Mo. Gov. Nixon proposes to tap university reserves

By DAVID A. LIEB

Associated Press

JEFFERSON CITY, Mo. (AP) — Gov. Jay Nixon wants five of Missouri’s largest universities to consider tapping their reserves to help plug a hole in next year’s state budget and avoid deeper cuts to the state’s higher education system.

Nixon’s proposal would call for the universities to provide the state $106 million from their reserves. The state would pay that money back to those specific universities in their operating budgets for the 2013 fiscal year, the governor’s budget director, Linda Luebbering, said Friday. Over the next several years, the state then would replenish the university reserves with money diverted from the Missouri Higher Education Loan Authority.

The net effect of the money transfers is that the universities would shoulder the burden of the state budget cuts in the short-term but would be made whole in the long run. Luebbering described the money shifting as only an idea, not a definite plan. Nixon, a Democrat, is expected to outline his official budget proposal to lawmakers in mid-January.

Luebbering said significant cuts will be necessary for the state fiscal year that begins July 1, because revenue growth is not expected to make up for the loss of about $750 million of one-time funding sources in the current budget, including the last remnants of the federal stimulus programs.

“We’re going to have another very challenging budget year in 2013,” Luebbering said. She later added: “The global economy has just taken longer to turn around than anyone would have thought a couple years ago, and the resources have just not caught up yet.”

Under the proposal discussed by Nixon’s administration with university officials, the University of Missouri system would be asked to take $62.3 million from its reserves; Missouri State University would supply $13.7 million and $10 million each would come from the reserves at the University of Central Missouri, Southeast Missouri State University and Truman State University.

The total of $106 million was intended to match the amount of money the Missouri Higher Education Loan Authority already owes to the state over the next several years for a college construction program enacted during the tenure of former Gov. Matt Blunt, Luebbering said. Instead of going to buildings projects, the money would be diverted to replenish university reserves. But the loan authority hasn’t made its recent installment payments on the construction program because of its own financial concerns and because Nixon’s administration and lawmakers have instead tapped MOHELA for tens of millions of dollars to help make up for funding cuts to college scholarship programs.

State lawmakers have expressed concern both about the substance of Nixon’s proposal and the fact that they were not initially kept in the loop about it.

The general details of the proposal were first reported Thursday by the Columbia Daily Tribune.

Sen. Jason Crowell, R-Cape Girardeau, told the Tribune he opposes participation in the money transfers plan by Southeast Missouri State University, which is in his district.

“Exactly when did university presidents become Jay Nixon’s payday loan officers?” he asked

House Budget Committee Chairman Ryan Silvey, R-Kansas City, called the plan ridiculous.

“The governor is looking for this scheme that avoids making tough decisions on cuts,” Silvey told the St. Louis Post-Dispatch. “Rather than balance the state’s budget, he wants to dream up new revenues sources which happen to be interest-free loans from our universities.”

Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia, has said the idea sounds like it may be “a Bernie Madoff-type Ponzi scheme.”

Schaefer, who was briefed on the plan Thursday by the governor’s staff, said he is willing to see whether an acceptable loan plan could be worked out. But he said many concerns would need to be addressed, including whether using university reserve funds for the state’s budget would hurt a university’s bonding capacity and wrongly divert money that came from private donations or student tuition.

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