3 Depart Board as Key Vote Looms

Multiple resignations are the latest predicament for the proposal. One spot has been filled.
By KIT WAGAR, The Star’s Jefferson City correspondent

Gov. Matt Blunt’s staff was scrambling Tuesday after three board members resigned from Missouri’s student loan agency days before a vote on whether to give the state $350 million.
The loss of three people from the seven-member board of the Missouri Higher Education Loan Authority raised doubts about Blunt’s plan to use the agency’s money to pay for a building spree at college campuses. Four affirmative votes would be needed to approve the plan, but one board member is on record as opposing it.

The board is scheduled to consider Blunt’s plan on Sept. 27. Blunt moved to plug one hole Tuesday by appointing St. Louis banker Tom Reeves to serve the last 33 days of an unexpired term on the board. But officials conceded that they have no way of knowing whether Reeves will feel comfortable voting for a multibillion-dollar transaction at his first board meeting.
The multiple resignations were the latest twist in the saga that has gripped the loan authority since January, when Blunt first proposed selling the agency to raise money for life sciences buildings and other improvements at state universities.

Blunt has touted the plan as a way to improve university research and the educational opportunities for Missouri students. But critics — most notably Attorney General Jay Nixon — have called the plan an illegal diversion of funds that would ultimately increase the cost of college for Missouri students.

The latest predicament arose Monday when two loan authority board members resigned. Charles McClain automatically was off the board when he cited health reasons for stepping down as commissioner of higher education, effective at the end of this week.

Marilyn Bush, an executive with Bank of America in St. Louis, cited the upcoming vote on Blunt’s plan as the reason for her resignation. Bush wrote that since her term would expire next month, she wanted to “allow a new member who would serve on the board for the next four years to be given the opportunity to consider and vote on this matter.”

And James Ricks, a management professor at Southeast Missouri State University in Cape Girardeau, resigned Tuesday. His resignation letter was not available, but he previously had indicated he would probably abstain from voting because his employer would receive some of the benefits from the plan.

Blunt’s office announced Tuesday afternoon that the governor had appointed Reeves to replace Bush. Reeves is president of Pulaski Bank, based in Creve Coeur. By law, two of the agency’s board members represent lending institutions.

Raymond Bayer Jr., the loan authority’s executive director, said he set aside four hours today to meet with Reeves and go over Blunt’s plan in detail. Bayer said the loan authority’s management team has endorsed the plan, but the final decision lies with the board.
“I’m going to give Reeves a mountain of paperwork and provide him with everything he needs to make an informed decision,” Bayer said. Like all board members, Reeves will “need to look at the proposal and vote in the best interest of MoHELA,” Bayer said.

The new funding plan requires the loan authority to pay the state $30.3 million immediately and an additional $180 million within six months. That would be followed by payment of $140 million in quarterly installments for six years.

The state would use the money to build research facilities and business incubators at state universities, including an $85 million health sciences center at the University of Missouri-Columbia and $18.4 million for new buildings and equipment at the University of Missouri-Kansas City.

Only one board member, retired banker John Greer from Marshfield, Mo., has publicly opposed the plan. He said Tuesday that the diversion of funds into university building projects violated the loan authority’s mission, which is to provide low-cost loans to college students.
“This is a money-grab, the biggest money-grab I’ve ever seen,” Greer said, comparing it to the robbery of a Brink’s armored car. “Tax money should go for buildings, not MoHELA money.”
The plan might be good for the state, but it would not be good for the loan authority or for college students, who would see higher interest rates and fewer loan-forgiveness programs, he said.

“They say they are doing these building projects without raising taxes,” Greer said. “But someone is being taxed — it’s the students … It will mean less loan forgiveness for students who were called away and are now fighting in Iraq. We always had plans to increase those programs, and there is no way this plan won’t affect that.”

To reach Kit Wagar, call (816) 234-4440 or send e-mail to kwagar@kcstar.com.