When state officials were approached to rescue Birmingham-Southern University, the university had already established a dismal financial track record.
- From 2004 to 2010, the company borrowed large sums of money imprudently to construct facilities.
- Multi-million dollar miscalculation of Pell Grant awards
- Depleted endowment funds of $130 million in 2000
- Moody's Investors Service downgrades the company's bonds to worst risk status
- Eight presidents have been appointed in the past 20 years, leading to unstable management.
- declares it will close in December 2022, raising serious doubts about its future
- Enrollment in 2018 was 1,268 students, decreasing by 43% to 721 students in 2023
State authorities had no role in producing that record.
The Alabama Legislature passed a bill in 2023 that would give a constitutional officer, with 50 years of banking, finance and investment expertise, uncontroversial sole discretion. Because of this, I believe the “intent” of the legislature was to do what I am required to do by law.
- The State Treasurer shall require applicants to meet five minimum criteria to qualify and to submit a written financial restructuring plan documenting the applicant's ability to repay the loan. .
- The State Treasurer shall review all loan applications and carefully and thoroughly examine each applicant's ability to repay loans under the program.
Birmingham Southern does not have sufficient collateral to commit to yet another loan.Also cannot be provided First perfected security interest in all secured assets.
Additionally, last December, Birmingham Southern University was placed on “warning” by its accrediting agency, the Southern Commission on Colleges and Schools. The university (SACSCOC) cited the university's non-compliance with the characteristics of the governing board, financial resources, financial statements and financial responsibilities. Additionally, Moody's Investors Service has completely withdrawn the debt rating after previously downgrading it to junk bond status.
And just this week, Birmingham Southern received $30 million in taxpayer funds by stripping the state Treasurer of loan reviews and giving $30 million in taxpayer funds to banks already on the brink of loan jeopardy. Senate Bill 31, which would provide funding, was introduced in this Congress. Loaning a university millions of dollars is effectively giving the chicken coop to the foxes!
After many hours of thorough review and investigation of the information provided by Birmingham-Southern, I have determined that Alabama taxpayers will not be responsible for financing loans to an institution that I believe has been grossly mismanaged for many years. I stand by my decision to refuse to use the funds of It's very depressing.
Mr. Young Boozer is serving his fourth term as Alabama State Treasurer.
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