loans. Montgomery County Circuit Court Judge James Anderson dismissed the college's suit on [[October 25]], finding that Boozer had been given the legal authority to act as he did.
 
In December, BSC submitted a revised application to Boozer's office, offering collateral with terms more favorable to the state. Boozer rejected the revised offer, as well.
 
==2024 law==
The college and its supporters called on the state legislature to change the law during the [[2024 Alabama legislative session|2024 sesssion]]. In his [[2024 State of the City address]] Birmingham mayor [[Randall Woodfin]] suggested that changing a single word, so that the law directed that the Treasurer "shall" instead of "may" approve the loan, would change the outcome.
 
Waggoner and Smitherman were joined by 19 other co-sponsors when '''Senate Bill 31''' was introduced on [[February 6]], the first day of the session.
 


==References==
==References==
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* Ivey, Kay (June 1, 2023) "[https://www.legislature.state.al.us/pdf/SearchableInstruments/2023RS/SB278-ID2824.pdf Message from the Governor]"
* Ivey, Kay (June 1, 2023) "[https://www.legislature.state.al.us/pdf/SearchableInstruments/2023RS/SB278-ID2824.pdf Message from the Governor]"
* Thrailkill, Laurel (June 6, 2023) "Lifeline for BSC: Bill approved that could provide bailout." {{BBJ}}
* Thrailkill, Laurel (June 6, 2023) "Lifeline for BSC: Bill approved that could provide bailout." {{BBJ}}
* Griesbach, Rebecca (October 18, 2023) "Architect of Birmingham-Southern bailout ‘disgusted’ by state’s denial of funding." {{AL}}
* O'Leary, A. J. (October 19, 2023) "BSC lawsuit against state treasurer says grudge harmful to college." {{BBJ}}
* O'Leary, A. J. (October 19, 2023) "BSC lawsuit against state treasurer says grudge harmful to college." {{BBJ}}
* Moody, Josh (October 19, 2023) "[https://www.insidehighered.com/news/government/state-policy/2023/10/19/birmingham-southern-denied-state-loan-it-expected?mibextid=Zxz2cZ Birmingham-Southern College Denied State Loan]." ''Inside Higher Ed''
* Cason, Mike (October 20, 2023) "Why State Treasurer Young Boozer said he turned down Birmingham-Southern’s loan request." {{AL}}
* Cason, Mike (October 25, 2023) "Judge dismisses Birmingham-Southern’s lawsuit seeking $30 million state loan." {{AL}}
* Cason, Mike (March 20, 2024) "Birmingham-Southern loan bill changed, advances in Alabama Legislature." {{AL}}
* Cason, Mike (December 10, 2023) "Birmingham-Southern makes another request to State Treasurer Young Boozer for $30 million state loan." {{AL}}


==External links==
==External links==

Revision as of 09:12, 21 March 2024

The Alabama Distressed Institutions of Higher Education Revolving Loan Program is a public loan made available by state law. The legislation 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 million in private donations toward its permanent endowment. As it happened, the request came during a year that the Alabama education budget had a surplus of more than $2.7 billion, largely due to an influx of federal funds relating to the COVID-19 pandemic and economic stimulus included in the American Rescue Plan Act.

2023 law

During the 2023 Alabama legislative session, State Senators Jabo Waggoner (R-District 16) and Rodger Smitherman (D-District 18) co-sponsored Senate Bill 278, creating a loan program which would be available to any eligible college before it expired on January 18, 2027. According to the law, the program would be administered by the Alabama State Treasurer.

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."

Ivey's suggested executive amendments were adopted by both chambers on June 6, the final day of the regular session. By that point, Birmingham-Southern reported having secured $46 million in pledged donations toward its endowment campaign. She signed the bill on June 16 and it was enrolled as Act of Alabama 2023-560.

Treasurer's denial

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 held the college's existing loans. Montgomery County Circuit Court Judge James Anderson dismissed the college's suit on October 25, finding that Boozer had been given the legal authority to act as he did.

In December, BSC submitted a revised application to Boozer's office, offering collateral with terms more favorable to the state. Boozer rejected the revised offer, as well.

2024 law

The college and its supporters called on the state legislature to change the law during the 2024 sesssion. In his 2024 State of the City address Birmingham mayor Randall Woodfin suggested that changing a single word, so that the law directed that the Treasurer "shall" instead of "may" approve the loan, would change the outcome.

Waggoner and Smitherman were joined by 19 other co-sponsors when Senate Bill 31 was introduced on February 6, the first day of the session.


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
  • Griesbach, Rebecca (October 18, 2023) "Architect of Birmingham-Southern bailout ‘disgusted’ by state’s denial of funding." AL.com
  • O'Leary, A. J. (October 19, 2023) "BSC lawsuit against state treasurer says grudge harmful to college." Birmingham Business Journal
  • Moody, Josh (October 19, 2023) "Birmingham-Southern College Denied State Loan." Inside Higher Ed
  • Cason, Mike (October 20, 2023) "Why State Treasurer Young Boozer said he turned down Birmingham-Southern’s loan request." AL.com
  • Cason, Mike (October 25, 2023) "Judge dismisses Birmingham-Southern’s lawsuit seeking $30 million state loan." AL.com
  • Cason, Mike (March 20, 2024) "Birmingham-Southern loan bill changed, advances in Alabama Legislature." AL.com
  • Cason, Mike (December 10, 2023) "Birmingham-Southern makes another request to State Treasurer Young Boozer for $30 million state loan." AL.com

External links

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