Birmingham-Southern College Files Suit Against State Treasurer Young Boozer for "Sudden and Unwarranted" Denial of Bridge Loan

FOR IMMEDIATE RELEASE

Birmingham, AL (10/18/2023) — Birmingham-Southern College has filed a lawsuit in Montgomery County Circuit Court seeking to compel Alabama State Treasurer Young J. Boozer III 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.

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."

Even so, BSC is moving forward with normal operations, including recruitment efforts for fall 2024. "As the passage of the enabling legislation - and the overwhelming and heroic support that helped get it passed -- proved, BSC has done and continues to do too many good things for our community and state to fold our tent," Coleman said.

"We offer an educational experience that many students and families are seeking - small, residential, highly personalized, and rooted in the Methodist tradition of service," he added. "More than 60 percent of our students are from Alabama, and more than half of our 17,000 graduates live in Alabama.

"This school makes an outsized impact on our state, and we are committed to the fight for its future."

"Sudden and Unwarranted"

The bill was conceived and written to allow 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 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 October 13 that arrived today, was "sudden and unwarranted," Coleman said.

"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," Coleman said.

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. "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.

BSC Qualifies for Funding

Coleman said the refusal to extend bridge funding as provided for in the law ignores the fact that BSC meets every single criterion set forth in it. 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 the 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 on Saturday, Oct. 14.

Details of the Lawsuit

The lawsuit, filed today 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 October 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.

The Cost of Boozer's Denial

Coleman said Boozer's refusal to uphold a state law that was passed with bipartisan support in the Alabama Legislature and was signed into law by the Governor brings significant cost to the state. If Boozer's actions were to force the College to close:

Alabama would lose $97.2 million each year in economic impact generated by BSC.
Jefferson County would lose $70.5 million of that annual economic impact.
State and local coffers would lose $13.8 million in taxes generated by BSC.

Beyond the numbers, there is a significant human cost. Nearly 300 direct jobs would be lost, with another 1,200 jobs impacted. Even more urgently, students would have to try to transfer to other institutions in the middle of the academic year - including more than 200 seniors who are expecting to graduate from BSC in May 2024 and whose ability to do so is imperiled by Boozer's actions.

Coleman urged BSC students, alumni, and supporters to "let their voice be heard with the greatest possible volume" by emailing him at young.boozer@treasury.alabama.gov and calling Boozer at (334) 242-7501 to urge him to comply with the state law, and by reaching out to Gov. Ivey and their legislators to ask them to do the same.

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The following documents are available upon request:

Complaint and Motion filed in Montgomery Circuit Court on October 18, 2023
Timeline of Key Events and Interactions

Birmingham-Southern College