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Alabama distressed institutions bill likely to pass

Founded in 1856, Birmingham Southern College has a long history but now the private liberal arts college is on the brink of financial collapse without an infusion of millions of dollars. (
Founded in 1856, Birmingham Southern College has a long history but now the private liberal arts college is on the brink of financial collapse without an infusion of millions of dollars. (
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On Thursday, the Alabama House passed SB278 to create the Distressed Institutions of Higher Education Revolving Loan Program.

The bill came out of a legislative initiative to create a state fund to help keep struggling institutions of higher learning in Alabama in business.

House members voted 66 in favor and 27 opposed, to move the amended bill back to the Senate for final consideration.

The Senate will have to agree on amended language added before the bill can go to Governor Kay Ivey to be signed.

The fund is to be administered through the Alabama State Treasurers Office. It allows the Treasurer to oversee a $30 million dollar fund from which distressed schools can draw a loan and pay back to the state.

"A lot of us are conflicted about what we are doing, but I think it's important that we are not voting to make a loan to Birmingham-Southern. What we have done rather, is to set up a vehicle, a program for institutions that are important to our state important to those communities that have the ability to provide collateral to help them through a potential period," said Representative Danny Garrett of Jefferson County. " We are not voting to make a loan, we are voting to make a structure, that structure will allow that decision to be made by the treasure, on whether or not we move forward with a loan, the treasurer who is a bank, former banker, very esute banker, a Stanford graduate."

SEE ALSO: State house approves one time $210 rebate for taxpayers

The Amendment sets a sunset date to apply for a loan to January 18, 2027. This date represents the conclusion of current Treasurer Young Boozer’s time in office.

Any money remaining in the fund at that time would go back into the Education Trust Fund.

Several Representatives called attention to the amount of the fund. The $30 million representing the amount Birmingham-Southern College requested from the state earlier in the year, while working through financial uncertainty.

SEE ALSO: Several bills pulling from Education Trust Fund raise concerns about sustainability

Those representatives challenging statements that the money would be available to any distressed institution which meets certain criteria can apply for a loan from the Treasurer’s office.

But if Birmingham-Southern College were to apply and be granted the $30 million reserved for the program, that would leave no additional funds for another institution to draw from.

"I started to think about all the challenges this state has faced with other schools, and have not made any move to make this possible," said Representative Pebblin W. Warren from Macon County and Lee County.

One of those schools is Judson College. It was in a similar position as Birmingham Southern College just two years ago. Deborah Pugatch graduated from Judson in 2004, an she he was heartbroken to see her alma mater shutdown. She admits the financial harDship of birmingham southern brings on a range of emotions.

"I have had mixed emotions since that announcement, about the help they have been asking for. My heart was like yes please please give them the money, please ,but then it was Judson didn't get it," explained Pugatch.

For pugatch, it's about more than Judson College and Birmingham Southern College. It's about their legacy, and even though Judson couldn't stay open, doesn't mean another school should have to close its doors.

"Maybe its right place right time for Birmingham Southern. Maybe it was Judson just closed, there was so much attention on that school closing. And to hear another well known private institution was going to close, triggered some, "oh we need to do something," she said.

Proponents of the amendment argue the bill does not name where the money is to go and it’s up to the Treasurer to decide what amount will be loaned and to whom and to set terms for repayment.

Institutions applying for a loan through the program would have to put up property as collateral and have a current assessment on file for the value of the property.

Representative Juandalynn Givan for Jefferson County said the last time BSC was appraised was last year. The value was around $75-$90 million. She would want to see an updated appraisal done for the school.

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Birmingham Southern College does not have a comment on the bill, until the legislative process is complete.

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