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Nixon takes on directors of MOHELA in lawsuit

Nixon claims board members broke the law.
Wednesday, February 15, 2006 | 12:00 a.m. CST; updated 10:42 a.m. CDT, Friday, July 18, 2008

[NOTE: This article has been modified since its original posting.]

Attorney General Jay Nixon announced Tuesday that he will file a lawsuit against the Missouri Higher Education Loan Authority board of directors alleging violations of state law governing open meetings.

“Public business, particularly a matter of this magnitude, cannot be done in secret,” Nixon said in a prepared statement. “MOHELA’s actions took place without the transparency that the Sunshine Law requires.”

According to the statement, the violations took place from Jan. 20 to 31, the day the MOHELA board formerly voted in an open meeting at the governor’s office to fund Gov. Matt Blunt’s $450 million initiative for campus construction projects and scholarships.

The board announced after the meeting that in order to fund the initiative, it would sell $2.4 billion in student loans — or about half of the loan agency’s assets.

The governor’s office declined to comment on the lawsuit.

Earlier Tuesday, the attorney general’s chief of staff and a senior attorney from the office told senators at an Education Committee hearing that they are concerned about the proposed sale.

Chief of Staff Paul Wilson noted that the open meeting at which the board of directors adopted the resolution lasted fewer than five minutes and involved no discussion.

“The reason that the meeting was so short was because, as the witnesses testified last Thursday, they had to finish the meeting and adopt the resolution before the governor’s previously scheduled press conference announcing that they had done so,” Wilson said.

Missouri’s Sunshine Law requires that all governmental agencies and officials hold meetings that are accessible to the public, even if the meetings are conducted by telephone or through the Internet.

Wilson said the loan agency, established by the General Assembly in 1981, had been fulfilling its mission to provide affordable assistance for Missourians studying in universities, community colleges and trade schools across the state.

“The current very sketchy, untested and unscrutinized proposal is a dramatic departure from their very successful business plan that has served an essential need for Missourians,” he said.

Nixon held a public hearing on the proposed student loan sale with MOHELA’s executive director and chairman Feb. 9 at St. Louis Community College. Nixon said in his opening speech that the attorney general’s office has scrutinized “dozens, if not hundreds” of sales involving nonprofits.

But the Education Committee’s chairman, Sen. Gary Nodler, R-Joplin, said about Nixon’s lawsuit, “His motivation is clearly political.” Nodler asked why the attorney general did not show similar concern in December when three curators for the University of Missouri System alleged that that board had violated the Sunshine Law.

“The attorney general uses selective indignation,” Nodler said.

In the lawsuit, Nixon will ask the court to void any actions taken during MOHELA meetings that violated state law and force the board of directors to open up any proposals to sell its assets to public discussion.

At Tuesday morning’s Senate hearing, UM System President Elson Floyd joined other state university leaders in a chorus of support for the sale of the $2.4 billion in MOHELA student loans.

Floyd noted that universities had not seen a significant increase in capital funding in five years, although they had counted on capital increases every couple of years in the past.

“The needs are still there,” Floyd said. “The Lewis and Clark Discovery Initiative would provide a one-time infusion of funds to help catch up on our highest capital priority needs.”

In addition to the higher education leaders, MOHELA’s executive director, the director of the Department of Economic Development and a higher education commissioner also testified at the Senate hearing in support of the initiative.

The governor’s plan would direct the $450 million profit expected from the sale of half of MOHELA’s assets to fund $300 million in building projects, $100 million in scholarships, $20 million in endowed professorships, $5 million to entice techonology companies to move closer to campuses and $25 million in unspecified initiatives.

MU Chancellor Brady Deaton also attended to voice his approval of the governor’s plan. MU would get the largest share of the money earmarked for construction, with $87.5 million to help fund the building of a health sciences center.


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