Alabama House repeals financial lifeline program intended for Birmingham-Southern College

The Alabama House of Representatives Thursday passed a bill ending a program designed to keep Birmingham-Southern College (BSC) open.

HB 415, sponsored by Rep. Juandalynn Givan, D-Birmingham, repeals the Distressed Institutions of Higher Education Revolving Loan Program passed in the 2023 regular legislative session. The bill was intended to extend a loan to BSC to get it through a financial crisis.

“I stand in a precarious situation because I represent the area, but I would never do anything against the people of Alabama. If it’s not right, it’s not right. If it’s broken, it’s broken, and if it can’t be fixed, it cannot be fixed,” Givan said.

Once repealed, about half of the funding allocated for the program last year (about $15 million) would go back to the Education Trust Fund and the other half would go to the K-12 Capital Grant Program, a fund in the lieutenant governor’s office that pays for “capital projects, deferred maintenance, or technology needs” subject to the approval of individual representatives or senators.

The funding for BSC depended on the State Treasurer Young Boozer approving the loan, estimated at about $30 million. Boozer last year refused to do so, citing concerns about the long-term economic health of BSC.

Sen. Jabo Waggoner, R-Vestavia Hills, who sponsored the 2023 legislation, sponsored a bill this year to get the money to BSC and remove Boozer from the process, but the legislation failed to advance out of a House committee.

Birmingham-Southern College cited the failure of the bill as a key reason for their scheduled closure next month.

Rep. Mary Moore, D-Birmingham, noted that the bill was pitched as a potential lifeline for other institutions that may be in financial distress last year.

“So, now we come back and say “No, it was just for Birmingham Southern, and since Birmingham Southern, they couldn’t work it out, so now what we’re going to do is repeal it,’” Moore said.

Givan said she wasn’t sure why there was “so much dialogue around that.”

“When I came into this process, I did speak to the fact, and we knew going in that we will be attempting to assist Birmingham-Southern with their application,” Givan said.

Rep. Danny Garrett, R-Trussville, said that when they created the program, they hoped it would be in place for other institutions, but they learned it would be difficult to get a loan under the program because one of the conditions was that institutions had to be able to provide a first position in collateral.

“That’s just very practically difficult to do. We thought it might be doable in that case,” he said, and added that two other institutions, one non-educational, applied for the program and did not meet the parameters.

The bill moves to the Senate for consideration.