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MOHELA spending plan falls through


Jefferson City, MO – A plan to construct college buildings with the profits of a student loan sell-off failed Friday in the Legislature, but Gov. Matt Blunt plans to push ahead with the plan anyway.

The demise was for a $478 million spending plan for the proceeds of the Missouri Higher Education Loan Authority (MOHELA). The spending bill faced a constitutional deadline of 6 p.m. Friday for passage, but it never came to a final vote in either the House or Senate.

Immediately afterward, though, Blunt's office said it would bypass the Legislature and pursue an option for the quasi-governmental student loan agency to transfer the proceeds from its loan sale directly to state universities.

Blunt has no plans to call legislators back for a special session to take another crack at the spending plan, said his deputy chief of staff for policy, Rob Monsees. "I am extremely disappointed that the Missouri General Assembly did not make passing the Lewis and Clark Discovery Initiative a priority," Blunt said in a written statement.

But he added: "I will not give up on the young people of this state and will immediately begin considering other options to fully implement" the plan. At a minimum, Blunt will pursue a direct routing of money from the student loan agency to the universities for the roughly $300 million in construction projects he had proposed, Monsees said.

When announcing his plan to sell MOHELA assets in January, Blunt also had proposed that money go toward endowments for student scholarships, professors and businesses enticements.

Raymond Bayer Jr., the interim director of the student loan authority, said MOHELA will move forward with its plans to sell off loans as a way to fund higher education projects. "The board has committed to working with the governor on the Lewis and Clark plan," Bayer said after witnessing the legislative failure.

But Bayer added that he could not comment about the potential direct transfer of money to universities, which would have to be approved by the agency's board of directors.

After the spending legislation failed, the Senate adopted a resolution 24-9 encouraging Blunt to continue working with the MOHELA board to implement the plan by using the legislation as a general blueprint.

Senate Majority Leader Charlie Shields (R-St. Joseph) said he believed MOHELA could sell its assets and decide how to spend them on its own without legislative approval. "If they move forward on that, all the Senate is saying (is) please take into consideration our priorities," Shields said.

The spending plan that died Friday was a compromise among Blunt, the House and the Senate. It would have:

- Spent nearly $332 million to construction at universities and community colleges.

- Spent about $80 million for health care, including nearly $53 million for construction at Federally Qualified Community Health Clinics that serve the poor and uninsured.

- Spent $50 million to pay down state debt related to higher education institutions.

- Spent more than $15 million for a fund to help develop technology businesses near college campuses.

The MOHELA spending plan faced opposition from some lawmakers because it would have appropriated money before analysts for the MOHELA board have fully verified whether the asset transfer is financially workable. Others complained they needed more information about how the loan sale would affect students.

Lawyers for the MOHELA board also have questioned whether it can legally transfer the proceeds for use by the state. But Monsees said the governor's legal counsel believes it's possible for MOHELA to transfer its proceeds either to the state or to universities.

None of those concerns, however, were the deciding factor in Friday's failure. That's because Republican House leaders refused to allow a final vote on the MOHELA bill until the Senate passed a separate higher education bill. The Senate never voted on that other bill, because it was filibustered by a bipartisan group of senators and strenuously opposed by the leaders of Missouri's public universities.

The bill by House Speaker Pro Tem Carl Bearden (R-St. Charles) would have created a new $1,000 scholarship for college freshmen a fairly uncontroversial provision. But it also contained a highly contentious provision that would have taken money from the operating budgets of state universities if legislators don't increase scholarship funding to certain levels by certain years.

The legislation also imposed a backdoor incentive to cap university tuition increases, allowing schools to avoid the state funding penalty only if they kept tuition increases below the rate of inflation.

Most of the state's university leaders met by conference call Thursday night and agreed to oppose the scholarship bill because of the funding constraints, even if it cost their campuses new buildings. "The benefits do not outweigh the costs," said Steve Knorr, vice president of government relations for the University of Missouri.

Bearden and House Speaker Rod Jetton (R-Marble Hill) said the opposition from university leaders played a significant role in the measure's failure. Bearden said the intent of his bill tying the new scholarships to college funding levels was to shift the focus of higher education funding to students, instead of to the institutions.

Republican House leaders said they had no regrets about insisting the scholarship bill pass before the bigger MOHELA spending bill even if it meant they both failed. "If people want to blame me for putting students first, I'll gladly accept the blame," Bearden said.


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