Blunt’s plan advances to next round

CHESTERFIELD ­­— Gov. Matt Blunt’s appointees prevailed in a divided vote Wednesday as Missouri’s student loan authority endorsed his plan to siphon $350 million from the agency to finance college construction projects.

The 4-2 vote by the Missouri Higher Education Loan Authority capped eight months of wrangling that began when Blunt initially proposed an outright sale of the 25-year-old student loan agency.

The new deal would allow MOHELA to keep operating but would transfer a bulk of its profits and sell billions of dollars worth of loans to finance Blunt’s initiative.

Although significant, Wednesday’s vote was not the final word. For the plan to go forward, it still needs approval from state lawmakers when they convene in 2007. Blunt conceded to that contingency to pacify fears of a potential lawsuit against MOHELA board members by Attorney General Jay Nixon, who contends the plan is illegal and ill-advised.

Blunt’s supporters on the MOHELA board touted the plan as a great way to improve the quality of education offered to Missouri students while also boosting the economy. But opponents worried that by diminishing its assets, the student loan agency could be less effective in the future in providing low-cost loans to Missouri students.

All four of the board members voting for the plan had been appointed by Blunt, two of them within roughly the past week. The two opponents had been appointed by Blunt’s Democratic predecessors.

After the vote, Blunt commended the MOHELA board “for recognizing the countless benefits” the plan “has to offer our students and our state, including jobs for working families.”

“The initiative provides much needed support for our schools,” the Republican governor said.

The vote occurred after about one hour of discussion at MOHELA’s Chesterfield headquarters, where an entryway sign declares: “MOHELA’s mission is to eliminate barriers to students so they can access higher education.”

Nixon said the vote ran contrary to that mission.

“Clearly college will be more expensive and the debt load will be more” as a result of MOHELA using money for buildings instead of student loan programs. “This does nothing to lower the cost of college education,” he said.

Nixon’s warnings of a potential lawsuit led the MOHELA board to postpone a scheduled Sept. 8 vote. Three of the seven board members subsequently resigned and Blunt quickly picked replacements for the two positions he controlled. Then on Monday, Blunt agreed to send the deal to the legislature because of Nixon’s warnings.

Given the board turnover and legislative contingency, Nixon said Wednesday that he will not sue MOHELA before lawmakers have a chance to consider the plan. While Nixon urged legislators to defeat it, Blunt expressed confidence they would pass it.

To take effect, the deal would need the enactment of legislation “approving the performance of the obligations contained” in the agreement. The exact form of that legislation remains unclear.

The deal also would be contingent upon legislation stating that MOHELA board members who are employed by a state educational institution or who also serve on the Coordinating Board for Higher Education did not have an illegal conflict of interest in voting for the plan. Nixon had claimed they could.

Among those opposed to the plan was MOHELA chairwoman Karen Luebbert of Chesterfield, who acknowledged a need for campus buildings but cited rising tuition costs that are making it more difficult for Missourians to attend college, thus creating a greater need for student loans.

Under Blunt’s plan, the quasi-governmental student loan agency would pay $350 million over six years to the Missouri Development Finance Board, which then would pass $335 million of that on to public colleges and universities for new and improved buildings — many of which would relate to the life sciences. A smaller portion, $15 million, would go to the Missouri Technology Corp. to attract high-tech businesses and spin off university research into commercial products.

In exchange, the Department of Economic Development would provide MOHELA $1.1 billion to $1.8 billion in tax-exempt bonding authority over 11 years, which MOHELA would use to underwrite additional student loans.

As part of the agreement, the University of Missouri System would pledge to consider increased use of MOHELA loans and Blunt’s administration and the universities would support legislation to expand MOHELA’s authority to initiate loans.

Board member John Greer of Marshfield, who opposed the plan, said the latter two pledges amounted to nothing and there was no way to guarantee future administrations would follow through on the “loose promise” of continued tax-exempt bonding authority.

The deal “could be a disaster for MOHELA,” said Greer, who also questioned why the board had not first received any independent analysis of the agency’s ability to fund the plan.

“I’m confident it will not impact the interest rates we offer to students,” said MOHELA Executive Director Raymond Bayer Jr. , or “the loan reduction programs we offer.”