MONTGOMERY — The Alabama House of Representatives passed legislation on Thursday to repeal the 2023 law creating a loan program for universities in financial straits after its designed recipient, Birmingham-Southern College (BSC), announced it would permanently shut down in May.
House Bill 415 (HB415), sponsored by State Rep. Juandalynn Givan (D-Birmingham), would repeal the loan program she sponsored in the House to help the struggling BSC in 2023.
Legislators appropriated $30 million for the program in the Education Trust Fund supplemental bill passed in the 2023 regular session. To be eligible, the college must have operated in the state for over 50 years, be experiencing financial hardship that could lead to the institution's closure and have assets sufficient to pledge as collateral.
Jefferson County delegates State Sens. Roger Smitherman (D-Birmingham) and Jabo Waggoner (R-Vestavia Hills) sponsored the 2023 bill, which Givan carried in the House.
However, the loan program did not work as desired after State Treasurer Young Boozer denied BSC a $30 million loan. The school announced it was closing its doors after a bill by Waggoner to replace Boozer as the loan program administrator died on the legislative vine.
Givan presented the bill before the House, giving credit to Boozer, who attended in the gallery.
State Rep. Mary Moore (D-Birmingham) took umbrage with lawmakers arguing that colleges other than BSC could take advantage of the loan program when it passed last year, only to rescind the program after BSC closed.
"Last year, when that bill came up, we knew that it was for Birmingham Southern, but there was a lot of dialogue before they passed that bill that said other institutions that might have financial problems can submit a request and maybe benefit from that," Moore said. "What bothers me is that we said that last year during the discussion, and now we want to come straight for it and say, oh this is just for Birmingham Southern."
State Rep. Danny Garrett (R-Trussville) took the podium to respond to Moore's objections. He said the program was set up to make it very difficult to obtain a loan, including the requirement that any distressed institution submit a collateral position. He also reiterated that the loan program would expire when Boozer left office.
"We've come to find out that the parameters were just so tight that it's just not really practical," Garrett said. "So, the choice, I think given the timeline of this program, given the difficulty of providing a first position in collateral for most of these institutions, given the fact a lot of members did not like the idea of entertaining non-public institutions, all that together, I think the decision here was that, with Birmingham-Southern being out of the picture, that we would take the money and revert it back to the Education Trust Fund and spend it separately. So I think the intentions were well intended; it was just a lot more difficult practically than we realized."
After a very limited discussion, the bill passed 98-0 with two abstentions.
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