MOHELA spending plan gets approval from legislators

Tuesday, April 25, 2006

JEFFERSON CITY, Mo. -- The House endorsed a plan Monday evening to spend most of a projected $450 million windfall from a student loan sale on college construction projects.

The plan also would use some of the money to pay down the state's higher-education debt, with lesser amounts pledged to endowments for student scholarships and business recruitment.

Democrats spent much of a 90-minute debate Monday questioning whether the Missouri Higher Education Loan Authority could afford to sell the assets necessary to raise the money, and whether the state could legally spend MOHELA money -- criticisms they voiced last week when the plan was discussed in the House Budget Committee.

The House voted 110-45 to adopt the most recent of four spending plans and then voted by voice vote to give initial approval to the bill. It needs another vote to move to the Senate.

MOHELA's board earlier this year endorsed a proposal to sell part of its loans and give the state $210 million in September and another $240 million spread out through June 2010. The House spending plan is contingent upon that going through.

Since January, there have been four separate plans for spending the MOHELA money -- two by House leaders, one by Senate leaders and one by Gov. Matt Blunt.

The most recent House plan would spend $325 million on university capital projects, $24 million for projects at community colleges, $69 million to pay back higher education-related debt, $12 million to create an endowment fund for student scholarships and $15 million to create an endowment for attracting high-tech businesses to college campuses.

Republican supporters said questions about whether the loan authority can afford to make the sale aren't relevant, because only the agency's board has the ability to do that. Instead, they said the focus should be on how to spend the potential money.

But Democratic Rep. Paul LeVota, of Independence, said the rush to spend the money is nothing more than a "cash grab" that could threaten access to higher education for many Missourians. He likened Republican arguments about the decision to spend the money to a choice about spending stolen money.

"If a friend robbed a bank and you spent it, you are a party to the wrong action," LeVota said.

Although the board has endorsed a plan for selling part of its assets, MOHELA has hired a private consultant to examine whether MOHELA would be able to function if it followed through with the sale. Additionally, in-house legal counsel has been reviewing the legality of the sale.

The loan authority's interim executive director, Raymond Bayer Jr., has said the loan authority needs the ability to issue its own loans in order to be able to make up for what it sells and to ensure the quasi-state agency's long-term fiscal health.

Currently, MOHELA buys student loans from direct lenders such as banks, and the banking lobby has objected to allowing the loan authority to tap into the direct loan market. The Legislature must give MOHELA the ability to expand its capabilities.

Lawmakers on Monday overwhelmingly rejected a Democratic attempt to require MOHELA be allowed to issue direct loans to students before the state can begin spending any money gleaned by selling part of its assets.

"We need to give assistance to MOHELA to go forward with their business," said Darrough, D-Florissant.

The amendment, which would have been tacked to the larger MOHELA spending plan, was defeated 107-47 on Monday.

House Budget Chairman Allen Icet said trying to expand MOHELA's mission is a big step and needs more review than is given to a floor amendment.

"This is the wrong way to go about it, and it creates some real problems," said Icet, R-Wildwood

MOHELA is HB1022

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