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Missouri struggles to find funding for higher education

Monday, July 23, 2012 | 6:35 p.m. CDT; updated 2:52 p.m. CDT, Monday, August 6, 2012

COLUMBIA — Many local candidates for state office have listed increased funding for higher education among their top priorities if elected.

In the past three years, Missouri's public universities have born the brunt of state budget cuts as lawmakers have struggled with declining revenue. 

The last time public universities received an increase in state funding was in the 2009 fiscal year. Since then, universities have seen their budgets slashed as state revenue dipped after the 2008 financial crisis and economic recession. 

Candidates all want higher education funding to be a priority, but they differ on how to make that happen. 

University of Missouri System's budget

In January, Democratic Gov. Jay Nixon called for a 15 percent cut for all public universities for fiscal 2013. The colleges were spared, however, when Nixon directed $40 million from a settlement with five of the largest mortgage companies toward higher education, and legislative leaders found other programs to cut. 

When the fiscal 2013 budget was passed in May, the General Assembly had the UM System funded at the same level as last year. 

The UM System was slated to receive just less than $400 million, but on June 22, Nixon announced he was withholding 1 percent of its funds out of concern the state's $24 billion budget was not balanced. That move brought the system's budget down to $396 million. 

Of the money the UM System receives from the state, roughly half goes to MU, but that amount varies year to year. 

Although the UM System dodged the 15 percent cut this year, its funding remains far below what it received in previous years.  

In fiscal 2011, the UM System received $415 million from the state. In fiscal 2010, the General Assembly appropriated $475 million to the UM System. The 2010 budget numbers were aided by $50 million from the federal stimulus package given to the UM System.  

Despite level funding for fiscal 2013, the UM Board of Curators approved a 3 percent tuition increase for Missouri residents for the next academic year. In-state tuition based on 12 credit hours will increase from $3,129 to $3,282. 

The ability to raise tuition means public universities don't have to rely solely on state aid. Missouri law, however, prohibits public universities from raising tuition at rates that exceed the annual Consumer Price Index. For fiscal 2013, the price index was 3 percent. In the past, the state Department of Higher Education has waived the tuition ceiling to allow universities to shore up their budgets.  

Revenue 

The past few years, the legislature has struggled to pass measures boosting state revenuethat could provide funding for higher education.

A $70 million tax amnesty program for the past two years has passed the House but languished in the Senate. The program would allow delinquent taxpayers a grace period to pay taxes without penalties. A group of Republican fiscal conservatives in the Senate held up the measure, saying it would reward people for failing to pay taxes on time. Supporters of the bill argued the choice was between people paying up without penalty or not paying at all. 

Lawmakers also failed to pass legislation that would allow the state to collect taxes on Internet sales. Current law allows Missouri to impose such a tax, but it does not allow the Department of Revenue to collect it. That legislation would have given the state an additional $20-40 million annually.

Tax credits

One of the most explosive legislative issues in recent years has been the debate over whether to scale back Missouri's tax credit programs. In 2013, Missouri is expected to redeem $685 million in tax credits. There are 61 different tax credit programs in the state, varying from historic preservation to a credit for Missouri grape growers. 

In 2011, the Republican-controlled legislature failed twice to reach a deal on setting annual caps and mandatory expiration dates — known as "sunsets" — on tax credit programs. 

In the 2011 fall special session, the House and Senate were deeply divided over tax credits. The House wanted to create new tax credit programs for attracting data storage facilities, sporting events and a cargo hub at Lambert Airport.

To fund the new tax credits, the Senate proposed placing annual caps on how much money per year could be redeemed from existing programs. The Senate also insisted on sunsets for existing programs and refused to authorize a key part of the cargo hub plan. 

After two months in special session, lawmakers gave up without passing any tax credit legislation, which would have brought more revenue to the state. 

Cigarette tax

Another contested source of revenue has been whether to raise Missouri's cigarette tax, which is the lowest in the nation. An initiative petition to increase the tax is scheduled to appear on the November ballot, pending a legal challenge in the Supreme Court. 

The ballot measure would raise the tax rate to 90 cents per pack, up from the current 17 cents. The increase would generate an additional $283 million to $423 million annually. 

Democrats wanted the legislature to pass the tax increase so they could determine where the additional money would be spent. The initiative petition strictly requires that 50 percent of additional tobacco tax revenue be spent on K-12 education, 30 percent being spent on higher education and 20 percent on tobacco cessation programs. 

Legislation to increase the cigarette tax never reached the Senate or House floor, as Republicans said the tax would negatively affect the poor. 

What candidates are saying

Local candidates said they view higher education funding as a priority and a means to create jobs and grow the economy. Here's what they had to say about higher education spending and revenue opportunities:  

State Senate District 19

  • Incumbent Sen. Kurt Schaefer (R): As Senate Appropriations Chairman, Schaefer helped keep university budgets level for fiscal 2013. He said the state could boost funding for higher education by finding other areas in the budget to cut. He supports raising the cigarette tax because he wants people to quit smoking. 
  • Rep. Mary Still (D): She said higher education is the most important funding priority in Missouri. She has sponsored measures to raise the cigarette tax the past few years in the Missouri House and supports the ballot measure. She said we need a "better balance" on tax credit reform but does not see the current situation changing. 
House District 44

  • Ken Jacob (D): He said one of the main reasons he is running for office is to promote awareness of the need for more higher education funding. Jacob said revenue from the cigarette tax would be only a "marginal increase and unlikely to make a significant change in the quality of education." 
  • Caleb Rowden (R): He said education produces a highly skilled work force. Rowden said he would "probably not" support the cigarette tax, but he was still "open to discussion." He said he agrees with placing annual caps and sunsets on tax credit programs. 
  • Mike Becker (R): He said the state needs to shift gears on education and sponsor classes to provide technical training for the long-term unemployed. On the revenue front, Becker said tax credit programs should be reviewed every two years. Becker also supports raising the cigarette tax but said the revenue should be set aside as a medical trust fund to pay for smokers' future health care. 
  • Dennis Smith (R): He said funding higher education is an "extraordinarily high priority." On boosting state revenue, Smith said the state's tax base should be broadened to include more people. He said tax credits have been economically beneficial but have become a "slippery slope" and "larger than expected." Smith also supports raising the cigarette tax.  
  • Chris Dwyer (R): He said that if the state asks for certain things from a university, then it needs to provide proper funding, otherwise the "university can solve its own (financial) problems." He opposes the cigarette tax increase because he said it would hurt the poor. He said he opposes tax credits. 
House District 45

  • Rep. Chris Kelly (D): He could not be reached for comment. He has no primary or general election opponent. 
House District 46

  • Fred Berry (R): He said he "does not want to just throw money at the problem." He wants to look at the private sector for ways to save money and train workers. He does not support the cigarette tax increase and wants "comprehensive tax credit reform," eliminating the programs altogether. 
  • Rep. Stephen Webber (D): He said lawmakers need "to find other areas in the budget to cut" in order to boost funding for higher education. He said tax-credit reform must be examined but added Missouri would not see the additional revenue until seven or eight years from now because of the way certain programs are organized. Webber also supports raising the cigarette tax.
House District 47 

  • Mitch Richards (R): He could not be reached for comment. He has no primary opponent. 
  • Nancy Copenhaver (D): She said higher education and K-12 funding are a "package." She supports the idea of reevaluating tax credits on a regular basis and said "we need to quit giving money away." She also supports raising the cigarette tax. 
  • John Wright (D): He said it's important that the state keep its commitment to higher education funding. He said there should be sunsets on certain tax credit programs and called for reducing annual caps on those programs. He supports raising the cigarette tax. 

House District 50

  • Incumbent Rep. Caleb Jones (R) said he did not know if there is a good answer for an effective formula to fund higher education. Jones said that if cuts had to be made then "we need to make sure the cuts affect the students as little as possible."

Missourian reporter Matthew Patane contributed to this report.

Supervising editor is Scott Swafford.


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