Nixon proposes softening colleges' budget cut

JEFFERSON CITY, Mo. -- Gov. Jay Nixon said Tuesday that he wants to soften a proposed budget cut to the state's colleges and universities by tapping money from a possible legal settlement with some of the nation's largest mortgage lenders.

The governor's budget for the 2013 fiscal year was released in January and called for a $106 million cut spread among the state's four-year and two-year institutions. Nixon said Tuesday that he wants to restore $40 million of that proposed cut by using Missouri's possible share of a nationwide settlement, which is being negotiated by the five largest mortgage lenders, the federal government and state attorneys general.

Nixon budget director Linda Luebbering said the additional money would reduce the budget cut for colleges and universities from 12.5 percent to 7.8 percent. She said the additional revenue was expected to flow into state coffers during the 2013 budget year. The 2013 fiscal year starts July 1.

Minutes before Nixon released the new budget proposal, Missouri Attorney General Chris Koster announced that he had given preliminary support for the proposed national mortgage settlement. The attorney general's office estimates Missouri could get $40 million with another $100 million in additional benefits for homeowners. The attorney general's office declined to elaborate about what the additional benefits could entail. Koster's office said it hoped the mortgage settlement would be completed soon.

"My intention is to settle this portion of the state's case against the banks, returning more than a hundred million dollars directly to mortgage holders in our state and adding tens of millions of dollars to the state's general revenue fund in these difficult economic times," said Koster, a Democrat.

The national mortgage settlement stems from abuses after the housing bubble. Many companies that processed foreclosures did not verify documents, and some employees signed papers they had not read or used fake signatures to speed foreclosures.

Nixon said in a written statement Tuesday that when he submitted his budget recommendations last month, the possibility for additional funding from the mortgage settlement was less certain with negotiations continuing. The Democratic governor said he now has additional information and feels more comfortable including the money with his state spending recommendations.

"My administration remains committed to working with our colleges and universities to make higher education more affordable and accessible for Missouri families," Nixon said.

Southeast Missouri State University president Dr. Ken Dobbins said after the governor's announcement Tuesday that the smaller budget cut would help to hold down tuition increases. However, he said it still might be necessary to cut some expenses while finding ways to boost revenue. According to figures released by Nixon's budget office, Nixon's budget recommends an additional roughly $2 million for Southeast.

"I was pleasantly surprised and very pleased," Dobbins said.