Candidate for Treasurer Applauds Wren's PACT Plan
Wren announced Thursday that he would introduce a three-bill legislative package that would guarantee all of the existing 48,000 contracts and change the way the program is administered.
Grimsley said the lack of such guarantees in Alabama’s PACT law, which was designed by then-state Treasurer George Wallace Jr., was an initial design flaw that has placed the PACT program in jeopardy.
Wallace is again running for state treasurer, along with Republican Terry Dunn and Democrat Jeremy Sherer, to replace current state Treasurer Kay Ivey who is running for governor.
The state treasurer serves as chairperson of the existing 10-member PACT board, and would also serve on the new board that would oversee the program if Wren's legislative package is successful during the 2010 session.
"George Wallace says he studied the Florida PACT program for two years and then copied it," Grimsley said in a news release. "This is simply not true. The centerpiece of Florida’s program was state guarantees, and Wallace’s program did not have them.
"Rep. Wren’s proposal to add state guarantees is an admission that George Wallace did not copy the centerpiece of the Florida program. But admitting Wallace’s initial design flaw is the first step toward a solution," Grimsley added.
According to information provided by Grimsley, Section 1009.98 of the Florida Statutes says the Florida Prepaid contracts are guaranteed by the State of Florida: "The state shall agree to meet the obligations of the board to qualified beneficiaries if moneys in the fund fail to offset the obligations of the board."
Unlike the Florida program, Alabama’s PACT law says its contracts are not obligations of the state. Section 16-33C-6 (b) states in part: "A PACT contract and any other contract entered into by or on behalf of the trust, does not constitute a debt or obligation of the state..."
Grimsley said the state should correct the PACT law by guaranteeing the contracts.
"From the beginning, George Wallace, Jr. put the state seal and the word "guarantee" into the PACT contracts. The state is now in a ‘Catch-22’. If they argue the contracts are not guaranteed, they are admitting the state committed fraud and deception in marketing the PACT program," Grimsley said.
Grimsley said the crisis has already sparked numerous lawsuits, and the cost of the litigation to the state would far exceed the cost of guaranteeing the program.
"Because the state purported the program to be guaranteed, I believe PACT holders will prevail over the state in court," Grimsley said. 'The state could save itself hundreds of millions in litigation costs by adding the guarantees the program should have had from the beginning."
Grimsley said Wren’s proposals did not contain any funding plans for the state guarantees. "Solving PACT’s original design flaw is going to take a historic bipartisan effort. But step one was admitting the problem – George Wallace’s PACT program was not guaranteed by the state" Grimsley said. "Now that we’ve admitted the problem, we can all work together toward a solution."
Read about Wren's proposal to overhaul the state's PACT program here:
-- posted by Markeshia Ricks