SB 31 — Distressed Institutions of Higher Education Revolving Loan Program amended, loan qualifications revised, administering agency changed

SB31 INTRODUCEDENGROSSED SB31 PA8HREE-1YS9ZN26-2 By Senators Waggoner, Smitherman, Allen, Jones, Livingston, Bell, Shelnutt, Barfoot, Melson, Chesteen, Price, Williams, Sessions, Kelley, Stewart, Gudger, Chambliss, Butler, Carnley, Hovey, Weaver RFD:

06-Feb-24 Page 0 PA8HREE-1SB31 01/31/2024Engrossed KHF2 (F)KHF4 2024-317A 2BILL 4TO SYNOPSIS:BE ENTITLED AN ACT 9 Relating to education;

Underto amend Sections 1 through 6 of Act 2023-560 of the 2023 Regular Session, thenow Distressedappearing Institutionsas ofSections Higher16-65A-1 Educationthrough Revolving16-65A-6, LoanCode Programof wasAlabama established1975, underas the StateDistressed TreasurerInstitutions toof provideHigher loansEducation toRevolving certainLoan eligibleProgram; institutions experiencing financial hardship that could lead to closure of the institution.

This bill would define the purpose of the program, change the administrator of the program to the Alabama Commission on Higher Education, more specifically define eligible institutions to which loans shall be made, and establish certain terms and conditions of loans to eligible institutions.

A BILL TO BE ENTITLED AN ACT Relating to education;

to amend Sections 1 through 6 of Act 2023-560 of the 2023 Regular Session, now appearing as Sections 16-65A-1 through 16-65A-6, Code of Alabama 1975, as the Distressed Institutions of Higher Education Loan Program;

to change the administrator of the program to the Alabama Commission on Page 1 SB31 INTRODUCED Higher Education;

Legislative Findings.

The Legislature finds and declares that the purpose of the Distressed Institutions of Higher Education Revolving Loan Program established by Act 2023-560 of the 2023 Regular Session is to ensure the prompt issuance of loans to eligible public and private colleges or universities in Alabama which are in financial distress and meet the eligibility requirements of Section 16-65A-2, Code of Alabama 1975.

The program is designed to provide loan proceeds to those colleges and universities as quickly as possible to address their financial hardship.

The Legislature appropriated thirty million dollars ($30,000,000) from the Education Trust Fund for this program in Act 2023-378 of the 2023 Regular Session and those funds were deposited into the Distressed Institutions of Higher Education Loan Program Fund and remain available to be used for loans under this program.

Any doubts concerning eligibility or the ability to repay a loan shall be construed in favor of making such loans under this program.

Section 2.

"§16-65A-1 There is created the Distressed Institutions of Higher Page 2 SB31 INTRODUCED Education Revolving Loan Program to be administered by the State TreasurerExecutive Director of the Alabama Commission on Higher Education.

Page 1 SB31 Engrossed "§16-65A-2 (a) The term “eligible institution” as used in this section shall mean any public or private college or university in Alabama, including any state-related college or university, that meets all of the following criteria:

Collateral shall be deemed sufficient if a college or university provides an opinion letter from a bank that is not a current creditor of the college or university making application and that is registered to do business in the State of Alabama and is regulated by the State Banking Department which states that the collateral offered by the college or university is sufficient to secure the requested amount of the loan.

(b) An eligible institution seeking a loan from this program shall make application on forms prescribed by the Page 3 SB31 INTRODUCED State TreasurerExecutive Director of the Alabama Commission on Higher Education.

The institution shall certify that it meets Page 2 SB31 Engrossed all criteria provided by this section.

Any institution applying for a loan shall provide any information requested by the State TreasurerTreasurerExecutive Director of the Alabama Commission on Higher Education relevant to the determination of ability to repay.

Before 95 awarding a loan to any applicant, the TreasurerExecutive Director of the Alabama Commission on Higher Education shall require the applicant to submit a written financial restructuring plan documenting the applicant's ability to repay the loan.

The restructuring plan shall include specific facts demonstrating the applicant's ability to repay the loan as determined by the bank.bank that is approving the restructuring plan.

Page 43 SB31 INTRODUCEDEngrossed and the terms of repayment.

(e) The State Treasurer mayExecutive Director of the Alabama Commission on Higher Education shallmay award a loan to any eligible institution that meets the requirements provided in this section upon approval of the loan within 30 days of the date the institution submits its application and shall be responsible for the administration of the loan, subject to 95 this section.

The 30-day period to reach a decision on the approval of a loan may not be extended for any reason.

Once a loan is approved, funds shall be transferred to the applicant within a reasonable period of time.

Breach of contract by the recipient shall Page 4 SB31 Engrossed make the recipient immediately liable for the unpaid balance of the loan.

(g) The State TreasurerExecutive Director of the Page 5 SB31 INTRODUCED Alabama Commission on Higher Education shall forward copies of executed loan contracts to the Chairs of the Senate Finance and Taxation-Education Committee and the House Ways and Means-Education Committee, the Finance Director, and the Legislative Fiscal Officer.

"§16-65A-3 Annually, on or before the first day of December, the State TreasurerExecutive Director of the Alabama Commission on Higher Education shall file a report regarding the operation of the program, including all loans issued and the status of any repayments, to the Governor, Lieutenant Governor, Speaker of the House of Representatives, President Pro Tempore of the Senate, the minority leaders of the Alabama Senate and House of Representatives, the Chairs of the Senate Committee on Finance and Taxation-Education and the House Ways and Means-Education Committee, the Legislative Fiscal Officer, and the Finance Director.

Proceeds from loan repayments shall be deposited into this fund and may be used in the same manner Page 5 SB31 Engrossed as any other funds provided for this program.

Any monies remaining in the fund, including any interest earned or any contributions from other sources, at the end of a fiscal year Page 6 SB31 INTRODUCED shall not revert but shall remain in the fund and are reappropriated for the purposes authorized by this section.

"§16-65A-6 In addition to the powers granted by any other provision of this chapter, the State Treasurer Executive Director of the Alabama Commission on Higher Education shall have the powers necessary and convenient to carry out the purposes and provisions of this chapter, including the power to enter into and execute contracts, agreements, and other instruments." Page 6 SB31 Engrossed Section 3.2.

This act shall become effective immediatelyimmediately. upon its passage and approval by the Governor, or its otherwise becoming law.

Page 7 SB31 Engrossed Senate Read for the first time and referred ................06-Feb-24 to the Senate committee on Finance and Taxation Education Read for the second time and placed ................28-Feb-24 on the calendar:

1 amendment Read for the third time and passed ................05-Mar-24 as amended Yeas 22 Nays 5 Abstains 0 Patrick Harris, Secretary.

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