I understand that economic times are hard and some people have lost money. Some have lost a lot of money. I don’t, however, understand how State Treasurer Kay Ivey believes education budget money should be used to bail out the PACT Program. I applaud anyone who invested money for their child’s education, but that is just what you did, you made an investment. An investment involves risk. These paragraphs taken from the PACT 2007 Enrollment Kit clearly state this fact:
This Disclosure Statement provides important information concerning certain material risks associated with the purchase of PACT Contracts. Contract Purchasers are strongly urged and expected to read this Disclosure Statement in its entirety before purchasing a PACT Contract. The obligations of PACT are limited obligations payable only from proceeds received from PACT Contract sales and earnings from investment performance. Neither the Contract Purchaser nor Beneficiary has any recourse against the Treasurer, the Board, the PACT Program, any other state or federal government agency, or the State of Alabama in connection with any obligations arising out of the PACT Contracts. The obligations of the PACT Contract are not backed by the full faith and credit of the State of Alabama.
No Guarantee; Not Insured: Participating in PACT entails risk of return. The Trust Fund and investments under PACT are not bank deposits, and are not debt obligations of, or insured or guaranteed by the FDIC, the State, the Board, the Treasurer, the PACT Program, or any other state or federal governmental agency. None of these entities or persons has any legal or moral obligation to ensure the ultimate payout with the respect to the purchase of a PACT Contract.
Today on the WSFA Website there is an article which states: “The chair of the Prepaid Affordable College Tuition Plan, State Treasurer Kay Ivey, says a three-member committee of the PACT Board is working on legislation that would provide up to $25 million a year from the state education budget.” How can you take 25 million dollars from the education budget that every year is in trouble itself. Again, I feel for the people involved. I am not trying to sit here and say, “Too bad for you.” But I also don’t think people who were not enrolled in this program should now have to donate to the ones that were. No state funds, especially education funds, should be used to correct this problem. If the fund would have made an excessive amount of money would they have given money to deserving students who did not enroll? No. People who were not in the program would have had no right to any excess money nor should we incur any loss since the fund lost money.
I totally agree with you, Troy.My husband and I looked into the PACT program when our first child was born in 1996. My mother-in-law, a stock brocker, advised us against it, for the exact reasons you stated in your article – it’s an investment, not a guarantee. I also feel sorry for the people who have lost their money, but we CAN NOT bail them out with state funds, especially not education funds. We are going into 18% proration as it is now.My parents lost about $100,000.00 in their 401K retirement account this past year. I don’t see the state coming in to bail them out.
I do contribute to the PACT program and fully understand your concerns. I also don’t understand how my State Tax Refund is coming from the State Education Fund. In appearance at least, this state puts education at the very bottom of the priority list. Money in the fund can be taken for anything it appears. Back to the original rant about the Pact Program…I have also heard they plan to up the amount current contributors pay. I feel I have a contract with them for a certain amount, for a certain time period. To me, this would be a “breach” of contract. Hmmm. I also called their offices before any of this situation took place and was told I would receive a call back the next day. I’ve been waiting for two months and have resolved the issue myself. It would appear they had problems before this economic downturn and maybe it is a convenient excuse.Charlotte
As a parent of children who attend a school (Pintlala Elementary/Montgomery County) that has been, and still is at risk of being closed, I vehmently disagree with the proposed method of replacing PACT’s losses with Education funds! We had to have elected officials intervene just to get a deal to “come up with” $1 billion+ by May 1 to keep our school open, supposedly due to proration. Kay Ivey needs to fish another pond!
I agree completely with this post and the related comments… However, this is the nature of politics. It is not about the greater good for the people of Alabama, it is to serve oneself and protect one’s interest and position of power. This is exactly what is referred to when talking about accountability in government. Kay Ivey, nor anyone else involved, has yet to step up and take responsibility for the poor investment strategy that created this problem. It is not just a poor stock market, it is that it was invested unwisely. And, they would rather take this money from every taxpayer in Alabama, in an attempt to cover their mistakes, than to take responsibility.
Well here we go again with people wanting the rest of society to bail them out. It is clearly stated in the contract that there are no guarantees. Our society wants all the reward and no blame. It is not the states fault people didn’t read the entire contract. Now they want to pull more money from the education budget to bail them out. Poppy cock! The teachers of Alabama have a hard enough time trying to teach our kids (many using their OWN money) on the low budget we have now. As usual it will be the education system that gets screwed and left the bag wondering how to make things work on a McDonalds budget with caviar expectations….
Thanks Forrest that is just about my point. Any time money is taken from the masses and given to a select few with little to no benefit to the ones supplying the money I think it is wrong. When Enron failed and people who had invested everything, their entire retirement, lost it all no one suggested any governmental entity repay the investors the money they lost. This is the same thing. Again, I hate that these people who were trying to provide an education to their children lost a majority of the investment, however the tax payers should not be on the hook for it now. If I do not stand to gain from my money being put into the program then I am not responsible to help recoup anyones losses.
I agree with you in that we should all be tired of footing the bill for everyone. With that, I have another interesting question to ask. Can someone tell me the price tag of education? It seems we sink more and more money into education and nothing is accomplished and they just keep asking for more. Since I was a child politicians have continuously played the card of education to get more money out the taxpayers. Bob Riley has increased the education budget in the state by $1.8 Billion (that is a “B”) since taking office in 2006. That is an almost 25% increase in six years!!! I have not seen enough improvment or progress in those six years to justify that 25% increase nor to justify sending my child to an Alabama public school because of their shortfalls. All I keep seeing is a bunch of worthless programs added and teachers still scraping by on meager salaries (2 of which are family members). The only thing I have seen go up is the paychecks of people like Paul Hubbard and the head of the state board of education (the highest paid individuals for their positions in the United States). I know when I want more money I have to go out and earn it. Politicians are not earning my money right now. They are stealing it. Both on the state and the national level and are lined up waiting for more. Show me a little more transparency, accoutability and some hard work with my tax dollars and I may feel like I am getting something for all the money they take. Otherwise stop asking, because I am tired of handing it over for nothing. Andrea
Great comment Andrea. That is the way of big government, socialist. They panhandle to noble ideas like education, poverty or healthcare. They raise taxes and say the government will fix the problems. Someone tell me one instance in where government has stepped in and improved things. That is what scares me about this healthcare system President Obama keeps talking about. We have government run health care in this country. It’s called the VA. How many American Heroes do you know that would rather go to “civilian” hospitals rather than to the VA. Most I think. The VA hospitals I have gone to were not to clean and it takes all day to be seen. How about all the social services to improve the the lives of poor people. Why do we still even have projects. If the programs works wouldn’t the levels of people on assistance be going down? Which brings me to another point. I am tired of the Democrats telling people they are the ones who care about the lower income individuals. They tell you “look we know you can’t do any better so here’s some money now thank us for it”. Conservatives say ” You are able to do more. You can and should try to help provide for your family.” But, somehow we are the biggots here. Somehow telling someone you can never achieve anything on your own is more compassionate than saying we believe you can be more than you are today. But back to the original point the more money the government can control the more control they have. Again please tell me what the government has proven they can run well? Troy