Posted by The real reason for Agricultural Commissioner Ron Sparks’ delay in announcing his 2010 candidacy? The word in Montgomery is that he’s waiting to see how much fallout from the PACT troubles is going to fall on Lt. Governor Jim Folsom.
Folsom sits on the PACT Board, and that’s his name on the “Wallace-Folsom Prepaid College Tuition Trust Fund” that is the full name of the program. Folsom was notably absent from the hearing last Thursday because he was in New York with his law firm business, and at the outset did not appear to be tuned in to the strong dismay that participants in the program have felt.
Sparks by all accounts heard here was prepared to announce his candidacy for Lt. Governor on Tuesday. But if Folsom gets dinged enough that he decides to run for Lt. Governor again instead of Governor, he would be tough to beat in a re-election bid, especially in a Democratic primary. So last Thursday, Folsom missed the emotional Board meeting, and Friday Sparks calls off the announcement events.
Since then, Folsom has confronted the issue a little more directly and has released a statement. An excerpt:
At this point, I want to make it abundantly clear that from its inception the program represented a sacred trust between those investing in the program and the State of Alabama. I hold firm to the vision that created this program and reiterate that – regardless of changes in the statutory language – I believe that investments in the program entitle PACT holders to the agreed-upon return of full payment of college tuition.
This is not the time for panic, for a rush to find a band-aid solution or for commentary that might cause a ‘run on the bank’. Such action will only exacerbate the current difficulties and short-circuit the long-term goals made for our children’s future. As the economy rebounds, as it inevitably will, we have every reason to be optimistic that Alabama’s PACT investments will again begin to grow.
Whatever hit Folsom may take on this, State Treasurer Kay Ivey is sure to take a larger one, at least in the short run, as it is her office that administers the fund. Participants in the Winter Symposium for the Blackburn Institute just two ago on March 1 have told me that Kay Ivey was talking up the PACT progam then even though the letters had already been mailed to participants warning of problems with the fund. Her best-case scenario is that she and Folsom can work out a plan to provide full college tuition for those who participated. Or that Robert Bentley, Randy Brinson, and Joe Turnham can. Or Artur Davis.
Are other states having problems with prepaid college tuition plans? Mississippi’s is solid, one of the top five in the country. Florida’s guaranteed program has lawmakers looking to borrow from it to meet other needs now. Illinois reports theirs is ok. It’s not rosy everywhere besides Alabama though. Maryland and Texas are two states reporting deficits in their prepaid college tuition funds. Both of those states’ plans carry guarantees for participants.
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I was also told by someone who has it 2nd hand that Folsom is not that interested in being governor. He can make more money doing the work he is doing now and remaining Lt.Gov. and have more time off to go hunting. I don’t know if any of this is correct.
Well, we know he won’t be playing tennis at the Mt. Brook country club!
And Sparks is quite the man of principle, there. Waiting to see what Li’l Jim does. If Li’l Jim stays LG, is Sparks term limited at Ag? I can’t see him having the stones to challenge Artur. Where does he go. I doubt the private sector is an option Sparks would consider.
The credibility of the entire state government stands to take a hit if this program fails to cover its obligations. The trustees’ sluggishness about disclosing financial statements and audits also arouses suspicion. They shouldn’t have called it PACT if they reserved the right to back out if the money dried up.
We keep hearing that education is the state’s major function, the key to prosperity, etc. — and all of this is true. If the state can’t keep this tuition program afloat, we’ll know we have a government that can’t govern.
No 1, I, too, have heard that Folsom may not be seeking to run for Gov, partly because of the PACT headline, but partly because of ongoing investigations into other public figures that may dig up some skeletons Folsom doesn’t want around.
I have also heard that Sparks is seriously considering a run for Gov against Davis. I happen to think he will get hammered in the primary. As much as I like Sparks, Davis has his machine oiled and ready to run at full tilt. He will putmore money behind this race than any other candidate on the field could raise. It will be an interesting 2010.
What’s the difference between the PACT Fund and the Bernie Madoff Ponzi scheme?
No punchline, I’d like to know…
It is my understanding that a Ponzi scheme, in the simplest of terms, promises quick, high returns to investors, and these profits are paid to initial investors from the investments of subsequent investors. This creates the illusion of a fund having high-yielding returns.
To the best of my knowledge, PACT does not promise anything as specific as a 150% ROI (return on investment). It would also differ from the Ponzi scheme in the sense that it does not promise quick returns on large, singular investments. PACT encourages small amounts of money to be put away in rather frequent increments as part of a comprehensive investment. Such investing for a child’s education would take place over roughly a 10-20 year period. Furthermore, it is my understanding that PACT directly invests contributions into the fund rather than using them to pay out to investors who cash in to send their kids to college.
The PACT is in trouble because stocks are down, not because it paid families with money from later investors. If that had been the case, the folks in Montgomery would have a much larger problem on their hands…
From what I hear, #4 is closer to the truth than Danny’s source. Folsom supposedly has gotten nervous because of the direction the still ongoing Langford investigation has taken. Don’t forget Bill Blount was one of Folsom’s money guys and several Folsom allies received big bucks for Jefferson county bond work as did Folsom’s company Raymond James.
last point..there are two major players with Obama connections who are actually trying to broker a deal for Folsom to run for reelection and Sparks to run against Rogers for Congress and Davis to have a clear shot at the nomination. I have heard that they have promised major money from the DNC to Alabama if said deal happens.
I certainly dont have any inside information but the comments made in post #7 would not suprise me.
Kay Ivey is finished. Talk to anyonee with actual power in Montgomery and that is a foregone conclusion.
At an event in Huntsville today (Saturday) Kay had expensive full-color brochures touting her for Governor in everyone’s chairs. That wins my All-Time Political Tone-Deafness prize.
Is she out of her mind??????
viability – I don’t talk much to Paul Hubbert (”actual power in Montgomery”)…
I think she made a good showing in Huntsville (FWIW the brochures were on the tables); IMO she’ll weather the PACT storm as well as any State politician.
I don’t talk to Hubbert eirther. But I do talk to people who contribute heavily to GOP campaigns – the people Kay has been visiting regularly the last few months. They won’t be contributing to her.
And yes I believe campaigning for Governor actively while a major meltdown is happening in YOUR AREA OF RESPONSIBILITY is in horribly bad taste.
No. 7, I haven’t heard the CD3 part of that arrangement, but the rest is exactly what I’ve been told. I guess if they are working on Sparks for CD3, which makes perfect sense, they must have something in mind for Segall. Any ideas?
#7 and #12 – “DNC” money doesn’t quite work like that. Everybody on this board sees grand conspiracies where it’s truly mostly just bumbling about in the dark.
Sparks will get creamed in any of those races, by the way. You think Ivy “lacks polish”?!
#13, I think Sparks has a better shot at CD3 than LTG or Gov. Some of those counties don’t require polish. He would have tremendous appeal in east Ala. Question is, where does Segall go? Treasurer, Auditor, AG? I’ve also heard that he is being looked at for Dem party chairman.
I won’t argue with the “bumbling in the dark” assessment, but that doesn’t change the fact that it is going on. I’m not one to spread rumors in posts; I simply put up what I hear if it has some credibility.
Does Sparks currently live in AL 3? I still think the guy could win AL 4.
The Folsom is out rumors may or may not be true but there is no Alabama political insider who has not heard some version of them in the last two weeks. These rumors are not slanderous, they just speculate that a reluctant candidate may not run.
What makes CD Three atractive to Sparks is the fact that the guy wants a race where all of the Dems are on his side and he is flattered by the national interest that a congressional race generates.
As for Davis, the jury is still out on two questions: can he put together a multi-million dollar fundraising operation when he has never raised a lot of money in state? Can he win back enough of the North Alabama ground that Obama lost but Parker Griffith won? No matter what AEA and Anzalone’s polls show, there will be electability doubts until those questions are resolved.
[...] Doc’s Political Parlor discusses the effect of the PACT crisis on the next round of elections. Revised to clarify that “PACT” is the name of the Alabama program, not of all prepaid tuition programs. Comments (3) [...]