Analysis: Student loan agency still a cash target
The idea was creative and controversial: Missouri could take
money from its student loan authority to help finance the
governor’s agenda for higher education.
When the idea came from Republican Gov. Matt Blunt, it was
denounced by then-Attorney General Jay Nixon, a Democrat with his
own aspirations for the governor’s office.
Now entering his fourth year as governor, Nixon is the one
thinking of taking of money from the Missouri Higher Education Loan
Authority to help finance higher education institutions. Perhaps
it’s no surprise that the idea has been just as controversial when
floated by Nixon’s administration as it was when he opposed it.
Whereas Blunt forged ahead with his plans to target the
treasurers of MOHELA for a college construction boom _ and
ultimately was successful in enacting legislation _ it remains to
be seen whether Nixon actually will incorporate the latest idea
into his State of the State address in January. If he does, it’s
likely that some of his own words will be used against him.
Nixon initially remained silent when Blunt outlined a plan in
January 2006 to sell MOHELA for a projected $425 million in order
to finance construction on college campuses, fund scholarships,
endow professorships and commercialize university research. But
when the MOHELA board endorsed a revised plan a few days later _
offering to sell half its assets to generate $450 million over
several years _ Nixon quickly began raising concerns about the
“troubling lack of transparency.” He then sued MOHELA, claiming it
violated the state’s open meetings law in its rush to develop and
approve an alternative to Blunt’s plan.
Blunt’s proposal got bogged down in the Legislature and court
and underwent numerous revisions. As the MOHELA board prepared to
vote on one of those drafts in September 2006, Nixon sent the
agency a letter blasting the “ill-conceived” plan and suggesting it
might be illegal for a variety of reasons.
Legislators ultimately passed a bill in May 2007 that directed
MOHELA to pay $350 million to the state over several years to
finance dozens of building projects at public colleges and
universities. Nixon sent Blunt a letter urging him to veto it.
“Hundreds of millions of dollars are being raided from the
state’s trust fund for low-cost student loans, and the real needs
and concerns of students and their parents have been ignored,”
Nixon wrote in a letter dated May 22, 2007. Nixon went to assert
that “every penny” MOHELA has “should be used to benefit students
in the form of low-cost loans.” Yet legislation results in “the
confiscation of MOHELA’s assets,” Nixon said at a later point in
the letter.
Blunt disregarded Nixon’s concerns, signed the bill into law,
and traveled the state promoting it.
A few months later, MOHELA made an initial $230 million payment
to the state. That money has helped repair and construct various
buildings on college campuses. But it wasn’t long before the loan
agency encountered financial strains because of a national credit
market crisis and changes in federal student loan policies. The
MOHELA board decided in 2008 to exercise a clause in the new law
that allowed it to skip its state payments if making them would put
the agency at financial risk.
The student loan agency has continued to postpone its payments
on Blunt’s college construction plan. Since Nixon took office in
January 2009, he has scuttled legislative attempts to direct money
toward the building plan, often citing the tight state budget.
Nixon has, nonetheless, tapped MOHELA to provide tens of millions
of dollars to offset a portion of his budget cuts to college
scholarship programs.
All that served as background for Nixon’s latest idea, which
leaked out in December after it was shared with some university
officials. The idea _ which Nixon’s administration says is not firm
enough to be a plan or proposal _ would call for five of the
state’s largest universities to transfer $106 million from their
reserves to the state so that Missouri could avoid making deep cuts
to the core budgets for higher education institutions in the 2013
fiscal year. The university reserves would then be replenished over
several years with money from MOHELA.
Nixon’s budget director, Linda Luebbering, explained that the
$106 million figure was intended to match the amount MOHELA already
owes under Blunt’s college construction plan. The money would
instead be diverted to Nixon’s university financing plan.
Nixon spokesman Sam Murphey said there was a significant
difference between Blunt’s plan and Nixon’s idea. The implication
was that Blunt’s plan altered MOHELA’s mission whereas Nixon’s did
not.
“This was one preliminary idea being discussed at the staff
level to preserve base funding for colleges and universities while
also maintaining funding (for) student scholarships,” Murphey said.
“That is a priority fully consistent with the purpose of
MOHELA.”
Ken Warren, a political science professor at Saint Louis
University, says Nixon’s idea to tap into MOHELA’s money
illustrates a couple of political realities.
One: “It’s always been common for politicians to flip-flop,”
Warren said.
He cites the example of President Barack Obama’s pledge as a
candidate to close the Guantanamo Bay terrorist detention facility,
contrasted with the fact that it remains open today, because Obama
was unable to secure support for placing the suspected terrorists
anywhere in the U.S.
That leads to Warren’s second point: “It’s often been said that
there’s a big difference between being a candidate and being the
officeholder.”
___
EDITOR’S NOTE: David A. Lieb has covered state government and
politics for The Associated Press since 1995.
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