MOHELA board members could face lawsuit
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MOHELA board members could face lawsuit

Date: September 11, 2006
By: Kathryn Buschman
State Capitol Bureau

JEFFERSON CITY-Attorney General Jay Nixon did not rule out the possibility Monday of filing a lawsuit to block the sale of the assets of the state's higher education loan authority.

Nixon was asked by reporters about his plans with MOHELA after a speech attacking the governor's idea to sell part of the program's assets to fund a statewide building construction program.

"The proposal not only ignores the purpose of MOHELA and circumvents the legislative process, it also ignores the long-established process for funding capital projects at out state colleges and universities," Nixon said in a speech at the Missouri Retired Teacher Association meeting. 

After the speech Nixon said that at least four out of the seven board members of the Missouri Higher Education Loan Authority could have potential conflicts of interest.  If all four were to recuse themselves, it would leave the board with one member short of a quorum. The board will meet again Sept. 27.

The governor's plan would involve selling $350 million worth of assets of the student loan authority over the next six years. The plan recommends $335 million toward capital improvement projects at state colleges and universities and that $15 million to go to the Missouri Technology Corporation to help commercialize new technologies in Missouri.  

Nixon cited by position rather than name the four MOHELA board members that he suggested could have potential conflicts of interest:

Nixon said that earlier this year, MOHELA board members who also served on the Higher Education Coordinating Board had recused themselves from voting on the the MOHELA-sale idea.

"They can make those choices themselves," Nixon said. "I'm just saying traditionally the CBHE people have recused on things where funding was coming to CBHE."

The board was scheduled to vote last Friday, but delayed the vote over potential lawsuit concerns. On the eve of the vote an attorney for MOHELA asked if board members could face lawsuits. Paul Wilson, an assistant to Nixon, told the attorney that members could be sued for violating their fiduciary duties or potential conflicts of interest, according to the chief spokesperson for Nixon's office.

A spokesperson for the governor's office said they are not worried about a potential lawsuit.  "The board's attorneys have reviewed the proposal and deemed it to be legally sound," Spence Jackson said. "One of the few people in the state who is against this proposal is Jay Nixon who is once again making comments he has no way of knowing are accurate."

Nixon was not clear if a lawsuit would come directly from his office. "There are various ways to deal with this, " Nixon said. "There are various outside interests that may or may not get interested."