UPDATE: Missouri governor proposes to tap university reserves

Friday, December 16, 2011 | 10:59 a.m. CST; updated 4:32 p.m. CST, Friday, December 16, 2011

JEFFERSON CITY — Gov. Jay Nixon wants five of Missouri's largest universities to consider tapping their reserves to help plug a hole in next year's state budget and avoid deeper cuts to the state's higher education system.

Nixon's proposal would call for the universities to provide the state $106 million from their reserves. The state would pay that money back to those specific universities in their operating budgets for the 2013 fiscal year, the governor's budget director, Linda Luebbering, said Friday. Over the next several years, the state then would replenish the university reserves with money diverted from the Missouri Higher Education Loan Authority.

The net effect of the money transfers is that the universities would shoulder the burden of the state budget cuts in the short-term but would be made whole in the long run. Luebbering described the money shifting as only an idea, not a definite plan. Nixon, a Democrat, is expected to outline his official budget proposal to lawmakers in mid-January.

Luebbering said significant cuts will be necessary for the state fiscal year that begins July 1, because revenue growth is not expected to make up for the loss of about $750 million of one-time funding sources in the current budget, including the last remnants of the federal stimulus programs.

"We're going to have another very challenging budget year in 2013," Luebbering said. She later added: "The global economy has just taken longer to turn around than anyone would have thought a couple years ago, and the resources have just not caught up yet."

Under the proposal discussed by Nixon's administration with university officials, the UM System would be asked to take $62.3 million from its reserves; Missouri State University would supply $13.7 million and $10 million each would come from the reserves at the University of Central Missouri, Southeast Missouri State University and Truman State University.

The total of $106 million was intended to match the amount of money the Missouri Higher Education Loan Authority already owes to the state over the next several years for a college construction program enacted during the tenure of former Gov. Matt Blunt, Luebbering said. Instead of going to buildings projects, the money would be diverted to replenish university reserves. But the loan authority hasn't made its recent installment payments on the construction program because of its own financial concerns and because Nixon's administration and lawmakers have instead tapped it for tens of millions of dollars to help make up for funding cuts to college scholarship programs.

State lawmakers have expressed concern both about the substance of Nixon's proposal and the fact that they were not initially kept in the loop about it.

The general details of the proposal were first reported Thursday by the Columbia Daily Tribune.

Sen. Jason Crowell, R-Cape Girardeau, told the Tribune he opposes participation in the money transfers plan by Southeast Missouri State University, which is in his district.

"Exactly when did university presidents become Jay Nixon's payday loan officers?" he asked.

House Budget Committee Chairman Ryan Silvey, R-Kansas City, called the plan ridiculous.

"The governor is looking for this scheme that avoids making tough decisions on cuts," Silvey told the St. Louis Post-Dispatch. "Rather than balance the state's budget, he wants to dream up new revenues sources which happen to be interest-free loans from our universities."

Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia, has said the idea sounds like it may be "a Bernie Madoff-type Ponzi scheme."

Schaefer, who was briefed on the plan Thursday by the governor's staff, said he is willing to see whether an acceptable loan plan could be worked out. But he said many concerns would need to be addressed, including whether using university reserve funds for the state's budget would hurt a university's bonding capacity and wrongly divert money that came from private donations or student tuition.

Like what you see here? Become a member.

Show Me the Errors (What's this?)

Report corrections or additions here. Leave comments below here.

You must be logged in to participate in the Show Me the Errors contest.


Jimmy Bearfield December 16, 2011 | 12:33 p.m.

Instead, Nixon ought to question -- loudly and publicly -- whether the state can afford so many public colleges and universities. Over the decades, too many legislators have successfully lobbied to have one for their district.

(Report Comment)
Derrick Fogle December 16, 2011 | 4:43 p.m.

Especially after you got your education out of Higher Education, so you could make your money. No reason to pay that forward.

(Report Comment)
John Schmidt December 16, 2011 | 4:54 p.m.

If we quit funding colleges those who are burdened by the taxes can create more jobs and make education unnecessary.

(Report Comment)
Jimmy Bearfield December 18, 2011 | 5:12 p.m.

"Especially after you got your education out of Higher Education, so you could make your money. No reason to pay that forward."

Explain what you mean. I moved halfway across the country to attend MU. I don't think it's unreasonable to expect Missourians to relocate for two or four years to attend college if they don't already live within commuting distance of a UM school or one of the Tier 2s (e.g., SEMO).

This is no different than closing military bases or post offices that we no longer can afford.

(Report Comment)
John Schmidt December 18, 2011 | 6:28 p.m.

Right. Because we were once in a defense draw down because of the end of the cold war. Now we are in an education draw down because the enrollment has been declining at MU, a problem that is also evidenced by reduced tuition revenue. Um... wait a minute...

(Report Comment)
Jimmy Bearfield December 18, 2011 | 9:29 p.m.

I would say nice try, John, um, except that it wasn't.

(Report Comment)
Ellis Smith December 18, 2011 | 10:32 p.m.

Seems to me that alumni not only can but DO in many cases "give back" to their alma maters. Ever hear of an endowment? It's not necessary to have millions of dollars to set up and fund an endowment: I've established two over the years (neither of them at MU) and continue to add to them.

(Report Comment)

Leave a comment

Speak up and join the conversation! Make sure to follow the guidelines outlined below and register with our site. You must be logged in to comment. (Our full comment policy is here.)

  • Don't use obscene, profane or vulgar language.
  • Don't use language that makes personal attacks on fellow commenters or discriminates based on race, religion, gender or ethnicity.
  • Use your real first and last name when registering on the website. It will be published with every comment. (Read why we ask for that here.)
  • Don’t solicit or promote businesses.

We are not able to monitor every comment that comes through. If you see something objectionable, please click the "Report comment" link.

You must be logged in to comment.

Forget your password?

Don't have an account? Register here.