Senator's bill would complete capital improvement projects and reduce tuition

JEFFERSON CITY - Money from the 2007 sale of MOHELA assets would bolster a higher education tuition reduction fund and still be given to certain capital improvement projects at state colleges and universities if a Senate bill receives favorable action this legislative session.

The bill, proposed by Senate Democratic Floor Leader Victor Callahan, would first channel revenue from the Missouri Higher Education Loan Authority toward capital improvement projects. As designated by former Gov. Matt Blunt in January 2007, $350 million of MOHELA's revenue would go toward the Lewis and Clark Discovery Initiative Fund in $5 million quarterly payments over six years. These funds would help finance 31 capital improvement projects at 14 state universities and the Coordinating Board for Higher Education.

But under Callahan's bill, the $119 million remaining in MOHELA's funds would go toward only those capital improvement projects begun on or by Jan. 1. The remaining money would be transferred to what Callahan calls the "Missouri Higher Education Tuition Reduction Fund."

Callahan announced his bill on Thursday, the day after Gov. Jay Nixon's office suspended funds for several of the 31 capital improvement projects and placed the other projects' funds under review. But Callahan said his bill is not related to Nixon's administration's placing those projects on hold.

"I have not had any discussions directly with the governor," Callahan said. "This is just a concept I've actually had about MOHELA from the beginning of the MOHELA legislation.

"My view was, if we were going to sell the assets, make it a self-sustaining system where you use it toward tuition reduction. This is an attempt, after several of the capital projects have begun, to stop the other capital projects and use and create a fund for the curators to reduce tuition."

Callahan said he ultimately supported the sale of MOHELA but disagreed with Blunt over where money from the sale would go. While the Blunt administration sent money toward capital improvement projects, Callahan wanted to see funds go toward tuition reduction. Now that Blunt is gone and Nixon's support for higher education has come across clearly in his recommendation that the sector not receive any budget cuts for fiscal year 2010, Callahan said he saw an opportunity to move for an emphasis on tuition reduction.

"I was unsuccessful in convincing the Blunt administration to spend it (revenue from the sale of MOHELA's assets) on tuition reduction," Callahan said. "They went with capital projects. I'm hoping to have that dialogue again. And if anyone has a better idea, I'm certainly open to it."

But any funds going toward tuition reduction would be leftovers after appropriations to certain capital improvement projects are designated. According to the bill's language, Lewis and Clark funds already provided by MOHELA would first go to capital improvement projects provided that "actual construction of such capital projects has begun on or before January 1, 2009."

When asked if "actual construction" refers to signed contracts or the beginning of physical construction, Callahan said that part of the bill has not yet been refined.

"We're trying to perfect this part of it," Callahan said. "If there's a project that's gotten a green light, particularly if a contract has been awarded, we don't want some subcontractor or contractor who's already been awarded a contract -- they should complete the project. What we're trying to capture is the projects that are on the list but haven't gotten too far, that haven't started construction. We're not going to stop a contract that's already under way."

Budget Director Linda Luebbering, who had not heard of Callahan's bill until Monday evening, said Callahan needs to evaluate the amount of money left in the Lewis and Clark fund and "make sure that whatever he's proposing is consistent with the amount of money that's actually available."

Regarding the financial feasibility of Callahan's bill, Luebbering questioned the use of the word "begun" in the bill's language about the capital improvement projects and the Jan. 1 cut-off date. According to a project status list released by the Budget Office, most of the capital improvement projects have already enjoyed a total expenditure nearing $129 million, with $227.5 million remaining in appropriations and funds not yet received.

"Depending on what he's using as the 'begun,' most of the projects have had some spending," Luebbering said. "The only ones that haven't are the ones that were suspended. If he's talking about funding every single one that's had at least some spending, there's not enough money. So even the projects that have begun and had a small amount of spending -- we can't afford all of them."

In addition to not being able to support those projects, the fund would not have enough money left for a tuition reduction fund, Luebbering said.

"The key is, there's more projects, there's more potential spending than we have available," Luebbering said. "And so something has to give."

Callahan said his office has yet to do detailed number-crunching on which projects would be affected by the bill, as well as what the appropriations, expenditures and other capital collections look like. Although he does not know specifics yet, Callahan said he hopes to see tuition rates go down by anywhere from 5 to 10 percent, given the combination of his own bill and Nixon's recommended tuition freeze.

"Bottom line is, one way or another, what I think this legislature needs to understand is (that) higher education is getting beyond the grasp of the middle class," Callahan said. "We have to make it affordable, and we have to take very affirmative steps -- like a freeze in tuition rates but also reducing tuition and making college affordable."

Another senator brought up the Lewis and Clark fund in the Senate chamber on Monday afternoon.

Sen. Wes Shoemyer, D-Clarence, announced a resolution suggesting that money from a federal economic stimulus package should first go toward uncompleted capital improvement projects under the Lewis and Clark fund. Shoemyer said his resolution is not related to Callahan's bill and is instead a response to the Office of Administration's suspension and review of funds last week.

"We made all these promises and said all these things that we were going to do, but we did not have the money to do it," Shoemyer said of the Lewis and Clark fund. "So that's why I want to make sure that stimulus moneys, when they came down, that they finish the promise that we made through the Lewis and Clark Initiative."

Shoemyer said he does not know how much money to expect from the federal government but that regardless of the amount of funds, the completion of projects should come first.