Crowell bill would require MOHELA approval for university borrowing

A Southeast Missouri lawmaker wants to tighten up borrowing protocol for Missouri's universities and colleges, a move in large part precipitated by Southeast Missouri State University's biggest bond issues.

But one member of the university's board of regents worries the legislation could prove stifling to higher education's quest to improve crumbling infrastructure.

Sen. Jason Crowell, R-Cape Girardeau, is the author of Senate Bill 200, which would prohibit a state educational institution from issuing revenue bonds or incurring debt for the payment of revenue bonds from any source, unless approved by the Missouri Higher Education Loan Authority. The bill also targets the state's biggest quasi-public entities, like the Missouri Development Finance Board, removing their authority to issue loans to state educational institutions.

"It's going to beef up the requirements before they issue any bonds that haven't identified revenue streams in which to pay all of these off," Crowell said.

His legislation would place more restrictions on MOHELA in approving the issuance of revenue bonds by state educational institutions or in granting the entities loans. The bill would require an institution to first receive an "A" or better bond credit rating by an independent credit rating service. After evaluating the ability of an institution to raise tuition and fees, the authority must find no impediment for the college or university to repay the loan.

The bill demands borrowers have in place a tuition or fee increase, or other revenue stream, to pay the bonds or repay the loan before bonds are issued or debt is incurred. The legislation also has provision that the state never has to pick up the tab on the bonds or loan.

Crowell points to Southeast Missouri State University's River Campus project, among others, as inspiration for the bill. He has long been critical of how that project was funded, without all defined revenue streams in place. He said Southeast officials talked about raising tuition to cover the costs, and then-Gov. Matt Blunt offered the idea of liquidating MOHELA assets to help cover the funding gap.

Crowell said authority executives have told him that Southeast's bond issuance of more than $59 million for a campuswide renovation project is secured by the university's ability to "massively" raise tuition to cover its borrowing.

"I say raise all the tuition upfront, and be honest that this is what you're doing," Crowell said. "A tuition increase is a tax increase. We need to get our financial house in order before we're doing stealthy bond issues that have taxpayers on the hook."

Southeast regent Al Spradling said the board has no intention of raising tuition "massively" to cover the cost of the borrowing plan. He said Southeast's students signed on to the bond issue, agreeing to pick up the brunt of the costs through a fee increase.

Southeast president Ken Dobbins said that without state support, universities are left holding the bag for capital improvement projects.

"I wish that we didn't have to have our students pay for it, but if revenues are such that we can't get money from the state for state buildings, we need to do it," Dobbins said.

He said Southeast's latest bond issue, including repairs to the century-old Academic Hall, would have no problem meeting the conditions outlined in Crowell's bill.

But Crowell takes issue with some of the university's defined revenue streams, particularly money savings expected from energy-efficient power and building materials.

"There's a former banker on the board of regents. He was my banker, and he did my home loan," Crowell said, referring to board member Jim Limbaugh. "If I said I was going to make my mortgage payments by energy cost savings he would have laughed me out of his office."

Limbaugh said he understands Crowell's point, but revenue and expense reductions are a common part of the total bond issuance application process.

Spradling said prudent financing is critical to public and private operations, but the bill could prove restrictive to universities.

"I'm concerned that this may be about trying to make life more miserable for universities than it already is," Spradling said. "If this is an effort to make it even more difficult for universities to borrow, which I suspect it to be, we're going to come to a point soon where our facilities are crumbling and there's no way to put them back together again."

mkittle@semissourian.com

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