Blunt, leaders agree on new MOHELA plan

Published Sunday, August 27, 2006

JEFFERSON CITY (AP) - Gov. Matt Blunt and legislative leaders have agreed on a new university construction plan that would be financed through the sale of $350 million worth of student loans, The Associated Press has learned.

The agreement, outlined yesterday by Blunt administration officials, comes after the governor’s original higher education funding plan failed in the General Assembly.

The new approach still involves the sale of loans held by the Missouri Higher Education Loan Authority. But instead of transferring those proceeds to the state or directly to universities, the money would pass through Missouri Development Finance Board.

Blunt’s administration and MOHELA’s executive director both said yesterday that the plan has been cleared by their lawyers, in hope of avoiding the legal concerns that surrounded the prior plan.

More details were to be announced tomorrow, said MOHELA’s executive director, Raymond Bayer Jr. The next board meeting of the loan agency is scheduled for Sept. 8.

Under the new plan, no legislative approval would be required to use proceeds from the sale for university construction. The plans calls for $313.9 million from MOHELA loan sales to be divided among 22 construction projects at Missouri’s universities and colleges. An additional $18 million would be distributed to community colleges; $15 million would go to an endowment to help spin off university research into commercial products; and $3.4 million would be used to replace equipment at the University of Missouri-Kansas City School of Dentistry.

An agreement among Blunt, House Speaker Rod Jetton and Senate President Pro Tem Michael Gibbons also calls for the Legislature to appropriate $10 million annually for a new scholarship program. An additional $10 million in state revenues would be spent on health clinics that serve the poor and uninsured, $2.4 million would go to health-care scholarships and $1 million would go to area health education centers. The new state spending would be considered when the Legislature convenes in January.

A disagreement among House members and senators related to the proposed scholarship program led to the demise of Blunt’s "Lewis and Clark Discovery Initiative" in May. At the time, Blunt’s office said it would instead pursue the transfer of MOHELA loan sale proceeds directly to universities, leaving the Legislature out of the mix. But discussions continued among the governor’s office, legislators and lawyers for MOHELA, leading to the latest proposal.

Blunt’s office provided the AP with a copy of a document prepared by attorney David Queen of the firm Gilmore and Bell. The memo outlines a proposed cooperative agreement with MOHELA in which the student loan agency would receive at least $1 billion in bond allocations over a 10-year period from the Department of Economic Development in exchange for its funds. The memo says the agreement would mark a first, because no state board has ever received a multiyear commitment.

A Department of Economic Development official said yesterday that MOHELA would either provide the proceeds of its loan sales to the Missouri Development Finance Board or would sell the loans to the finance board, which in turn would resell them. The money would go from there to the universities.