Southeast Missouri State University students by fall 2008 could be footing the bill for the school to make payments on River Campus bonds if the state legislature doesn't provide the necessary funding, school officials say.
University president Dr. Ken Dobbins says he hopes that doesn't happen.
He and state Sen. Jason Crowell, R-Cape Girardeau, remain hopeful the university will receive $17.2 million to help retire River Campus construction debt as part of legislation that would provide $350 million for campus construction projects across the state. The projects would be financed with cash from the state's student loan agency.
But Senate Democrats last week blocked a vote on the higher education bill favored by Gov. Matt Blunt by waging an all-night filibuster and then rejecting a proposed compromise.
Democratic lawmakers oppose the central element in the legislation -- the proposed use of Missouri Higher Education Loan Authority money for campus building projects. They want the student loan agency to focus on providing students with low-cost loans.
Crowell, one of the architects of the MOHELA legislation, said he would pursue two other funding avenues if the Senate can't get the capital spending plan approved.
The two options are to include $17.2 million for the River Campus in an appropriations bill that authorizes spending of general revenue for various projects or secure an appropriation of less than $900,000 just to make River Campus bond payments in the coming fiscal year.
Crowell said he has discussed all three options with Dobbins, university regents, Mayor Jay Knudtson and Cape Girardeau Chamber of Commerce president John Mehner on numerous occasions over the past 18 months.
"We have contingencies in place at my request," Crowell said of the other two options.
But the Republican senator said he still prefers to try to get state funding for the River Campus as part of the MOHELA bill.
He said other state lawmakers are more likely to vote for the MOHELA bill because it includes projects all across the state. He said it would be harder to sell his colleagues on a stand-alone appropriation for the River Campus.
Southeast succeeded in getting the Missouri Development Finance Board to issue bonds in 2003 to finance construction of the River Campus arts school rather than delay the project until state funding could be secured.
"Until you receive the money, there are no guarantees," Crowell said. "That is the calculated risk of starting this project before actually receiving the money."
Two sets of 20-year bonds were issued in 2003.
The first was for $9.97 million to cover the city of Cape Girardeau's share of funding for the River Campus project. The city is paying off that debt.
The second set of bonds totaled $26.3 million. Those bonds were designed to provide the financing needed until the university could raise sufficient donations through the school's foundation and secure state funding, said Kathy Mangels, vice president of business and finance at Southeast.
Southeast has been relying on interest earned on the bond money to make payments on the $26.3 million worth of bonds for the past four years.
But construction of the River Campus arts school is scheduled to be completed later this year. The remaining construction bills will have to be paid.
By March 2008, Dobbins said, the university will no longer have interest income in the account to make the monthly payments to retire the $26.3 million in bonds.
If the legislature fails to appropriate money for the project this session, lawmakers still have time to pass something in the 2008 session, Dobbins said.
But in that case, the university would be saddled with paying the monthly bond payments for several months without the help of any additional revenue. That's because any student fee increase to help retire the River Campus debt wouldn't take effect until the 2008-2009 school year, Dobbins said.
The regents, he said, won't look to raise student fees for the 2007-2008 school year to help retire the River Campus debt.
School officials have made it clear they don't want to put a financial burden on students.
Crowell said he also doesn't want the River Campus debt to lead to higher tuition for students.
"The River Campus is a unique project," he said. "It is the only one that is already spending money before the money is actually there."
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