Birmingham-Southern College closing would be a disaster for Birmingham and Jefferson County, according to State Sen. Rodger Smitherman (D-Birmingham).

Birmingham-Southern is on the brink of a possible shutdown due to financial missteps by the college's administration in previous years and declining enrollment. Alabama State Treasurer Young Boozer recently denied a $30 million state loan to the private school.

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.

On Wednesday, Montgomery County Circuit Judge James Anderson dismissed a lawsuit filed by Birmingham-Southern last week against Boozer for the loan denial.

Smitherman told 1819 News on Thursday, "I'm disappointed, and I'm disappointed because the intent of the Legislature was that anyone who met the criteria that was established was that they would be able to receive some assistance." 

"Birmingham-Southern met every one of those criteria. In fact, they had more than necessary security to secure the loan, and yet they didn't get the opportunity to get the loan," Smitherman said.

Boozer said the school couldn't provide the state priority over other creditors on its collateral assets and that Birmingham-Southern's financial restructuring plan does not adequately provide for repayment of the loan.

According to Boozer, the Treasurer's Office received loan applications from Birmingham-Southern College on August 24 and Selma University on September 1.

"On Friday, October 13, 2023, I notified leadership at Birmingham Southern College and Selma University that we will not be able to provide loans to their institutions based on their not meeting the required statutory minimum criteria," Boozer said in a statement on Wednesday to 1819 News.

Boozer said on Wednesday, "I am pleased with the dismissal of this lawsuit and confirmation that I have acted in accordance [with] the law."

Birmingham-Southern College president Daniel Coleman said they were considering appealing the lawsuit's dismissal.

Smitherman said he hopes the college will stay open long enough for the Legislature to address the issue again next year.

"I wish we had time to address this when we get back in the Legislature. I wish we had that time. I just don't know if they're going to be able to do that," Smitherman said. "I wish there was someone that could come forward to give them a short-term loan because they've got adequate collateral even for that. It's not like it wouldn't be secure. I don't know. If there's some kind of way they can even get temporarily maybe $10 million to carry them through the rest of this year and the next semester, then I think prior to that semester ending, that would give us an opportunity to see what we could do to see if we could still give them the kind of assistance that they need to survive. Otherwise, you're looking at a grave possibility that this school may close. That would be a disaster for us here because you're talking about $100 million of economic impact for this county and this city.

"I can tell you that in the Legislature, you have legislators working vigorously to get businesses in their district that bring a $30 million impact, and we're getting ready to lose one that brings over three times that amount of economic impact. People can't understand the impact of that loss of revenue and what it's going to have on county services to a certain degree and city services to a certain degree as well because those budgets come from that revenue. If you have less revenue, then you're going to have less to work within your budget."

Attorneys for Birmingham-Southern said the school's board will decide at a meeting on October 31 whether or not to close the school.

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