Blunt, legislative leaders agree on new MOHELA plan

JEFFERSON CITY, Mo. -- Gov. Matt Blunt and legislative leaders have agreed on a new university construction plan that would be financed through the sale of $350 million worth of student loans, The Associated Press has learned.

The agreement, outlined Saturday by Blunt administration officials, comes just three months after the governor's original higher education funding plan failed in the legislature.

The new approach still involves the sale of loans held by the Missouri Higher Education Loan Authority. But instead of transferring those proceeds to the state -- or even directly to universities -- the money would pass through Missouri Development Finance Board.

Blunt's administration and MOHELA's executive director both said Saturday that the plan has been cleared by their lawyers, in hope of avoiding the legal concerns that surrounded the prior plan.

More details of the plan were to be announced Monday, said MOHELA's executive director, Raymond Bayer Jr. The next board meeting of the higher education loan agency is scheduled for Sept. 8.

Under the new plan, no legislative approval would be required to use proceeds from the loan sale for university construction.

The plans calls for $313.9 million from MOHELA loan sales to be divided among 22 construction projects at Missouri's universities and colleges -- following the same blueprint as contained in the failed legislation. An additional $18 million would be distributed to community colleges; $15 million would go to an endowment to help spin off university research into commercial products; and $3.4 million would be used to replace equipment at the University of Missouri-Kansas City School of Dentistry.

An agreement among Blunt, House Speaker Rod Jetton and Senate President Pro Tem Michael Gibbons also calls for the Legislature to appropriate $10 million annually for a new scholarship program. An additional $10 million in state revenues would be spent on health clinics that serve the poor and uninsured, $2.4 million would go to health care scholarships and $1 million would go to Area Health Education Centers.

The new state spending would be considered when the Legislature convenes in January.

A disagreement among House members and senators related to the proposed general scholarship program led to the demise of Blunt's "Lewis and Clark Discovery Initiative" in May. At the time, Blunt's office said it would instead pursue the transfer of MOHELA loan sale proceeds directly to universities, leaving the Legislature out of the mix.

But discussions continued among the governor's office, legislators and lawyers for MOHELA, leading to the latest proposal.

Blunt's office provided the AP a copy of a document prepared by attorney David Queen, of the firm Gilmore and Bell. The memo outlines a proposed cooperative agreement with MOHELA in which the student loan agency would receive at least $1 billion in bond allocations over a 10-year period from the Department of Economic Development in exchange for its funds. The memo says the agreement would mark a first, because no state board has ever received a multiyear commitment.

A Department of Economic Development official said Saturday that MOHELA would either provide the proceeds of its loan sales to the Missouri Development Finance Board, or would sell the loans to the finance board, which in turn would resell them. The money would go from there to the universities.

Bayer confirmed that those concepts had been discussed. He also said he had received a letter Friday from Blunt, Jetton and Gibbons pledging their support for the plan to finance higher education projects with MOHELA proceeds.

"The lawyers believe that the concept they've developed works and is legal," Bayer said. "That is a big step."

Gibbons and Jetton could not immediately be reached for comment Saturday evening.

Blunt spokesman Spence Jackson also confirmed details of the plan.

"It's a tremendous accomplishment for Missouri college students and their universities," Jackson said, "and it is one that will have a landmark impact on our state's higher education institutions and our economy for years to come."

The plan does not include everything originally proposed, however. For example, Blunt had proposed in January that some of the MOHELA proceeds would go toward endowed professorships. The House had wanted some of the money to go toward state debt reduction, and the Senate had wanted more money to go toward health care.

As it evolved in the Legislature before it ultimately failed, Blunt's previous plan would have used the sale of MOHELA assets to spend $478 million. Nearly $332 million of that would have gone to construction at universities and community colleges. It also included $80 million for health care, $50 million to pay down the state debt and $15 million to help commercialize college research.