Southeast, Missouri State have different bond plans

Tuesday, February 14, 2006

Missouri State University won't ask the state to help retire bonds for a new building project.

Two state universities. Two expensive building projects. Two bond issues. The similarities stop there.

Southeast Missouri State University wants $17.2 million in state funding to help retire more than $36 million in bonds the school issued in 2003 to finance construction of its River Campus arts school in Cape Girardeau.

Missouri State University in Springfield has a building plan of its own, but one that requires no state aid, officials at that school said Monday.

Missouri State University announced plans Friday to build a $60 million basketball arena with the backing of hotel magnate John Hammons. Hammons has pledged $5 million in cash toward the project. The university intends to raise another $5 million.

Missouri State then plans to issue about $50 million in bonds, school officials said. Hammons will pay off $20 million of that debt. The school will have to retire the remaining $30 million in bonds.

Officials said MSU would pay off the debt with donations and money from arena suite and seat revenue.

"The business plan does not include state funding," university spokeswoman Andrea Mostyn said.

House Speaker Rod Jetton last week criticized the decision of Southeast's regents in 2003 to issue bonds for the River Campus that assumed that the state would help pay off the debt. "For the average person, this is like writing a hot check with no money in the bank to cover it," Jetton wrote in a letter faxed to the Southeast Missourian Monday morning.

The speaker doesn't object to Missouri State's bond plan. Missouri State isn't issuing bonds and then asking the legislature to pay off those bonds, said Jetton spokesman Todd Abrajano.

Jetton contends that Southeast's regents approved the bonds with no guarantee of revenue to retire the debt other than increases in student fees.

According to Jetton, University of Missouri system president Dr. Elson Floyd wrote a letter to the house speaker last October expressing concern about such a bond plan. "It is frankly irresponsible to issue bonds without a verifiable funding source," Jetton quoted from Floyd's letter.

Jetton wrote, "We cannot allow any university to go out and sell bonds on a project that does not have an approved funding stream."

Southeast officials said they thought they had a commitment from the state for future funding for the project. They argue the bond plan was a fiscally responsible move designed to avoid further delays and escalating construction costs.

The speaker says he won't support the request for state funding unless three members of the board of regents resign. Those regents were on the board when the school decided to issue bonds to proceed with the construction project.

"I have very little confidence in their ability to manage the resources we send them," wrote the Marble Hill Republican.

Jetton wrote that he believes in using the "power of the purse" to dictate changes at state-funded universities.

"When the University of Missouri wouldn't let journalism students wear American flag pins, I strongly criticized them and did all I could to affect their funding.

"When the UMKC professor wrote a book justifying pedophilia, we cut his position and salary out of the budget," Jetton wrote.

The River Campus funding issue also requires lawmakers to take a stand, he argued.

"I think it is important for the legislature to send a clear signal to the other state universities that those kinds of action will not be rewarded and that there are negative consequences for poor fiscal management," Jetton wrote.

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