ST. LOUIS — Gov. Matt Blunt is scaling back his latest proposal to finance a university construction boom with the proceeds of Missouri’s student loan agency.
Blunt spokesman Spence Jackson said Wednesday that the $450 million plan outlined just a few days ago will be trimmed to $350 million — a move intended to further ensure the financial stability and support of the Missouri Higher Education Loan Authority.
Under the proposed agreement, the quasi-governmental student loan agency would transfer $350 million to the Missouri Department of Economic Development during the next six years. That money then would be passed on to colleges and universities.
A cooperative agreement dated Monday also called for MOHELA to transfer an additional $100 million to the state, as long as MOHELA determined the payments would not harm the services and benefits it provides to Missouri students and residents.
That final $100 million payment is being dropped from the agreement, Jackson said.
“This will give MOHELA one less payment to worry about,” he said, and thus one more reason for its governing board to approve the plan.
The agreement also will be amended to specifically list the dozens of campus construction projects that would be funded through the MOHELA proceeds, Jackson said.
Blunt’s “Lewis and Clark Discovery Initiative” has been in flux since he outlined it in January. The amount of MOHELA’s assets to be sold has declined. And the variety of initiatives the money would fund also has been whittled down from what was being considered during the legislative session.
Additionally, the method of transferring the money to the state has changed since January — from a straight payment to one now contingent upon the state’s promise to provide MOHELA 11 years of tax-free bonds to continue underwriting student loans.
That pledge would come from the Department of Economic Development, and MOHELA would make its payments to the department’s Missouri Development Finance Board, which would distribute the money to higher education institutions.
The agreement allots $335 million for construction and equipment improvements at universities and colleges and $15 million to an endowment that would help commercialize university research. The agreement contained no specific plans for spending the final $100 million payment or any specific timetable for MOHELA to make it.
“Instead of leaving $100 million in limbo or putting extra pressure on MOHELA to find a way to generate that $100 million whenever we didn’t have specific uses for it spelled out, it was better to drop that out of the package,” said Mike Mills, the deputy director of the Department of Economic Development.
Plus, “it allows them less pressure on their solvency,” Mills said.
The executive director of MOHELA, Raymond Bayer Jr., said Wednesday that there had been some concerns from people outside his agency about the lack of details for how the $100 million would be generated and spent. But Bayer said MOHELA had no concerns that the additional $100 million payment would have threatened its financial security.
As of the end of June, MOHELA owned about $5.2 billion in loan principal — about 45 percent of which involved Missouri students or residents. A portion of those loans would be sold to generate the money for the state.
While the Republican governor’s administration sought to weed out potentially objectionable provisions of the agreement, some Democrats continued to criticize it Wednesday.
State Auditor Claire McCaskill added her disapproval to the previously expressed concerns of Attorney General Jay Nixon and some Democratic legislators.
McCaskill expressed concerns about the proposed pledge to not only provide MOHELA $130 million of bonding authority this year, but to commit at least $100 million in bonding authority for each of the next 10 years. The Economic Development department has not previously entered into such long-term agreements.
“They are proposing to commit future administrations,” McCaskill said. “That’s unprecedented. I don’t believe Governor Blunt has the authority to commit future administrations.”
As drafted, the plan would not need any legislative approval — a point with which McCaskill also took issue.
Some of the university building projects are sorely needed, she said, “but just because there’s a need doesn’t mean you get to circumvent a democracy. This is an end run that is not healthy for the process of spending public money.”