Missouri auditor's review critical of MOHELA disbursements, River Campus funding

Thursday, July 29, 2010

The state Department of Higher Education should have been more involved in picking projects for a college construction program and additional coordination is needed among colleges, according to reviews released Wednesday by the state auditor's office.

Auditor Susan Montee urged elected state officials to work closely with the Department of Higher Education to determine what future construction projects would most help Missouri's colleges. She also said there needs to be more unity among colleges over funding and recommended giving more power to the State Coordinating Board of Higher Education, such as allowing it to enforce changes to degree programs.

"We have allowed political influence to come in and play way too high a figure," Montee said during a news conference in Jefferson City, Mo.

Montee was also critical of the funding reimbursements for Southeast Missouri State University's River Campus. The university received $17.2 million in state funds for the project after it was completed to reimburse the university for bonds that had been issued. The audit recommended the legislature not appropriate funds for projects that are already complete.

The River Campus opened in August 2007. According to the review, Southeast received the bulk of its funds during fiscal years 2008 and 2009, while other universities were forced to halt projects. City and federal funds as well as private donations helped fund the $50 million project.

The audits focused on coordination within the Department of Higher Education and a 2007 college construction plan.

Montee pointed to several schools that spend more than $100,000 each to lobby the legislature and the method used to pick which building projects were included in the 2007 construction plan.

The review found that three priority construction projects for the Department of Higher Education were not included in the plan, but it did include 16 that were not considered a priority by the school or department.

The plan lists four Southeast projects, including the Autism Center for Diagnosis and Treatment. Of the four, the River Campus was the only project that received a funding recommendation from the coordinating board, according to the audit.

Every year, universities submit capital requests to the Department of Higher Education. Southeast's current top requests are science facilities and improvements to Academic Hall, which houses many of the Southeast's administrative offices. The university is considering issuing $40 million in bonds to fund those projects and other deferred maintenance.

The state's college construction plan called for the Missouri Higher Education Loan Authority to sell assets and transfer $350 million over six years to the state. Of that, $305 million was to go for construction at four-year colleges and universities, $30 million was for community colleges and $15 million was for the Missouri Technology Corp. to attract high-tech companies.

The loan authority made an initial $230 million payment in September 2007 but has delayed several payments since then because of the credit crunch and changes in federal laws.

Gov. Jay Nixon in 2009 suspended about a dozen projects because of funding shortages.

Montee said projects were not prioritized to organize funding allocations. Southeast received a large sum of its funding for the already-constructed River Campus as money started running short, while other projects could have been started.

"The ones that suffered were the ones that were not as far along," she said in an interview. A business incubator for Southeast was one of the projects that never got off the ground.

In a written response to the audit, the state Office of Administration said the process for selecting the campus construction projects followed Missouri's standard procedure for deciding what higher education building and repair projects to complete. Lawmakers approved a budget and consulted with the Department of Higher Education, lobbyists, constituents and others for information.

The Office of Administration, which is led by a gubernatorial appointee, said it did not have reason to believe funding from the state loan authority would fall short. After payments slowed, the office said Nixon consulted the Department of Higher Education about what projects to delay but that the governor ultimately is responsible for the decision.

A spokeswoman for the Office of Administration declined further comment.

Montee's audit also questioned an administrative fee levied by the Missouri Technology Corp. that has diverted some of the money it received through the 2007 plan.

The quasi-state entity questioned the auditor's procedures. The Missouri Technology Corp. also said the fund is a necessary accounting reserve and that the reserve level was set after a discussion with a national organization for non-profits specializing in economic development.

Staff writer Alaina Busch contributed to this report.

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