Southeast's share

Sunday, February 5, 2006

Area lawmakers want $17.2 million from the sale of student loans to go to the River Campus.

Gov. Matt Blunt's plan to fund construction projects at Missouri's public colleges provides less money for Southeast Missouri State University than it deserves, local lawmakers say.

They want to add $17.2 million for Southeast's River Campus arts school.

Blunt will consider the funding proposal and any others lawmakers put forward, a spokesman for the governor said.

Blunt wants to sell billions of dollars in Missouri Higher Education Loan Authority student loans and use the estimated $450 million profit to fund campus projects, scholarships and professorships. The plan would also set up a fund to attract and retain life-science companies and commercialize existing research in the state.

The not-for-profit MOHELA services the majority of loans made to students at Southeast and many other colleges in the state.

The governor proposed that the bulk of the money -- nearly $300 million -- would fund 20 campus construction projects at 14 college and research campuses. But Southeast would receive only $5 million to help fund a research laboratory for life-science companies. Another $13.6 million would be needed in the form of a local match to proceed with the project at the university's planned research and technology park along Interstate 55.

School officials say that could come from Chlorogen Inc., a bioscience firm that wants to open a manufacturing and research facility at the research and technology park.

The University of Missouri-Columbia would receive the biggest share of the money -- more than $92.5 million for three health and science research facilities.

A total of 659 UMC students had nearly $4 million combined in MOHELA loans in fiscal 2004.

Few UMC students have MOHELA loans. Most rely on direct loans through the federal government.

UMC ranked seventh among 14 college and research campuses in the dollar value of new MOHELA loans to students in the 2004 federal fiscal year. Southeast, in contrast, ranked third in the dollar value of new MOHELA loans with more than $24 million, state records provided by the lieutenant governor's office show.

Southeast students accounted for 6,717 new MOHELA loans in the same year, state records show.

Local lawmakers say those factors should be considered when it comes to using the profits from any MOHELA loans sale.

"It should be part of the equation," said state Rep. Nathan Cooper, R-Cape Girardeau.

Cooper, who backed the governor's original plan to liquidate MOHELA, praised the latest plan, which calls for the loan authority to sell some of its loans without going out of business.

"I think it is an innovative way to take advantage of state assets and provide resources to a key part of what our function is as a state government -- education," he said.

"I believe the board of directors of MOHELA will ensure that the students who have continued loan service through private agencies will continue to receive excellent service," Cooper said.

Lawmakers said the loan authority has bought and sold loans before. The only difference is that this time the authority intends to turn the money over to state government to spend on higher education projects rather than plowing it back into more loans, lawmakers said.

State Sen. Jason Crowell, R-Cape Girardeau, said he will work to include funding for the River Campus now that revised plans call for selling some of the MOHELA loans but not liquidating the loan authority entirely as the governor initially proposed.

He welcomed the plan to raise revenue without closing down the loan authority.

Blunt's initial plan drew criticism from some lawmakers who worried that the sale of the entire loan authority to a for-profit company would have led to increased interest charges and added debt for current and former college students. Crowell had expressed concern that students would be saddled with more debt by such an arrangement.

He said the latest plan protects students while also raising money to benefit higher education projects and programs.

House Speaker Rod Jetton of Marble Hill, Mo., also has voiced support for the new plan, insisting it will generate needed revenue while continuing to provide low-interest loans to Missouri's college students.

Although MOHELA's assets would shrink temporarily, the authority would continue to buy new loans and build back its financial portfolio.

Officials at the not-for-profit authority based in Chesterfield, Mo., said they will continue to provide low-cost loans to Missouri students.

Bid requests for the sale of any MOHELA loans will stipulate that the buyer would have to provide the same low-interest rates currently in place, officials said.

"MOHELA will still be a viable, nonprofit benevolent organization," said Southeast business faculty member James Ricks, who serves on the loan authority's board.

"If we sell it outright, then it is gone forever," he said.

Ricks said the MOHELA board came up with the latest plan. Board members unanimously approved the plan last week.

"In theory, it should be the best of both worlds," he said.

Cape Girardeau businesswoman Kathy Swan also serves on the seven-member board of directors. She declined to comment on the plan.

The original plan would have required approval from both the legislature and the MOHELA board. The latest plan requires only approval of the board of directors. That should allow the loans to be sold more quickly, supporters say.

But lawmakers still would have to decide how to spend the money.

Crowell said lawmakers don't have to approve the governor's list of projects. They can authorize entirely different spending priorities if they choose, he said.

Local lawmakers want to spend $17.2 million of the anticipated profits to help retire bonds issued for the River Campus arts school now under construction in Cape Girardeau.

Lawmakers previously appropriated $4.6 million in general revenue for the project, but more state funding is needed.

Cooper said the fact that the legislature appropriated money in the past for the project should make it easier to sell his colleagues on continued funding for the River Campus development.

Southeast president Dr. Ken Dobbins said the Missouri Coordinating Board for Higher Education has listed the River Campus as its No. 2 priority project for the past four years. Seven campus projects around the state that rank lower in coordinating board priority made it onto the governor's capital improvements list.

"We didn't know that the River Campus wasn't on it," Dobbins said of the governor's plan.

The Blunt administration didn't ask Dobbins for the university's construction priorities. Had someone asked, Dobbins said he would have listed the River Campus as the school's top priority for funding.

Dobbins said he received a call from the deputy director of the Missouri Department of Economic Development asking about the university's proposed life-science lab project prior to the governor unveiling the spending plan.

He said he wasn't told by the DED official that the project was being considered for funding under Blunt's higher education plan.

Dobbins said the River Campus project, which is already under construction, would be a good investment for the state.

The city of Cape Girardeau is providing about $9 million in motel-and-restaurant tax money. Southeast's foundation has raised $11.1 million. The federal government has provided $7 million, Dobbins said.

The state so far has provided $4.6 million and another $17.2 million is being requested by Southeast.

"The state would be paying less than 50 percent of the cost," said Dobbins. "It is a bargain for the state."

Missouri state government traditionally pays 80 percent of the cost for such college facilities, he said.

Local lawmakers and Lt. Gov. Peter Kinder of Cape Girardeau believe the legislature would be justified in adding the River Campus to the proposed spending plan. They're optimistic that will occur.

Cooper predicts the legislature this spring will approve a plan on how to spend the money.

Blunt spokesman Spence Jackson said the governor's plan focused largely on funding life- and plant-science projects on Missouri's public college campuses.

"Certainly, Southeast Missouri State University, being in the heart of one of the great agricultural regions of our state, has a very good opportunity to be a leader in both of those technologies," Jackson said.

Many of the 20 projects proposed by the governor already have efforts underway to secure local funding. Some projects have some local funding in place either from the private sector or the federal government, he said.

Karen Walker, director of student financial aid at Southeast, said she's glad MOHELA won't be liquidated.

MOHELA handled 83 percent of the new loans made to students at Southeast in the federal fiscal year that ended on Sept. 30, 2004, state records show. But Walker said current students at Southeast haven't shown concern over the planned sale of student loans. "We have not heard from the students," she said.

She predicted that any sale of student loans to a private loan company won't cause any hardship on the students or graduates who are paying off their debts.

"I don't believe the majority of students would even see it as an issue," she said.

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