A hearing is set for this afternoon in Montgomery County Circuit Court over a lawsuit Birmingham-Southern College filed Wednesday against State Treasurer Young Boozer.
The college said it is suing Boozer to compel him to “execute the Distressed Institutions of Higher Learning Revolving Loan Fund Act, passed on June 6 and signed into law by Gov. Kay Ivey on June 16.”
Boozer notified BSC he was denying the college $27 million in requested bailout funding.
Circuit Judge James Anderson set the hearing for 1:30 p.m. at the Montgomery County Courthouse. Officials are asking the treasurer to disburse the loan by the end of the month.
Related story: With BSC in mind, Legislature OKs loan program
In a news release Wednesday, BSC President Daniel Coleman said that although the College has engaged in good faith discussions with Boozer for several months, “unfortunately, our good faith has been betrayed. After several additional attempts over the last two weeks and up through today to get Treasurer Boozer to execute the will of the Alabama Legislature, we have no other choice but to seek remedy from the court.”
The legislation allowed for a $30 million lifeline to the college, providing operating funds for three years during which it could raise an endowment of up to $200 million to ensure its long-term financial stability. In spring 2023, BSC’s Board of Trustees received assurances from legislative leaders supporting a measure to provide bridge funding that, should the bill pass, the college would be positioned to borrow the $30 million in bridge funding required to keep it open.
The college said it made commitments based on that assurance, including enrolling students and refilling key faculty and staff positions.
The state treasurer’s denial of BSC’s application, which was communicated in a mailed letter dated Oct. 13 that arrived Wednesday, was “sudden and unwarranted,” Coleman said in the release. “This followed months of discussions in which the treasurer gave no indication whatsoever that any aspect of BSC’s application was wanting, or that he would not act as the Legislature intended when they wrote and passed the Loan Fund bill.
“As we began final preparations for Homecoming & Family Weekend on October 13 and 14, including the public launch of our endowment campaign, Boozer contacted me to say that he was not inclined to authorize a loan as contemplated by the loan fund law and anticipated by the Legislature.”
Since then and up through the time of the filing, BSC and its allies have continued to try to persuade Boozer to execute the law, the news release said.
“At this point, our Board of Trustees have authorized the filing of this lawsuit in hopes of moving this matter to a favorable conclusion for the college,” Coleman said.
Coleman said BSC met the criteria in the law to receive the funding. The requirements include:
- Has operated for more than 50 years in Alabama.
- Founded as Southern University in 1856, BSC has operated for 167 years.
- Has a significant impact on the community in which it is located.
- The College has an economic impact of $70.5 million per year in Jefferson County and $97.2 million statewide.
- BSC has educated a disproportionate share of physicians, dentists, lawyers, business and civic leaders, educators, and other professionals who live, work, serve, and pay taxes in every county in the state.
- BSC also serves as a partner to and anchor for the historic neighborhoods of Bush Hills and College Hills that surround the 192-acre campus.
- Has assets sufficient to pledge as collateral.
- The College offered collateral that exceeds several times over the amount of proposed $30 million loan, including its 192-acre campus in west Birmingham and U.S. Treasury securities.
“It is an undisputed fact that Birmingham-Southern College has met each and every requirement of the law,” Coleman said.
Coleman said the college’s application included a detailed plan under which it can achieve financial stability for the long-term and repay the state loan in a timely manner. BSC has already received more than $45 million in pledges toward an endowment goal of $200 million, and publicly launched the endowment fundraising campaign last Saturday.
The lawsuit, filed Wednesday in Montgomery County Circuit Court, seeks declaratory and injunctive relief and asks the court to find that the college has provided sufficient information for the loan to be approved and that it meets the statutory requirements to obtain the loan.
It asks the court to issue a writ of mandamus to compel the state treasurer to take the necessary steps to issue the requested loan and disburse the loan proceeds no later than Oct. 30.
The college is also petitioning the Court to issue an emergency order expediting discovery and a final hearing on the merits because Boozer did not have the discretion to deny the loan application and he has acted arbitrarily and capriciously in the exercise of any discretion he has under the law.
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