Crticism surfaces on governor's MOHELA plan
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Crticism surfaces on governor's MOHELA plan

Date: August 28, 2006
By: Kathryn Buschman
State Capitol Bureau

JEFFERSON CITY - The chairman of the Missouri Democratic Party and some Democratic lawmakers are raising concern over the governor's latest plan to sell the state's college loan program.

"Everybody skipped over the question of what is this going to do to student cost of their education? Is this going to drive them up or is it going to continue to keep them low? Or is the answer somewhere in between and if it is, why is nobody giving us a square answer on this? Those are the things that still remain unanswered," said Roger Wilson chairman of the Missouri Democratic Party.

Missouri Democratic Party spokesman, Jack Cardetti, also raised concern over the plan. He said MOHELA told the governor earlier this spring they needed legislative approval to authorize the selling of the loans.

"By haphazardly going through with a plan that does not include the legislature they are putting this whole deal at risk and putting students that have MOHELA loans at risk, and that's a real problem."

The governor's plan involves spending $350 million worth of assets of the student loan authority. The plan recommends $335 million toward capital improvement projects at state colleges and universities and $15 million to go to the Missouri Technology Corporation to help commercialize new technologies in Missouri.

Sen. Chuck Gross,  R-St. Charles, and chair of the Appropriations Committee, said he thinks the new plan is on solid ground because it seems to be legal and is exactly what the Senate had proposed last legislative session. But added, "It does to a degree break the precedent that the appropriation of money is reserved exclusively for the legislature."

MOHELA's interim director had questioned as late as this April whether the board had authority to sell off its assets without legislative authority. 

 In an April letter to Gov. Blunt, Raymond Bayer, Jr., wrote : "MOHELA has been advised by experienced Missouri law firms that state law does not, as clearly as necessary for a transaction of this magnitude, authorize the transfer and use of the funds contained in the Plan."

At issue is a provision in state law governing assets of the loan authority: "The proceeds, fees, and revenue shall remain under the exclusive control and management of the authority..."

During the last legislative session, some lawmakers argued that section in the law needed to be amended before the authority could give it's assets to another agency in the government.

But Speaker of the House, Rod Jetton, R-Marble Hill, said that legal concern would be addressed by using the Missouri Development Finance Board as a conduit for the money from the board to the schools.

Instead of going directly to the universities, the money generated from the sale of the loans would go through the Missouri Development Finance Board and then distributed to schools.  

"There was some concerns on without legislative approval if MOHELA could [be sold]," said Jetton. "I think that's when the attorneys looked at this and came up with the conclusion that if it would go from one non-for profit entity, which MOHELA is, to another, which the Missouri Development Finance Board is, then it would be legal to give the money straight to the universities."

However, Wilson said having the money funneled this way is a wrinkle in the plan. "Are they still going to spend it on higher education projects or is this going on other projects? Nobody's answered that and that is something that kind of jumped off the page at me."  

Sen. Joan Bray, D-St. Louis County voiced similar concerns and said she is curious to see how the money gained from the sale of the college loan program would be used. "Huge sums of money going to state activities not being appropriated [be the legislature] and it is sort of startling," she said.  

Senate Pro Tem Michael Gibbons lent his support for the governor's plan and said, "There's been a lot of lawyers studying this question and I think there's a great confidence that the use of money as it has been proposed by Governor Blunt is in fact legal."

House Minority Floor Leader, Jeff Harris-D-Columbia, said he was surprised with the lack of attention given to the plan.

 "It is a little strange, " he said. "Governors have press conferences for state apple day, governors have press conferences pretty frequently-they're politicians like everyone else. It is strange that this governor chose to basically sort of  leak this thing out there on a weekend as opposed to gathering everyone in his office and looking them in the eye and tell them this is our plan and this is why we think it is a good one."

Sen. Chuck Graham, D-Columbia also voiced concerns that the governor did not have the authority to sell the state college loan program and that selling the student's loans would create higher interest rates for future students and unnecessarily burden them with higher costs.