How to spend $450 million: Lawmakers have different views on MOHELA funds

JEFFERSON CITY, Mo. -- Proposals for spending the estimated $450 million state treasury windfall from the sale of Missouri's student loan portfolio could multiply in coming weeks as the Senate and legislative Democrats weigh in on the deal.

During a question-and-answer session Thursday with publishers, editors and reporters from across the state, Senate President Pro-Tem Michael Gibbons, R-Kirkwood, said how the money is used will be the subject of Senate floor debate.

Democratic leaders, who direct the minority party in both chambers, said they have discussed several of the issues surrounding the proposal and are considering an alternative plan.

The gathered media members also heard from Attorney General Jay Nixon, who is suing the Missouri Higher Education Loan Authority board for the way it approved the sale of $2.4 billion of its assets, and from Gov. Matt Blunt, who began the debate by proposing the sale. Nixon's lawsuit claims the board violated the state Sunshine Law when it approved the sale. The lawsuit, Blunt said, attacks "technical problems" with the action and shouldn't be allowed to block the sale.

The officials spoke during a day of discussion at the Capitol Building sponsored by the Associated Press and the Missouri Press Association.

So far, there are two proposals to divvy up the money generated if MOHELA makes the sale. Blunt, who at first sought to sell the agency itself, wants to spend $300 million on construction projects, $100 million on a scholarship program, $30 million on business incubators focusing on technology initiatives and $20 million for endowed professorships. House Republicans disagree with Blunt's priorities, preferring instead to spend $165 million on construction, $190 million for scholarships, $18 million for community colleges and $75 million to retire state debt.

By promising the Senate floor debate, Gibbons drew a contrast with GOP colleagues from the House, where a spending plan was decided in a closed caucus on Feb. 8.

"The fundamental question is, are we doing the best job we can do for the students, the parents and the people of Missouri?" Gibbons said.

Democrats will focus on whether students will be protected before considering how to spend the money, Senate Minority Leader Maida Coleman, D-St. Louis said. "This should not be a tax on students," she said.

In Blunt's proposal, Southeast Missouri State University is slated to receive $5 million for a life sciences business incubator. The House leadership eliminated funding for Southeast. House Speaker Rod Jetton, R-Marble Hill, said he objects to the university's decision to issue bonds to complete the River Campus project.

In defending his program, Blunt said MOHELA's assets come from higher education and should benefit state colleges and universities. Any spending plan, he said, should include "significant capital improvements all around the state."

Thursday Jetton, who last week demanded that three members of Southeast's Board of Regents resign for their role in approving the bonds, said he is not adamant that Southeast be cut off from the MOHELA funds. The regents, he said, were acting on information from university president Dr. Ken Dobbins that wasn't accurate when they approved using borrowed money for the River Campus.

A $1,000 appropriation in 2003 wasn't intended to show legislative support for the bonds, Jetton said, but instead was a way of showing that lawmakers would help with construction costs when state coffers were fuller.

Jetton stopped short of calling for Dobbins to resign. "I don't want to put that out there and escalate the situation," he said.

MOHELA was created in 1981 to acquire student loans from banks. The purchases keep money available for future borrowers and, through MOHELA's not-for-profit status, helps keep interest rates low. After Blunt proposed selling the entire agency, the MOHELA board countered with their proposal to sell part of its assets. The board vote to go ahead with the sale capped a brief meeting in Blunt's office on Jan. 31.

The Sunshine Law violations alleged by Nixon stem from the lack of discussion and unanimous vote during the brief meeting. If a judge agrees with Nixon, the board vote could be set aside. "The action they took is in serious jeopardy," Nixon said.

Nixon had originally planned to hold hearings on the wisdom of the sale but decided after one meeting that the legality of the action needed scrutiny.

The legislature should jump in to scrutinize whether the sale is in the best interests of the state, Nixon said. "No one has studied the public policy of the sale," he said.

Blunt promoted the proposal as a boon to the state's economic future. The construction program he proposed, he said, is aimed at enhancing research and education in medicine and the life sciences. "We are not building buildings for the sake of building buildings," Blunt said.

Missouri has a choice to make, Blunt said. "We need to decide if we are going to be a life science leader. The naysayers shouldn't be allowed to stand in the way of the project."

rkeller@semissourian.com

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