I've been kinda following this story for the past few days and I was more than mildly surprised to see the story on the front page of today's Huntsville Times given The Times predeliction for hiding bad city, county and state news, but there it was. Seems as though the state of Alabama invested these funds and the investments have tanked along with our personal IRA and 401K plans.
Nancy Jones of Gurley held on to her glossy brochure from 1990 when the state first sold contracts for the PACT Trust Fund, which stands for Prepaid Affordable College Tuition. Her contract and the marketing brochure make repeated use of a word that the state no longer acknowledges: "guarantee."
On Page 1 in the first paragraph, the state offers "a contract that will guarantee up to four years of future undergraduate tuition" at any state school.
"We had $4,000 in our savings account. I remember it well. We wiped out our savings," said Jones. "This was guaranteed. It says nothing about your investment being at risk in my paperwork."
Jones said she paid $3,900 for four years of college tuition for her infant son, who today is halfway through studies at the University of Alabama in Huntsville.
The really bad news?
Even at a peak of nearly $900 million in September 2007, according to actuarial tables there wasn't quite enough money to cover all the future tuition payments - at least not without selling more contracts or benefiting from favorable investments. Now, according to the treasurer's office, the fund has enough to cover half of what it owes.
Looks to me like the only winners to come out of this state sponsored Ponzi scheme will be the lawyers.
2 comments:
Hi Fred,
Are you going to the meeting tomorrow in Montgomery? If so, this is the best advice I can give you.
http://www.leftinalabama.com/showDiary.do?diaryId=3555
If you are going to the meeting, or know anyone who is, I urge you to read and consider that advice, and pass it along to anyone who might be able to use it.
The questions that need to be answered about this are probably not going to be answered at the meeting. This is the one opportunity we have to try and get organized enough to address this. Two or three contacts are better than none.
Sorry for the short notice. We've been struggling to get ahead of this thing since the story first broke, and I am feeling my way through this.
Most of what we've written on this at left in alabama is here
http://www.leftinalabama.com/tag.do?tag=PACT
gonna try again. I'm no good with HTML, just paste that address into the browser and feel free to remove this comment.
advice
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