Deadline missed; MOHELA plan fails

~ Gov. Blunt said he will pursue transferring loan-sale proceeds directly to universities.

A plan to construct college buildings with the profits of a student loan sell-off failed Friday in the Missouri legislature, but Gov. Matt Blunt plans to push ahead with the plan anyway.

Southeast Missouri State University president Dr. Ken Dobbins welcomed the governor's move which could provide funding for campus construction projects including $17.2 million for the River Campus arts school. It also would provide about $5 million for a life-science research lab at the Cape Girardeau school's planned technology park.

Blunt's office said late Friday that the governor would bypass the legislature and pursue an option for the quasi-governmental Missouri Higher Education Loan Authority to transfer loan-sale proceeds directly to state universities.

"If that is a possibility, that is wonderful," Dobbins said.

State Rep. Nathan Cooper, R-Cape Girardeau, also voiced support for the move. "MOHELA operates outside of the appropriation process to start with," he said.

The legislative demise of the $478 million spending plan for the proceeds of the Missouri Higher Education Loan Authority marked a major disappointment for the Republican governor.

The spending bill, which faced a constitutional deadline of 6 p.m. Friday for passage, never came to a final vote in either the House or Senate.

Dobbins blamed the bill's demise on the fact that House leaders linked it to a controversial scholarship measure that would put constraints on state spending for higher education.

The Senate never voted on that other bill, because it was filibustered by a bipartisan group of senators and strenuously opposed by the leaders of Missouri's public universities.

The bill by House Speaker Pro Tem Carl Bearden, R-St. Charles, would have created a new $1,000 scholarship for college freshmen. It contained a contentious provision that would have taken money from the operating budgets of state universities if legislators don't increase scholarship funding to certain levels by certain years.

The legislation would have imposed a backdoor incentive to cap university tuition increases, allowing schools to avoid the state funding penalty only if they kept tuition increases below the rate of inflation.

The presidents of the public universities in the state, including Dobbins, opposed the measure.

"All of us believed that this was not good legislation for public higher education in the state even if it doomed the MOHELA deal," Dobbins said.

Most of the state's university leaders met by conference call Thursday night and agreed to oppose the scholarship bill because of the funding constraints.

Bearden and House Speaker Rod Jetton, R-Marble Hill, said the opposition from university leaders played a significant role in the measure's failure.

No special session plans

Blunt has no plans to call legislators back for a special session to take another crack at the spending plan, said his deputy chief of staff for policy, Rob Monsees.

"I am extremely disappointed that the Missouri General Assembly did not make passing the Lewis and Clark Discovery Initiative a priority," Blunt said in a written statement. But he added: "I will not give up on the young people of this state and will immediately begin considering other options to fully implement" the plan.

At a minimum, Blunt will pursue a direct routing of money from the student loan agency to the universities for the roughly $300 million in construction projects he had proposed, Monsees said.

Cooper and state Sen. Jason Crowell, R-Cape Girardeau, remain optimistic MOHELA funding can be secured for the River Campus and life-science lab projects.

But bypassing the legislative appropriation process could spark debate over the legality of such a move. "I would concur that it is an unsettled question," Crowell said.

Blunt had proposed that money also go toward endowments for student scholarships, professors and business enticements.

Raymond Bayer Jr., the interim director of the student loan authority, said MOHELA will move forward with its plans to sell off loans as a way to fund higher education projects.

"The board has committed to working with the governor on the Lewis and Clark plan," Bayer said after witnessing the legislative failure. But Bayer added that he could not comment about the potential direct transfer of money to universities, which would have to be approved by the agency's board of directors.

After the spending legislation failed, the Senate adopted a resolution encouraging Blunt to continue working with the MOHELA board to implement the plan.

Senate Majority Leader Charlie Shields, R-St. Joseph, said he believed that MOHELA could sell its assets and decide how to spend them on its own -- without legislative approval.

"If they move forward on that, all the Senate is saying [is] please take into consideration our priorities," Shields said.

The spending plan that died Friday was a compromise among Blunt, the House and the Senate. It would have directed:

* Nearly $332 million to construction at universities and community colleges.

* About $80 million for health care, including nearly $53 million for construction at Federally Qualified Community Health Clinics that serve the poor and uninsured.

* $50 million to pay down state debt related to higher education institutions.

* More than $15 million for a fund to help develop technology businesses near college campuses.

Lawyers for the MOHELA board have questioned whether it can legally transfer the proceeds for use by the state. But Monsees said the governor's legal counsel believes it's possible for MOHELA to transfer its proceeds either to the state or to universities.

Southeast Missourian staff writer Mark Bliss contributed to this report.