The North Alabama Conference of the United Methodist Church’s Board of Pension and Health Benefits approved an investment on Thursday in Birmingham-Southern College (BSC) for $2.5 million in support of the College’s efforts to remain open as it continues to secure funds for its permanent endowment.
The investment is contingent on the City of Birmingham making a separate investment in the College of at least an equal amount at an upcoming city council meeting.
The North Alabama Conference of the United Methodist Church's Board of Pension and Health Benefits approved the investment on Thursday following a presentation by BSC president Daniel Coleman and BSC Board of Trustees chair Rev. Keith Thompson.
“We are deeply grateful to the North Alabama Conference for this demonstration of faith in the College and what it means to Birmingham, to Alabama, and to the world,” Coleman said. “The College we know today was formed in 1918 through the merger of two Methodist institutions – Southern University, founded in Greensboro in 1856 as a liberal arts institution, and Birmingham College, founded here in 1898 to educate managers and leaders in the still-new industrial city."
“Throughout the 100-plus years since that merger, BSC has remained grounded in the Methodist tradition of service. This partnership honors our history and will help ensure our future," he added.
The $2.5 million investment is a one-year, zero-coupon instrument secured by a second mortgage on the campus of Birmingham-Southern, with interest set at a competitive rate, according to a news release from BSC.
On August 15, the Birmingham City Council passed a resolution that charged Mayor Randall Woodfin with creating an economic development plan of up to $5 million to support BSC.
“Since then, we have continued to work with Mayor Woodfin, who will formally present his plan to the Council on Nov. 21,” Coleman said. “We are grateful to him and to the Council for their consideration of this critically important support.”
BSC will likely stay open until at least the end of the 2024 spring semester after possibly securing additional funding from the City of Birmingham and other sources, Coleman said last week.
BSC, a private school, is financially troubled due to 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 bail the private school out.
An Alabama State Treasurer’s Office spokesperson said in October the loan denial was “based on insufficient collateral and the lack of a first perfected security interest in all collateral assets.”
“Contrary to the statement of President Coleman, the Treasurer has not stated that the College was ‘not a good credit risk,’ but instead, has stated that the College is a ‘terrible credit risk.’ The College’s Moody’s credit rating of Caa2 confirms it to be a junk bond, one step above default,” the spokesperson said in a statement.
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.
Montgomery County Circuit Judge James Anderson dismissed a lawsuit recently filed by BSC against Boozer for the loan denial.
Attorneys for BSC have previously said the school would shut down at the end of the fall semester if the state loan weren't secured.
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