Birmingham-Southern College (BSC) officials filed a lawsuit Wednesday against Alabama State Treasurer Young Boozer after he notified the private school he was denying its requested $30 million state loan.
Legislators passed the Distressed Institutions of Higher Education Revolving Loan Program and appropriated $30 million in the 2023 legislative session. The Alabama State Treasurer’s Office administers the program.
A BSC spokesperson said in a press release on Wednesday, “The bill was conceived and written to allow for a $30 million lifeline to the College, providing operating funds for three years during which it could raise an endowment of up to $200 million to ensure its long-term financial stability. In spring 2023, BSC’s Board of Trustees received assurances from legislative leaders supporting a measure to provide bridge funding that, should the bill pass, the College would be positioned to borrow the $30 million in bridge funding required to keep it open. The College made commitments based on that assurance, including enrolling students and refilling key faculty and staff positions.”
State Sen. Jabo Waggoner (R-Vestavia Hills), an alumnus of Birmingham-Southern College, sponsored the bill that created the program. Waggoner and other Birmingham-area legislators hoped to secure a $30 million state grant to the financially-ailing Birmingham-Southern College early in the 2023 regular session, but the plan switched later in the session to loaning the school the money, though the school isn’t specifically mentioned in the legislation.
The loan program authorizes the state treasurer to establish the terms and conditions of the loans. Boozer’s denial of BSC’s application, communicated in a mailed letter dated October 13 that arrived on Wednesday, was “sudden and unwarranted,” BSC president Daniel Coleman said.
“This followed months of discussions in which the treasurer gave no indication whatsoever that any aspect of BSC’s application was wanting or that he would not act as the Legislature intended when they wrote and passed the Loan Fund bill,” Coleman said. “As we began final preparations for Homecoming & Family Weekend on October 13 and 14, including the public launch of our endowment campaign, Boozer contacted me to say that he was not inclined to authorize a loan as contemplated by the loan fund law and anticipated by the Legislature.”
According to the program’s website, no guarantee is made that proceeds for loans will be available or that any applicant will receive any loan proceeds from the Fund, and the Treasurer reserves the right to deny any or all applications.
Alabama State Deputy Treasurer Glenda Allred told 1819 News on Wednesday, “Because this matter is in litigation, the Treasurer will not be commenting at this time and looks forward to aggressively defending this lawsuit.”
A hearing on the lawsuit is scheduled for Thursday afternoon in Montgomery County Circuit Court.
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