Holden pits tobacco bonds against education cuts

Wednesday, January 22, 2003

The Missouri Legislature must authorize the use of tobacco settlement money before the end of February if the state is to avoid slashing education spending this spring, Gov. Bob Holden said Tuesday.

State colleges could face combined spending cuts of $90 million to $175 million, he said in his visit to Southeast Missouri State University. The governor also said that Missouri's public school districts could face cuts of $175 million to $260 million.

This may mean up to $8 million in budget cuts for Southeast, Holden told school officials during his visit.

Holden has urged lawmakers to authorize the sale of bonds to cover the $300 million shortfall in the budget for the current fiscal year, which ends June 30. The bonds would be retired with money from Missouri's settlement with the tobacco industry. The state is slated to get $4.5 billion over 25 years from the settlement.

Both the state Senate and the state House overwhelmingly approved the use of tobacco money in the 2002 legislative session.

But Holden worries that the Legislature, now under GOP control in both chambers, might not give the final spending approval needed to issue the bonds.

Both state Senate President Pro Tem Peter Kinder, R-Cape Girardeau, and House Speaker Catherine Hanaway, R-Warson Woods, have expressed concern about Holden's plan.

When asked about the tobacco bond issue Tuesday, House Majority Floor Leader Jason Crowell, R-Cape Girardeau, said discussions are ongoing.

A decision on bonds should be made by February because making cuts in education any later would place an undue hardship on schools' budgeting choices, the governor said.

Holden said eight states already have issued bonds, and eight others are pursuing similar financing plans.

If the state budget ax falls, Southeast could lose $4 million to $8 million in state funding, school president Dr. Ken Dobbins said following a meeting with Holden.

Dobbins said the university wouldn't raise tuition this semester to make up such a shortfall.

"We will have to borrow the money," he said.

Holden delivered the budget warning first in a meeting at the university with Dobbins and Quentin Wilson, interim commission of higher education in Missouri, and later in the afternoon at a news conference at the University Center. About 50 university officials, students and reporters attended the news conference.

Following the news conference, Holden met privately with area school superintendents and local chamber officials at the Cape Girardeau Chamber of Commerce office.

The governor said Missouri's future funding problems can't be addressed until the current revenue shortfall in fiscal 2003 is addressed. Missouri is facing the possibility of a $1 billion shortfall in fiscal 2004, which begins July 1.

Holden said he doesn't want to cut education spending. "You do not grow the economy by cutting further in education," he said.

Southeast and other state colleges experienced huge funding cuts last year.

Southeast implemented budget-saving moves that totaled $5.26 million. Southeast raised tuition, closed Parker Pool, cut several positions, reshuffled administrative jobs, deferred maintenance and made other spending cuts.

Ross McFerron, Student Government president, attended the news conference. Afterward, he welcomed the news that students won't face another tuition increase this school year.

"It's good for the seniors," he said. But McFerron said returning students could face a huge increase in tuition next fall if the university has the added cost of paying off a loan.


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