- Legislative Update - https://www.umsystem.edu/newscentral/legislative-update -

July 8, 2013

Nixon sends tax cut measure back to the legislature

Citing concerns over potential revenue shortfalls that would impact higher education and other services, Governor Jay Nixon vetoed a major tax cut measure on June 5.  HB 253 [1], sponsored by Rep. T.J. Berry (R-Kansas City), would reduce personal and corporate income taxes over a 10-year period and also include a tax amnesty proposal and other provisions.  The fiscal note called for an expected impact of about $800 million, although other groups have put it as high as $1.2 billion.

Lawmakers passed the plan in response to a proposal adopted last year by Kansas that many fear will result in job losses for Missouri. But Kansas is already seeing impacts on higher education funding due to its tax cuts and the resulting budget shortfalls, including tuition increases at public institutions that are in some instances more than four times the CPI.

To see Nixon’s veto letter and more details behind his plan, click here. [2] He has continued to outline problems with the bill since the veto, including the fact that it eliminates a sales tax exemption on prescription drugs and college text books.

Republicans may attempt to override Nixon’s veto during the annual veto session September 11. Both chambers would have to pass a motion by at least a two-thirds majority to override the Governor’s action. Although the Senate passed the tax cut bill by a wide margin, it did not pass in the House by the required 109 votes that would be needed for an override.

UM President Tim Wolfe commented on the veto during the June Board of Curators meeting, saying he is “not opposed to tax cuts as long as we are completing the equation by finding revenue elsewhere or identifying where cuts would be made to make up for the decrease in general revenue. But that’s not what is happening with House Bill 253. The ramifications of not completing the equation could be dramatically increased tuition, additional cuts in our workforce, decreased wages, and even enrollment caps if enacted.  These are not the kinds of choices we want to make for the University of Missouri System. These are not choices that help Missouri build its future workforce and increase the percentage of adults who have a college degree.”

Council on Public Higher Education part of coalition supporting tax cut veto

Higher education organizations are among those joining the Coalition for Missouri’s Future in an effort to support the Governor’s veto of the tax cut bill (HB 253 [1]).  The Coalition includes the Council on Public Higher Education (COPHE), the organization representing all public four-year institutions of higher education, as well as the Missouri Community College Association.

Coalition members are organizing informational meetings across the state to share concerns about the tax cut bill and to encourage supporters to talk to lawmakers about voting against a veto override in September.  For more information about the Coalition and its information on the tax cut bill, go to http://www.missourifuture.org/ [3]

Governor Signs Budget Bills

On June 28, Governor Jay Nixon signed the FY 2014 budget bills, including HB 3, which contains higher education funding.  The Governor made expenditure restrictions across the state budget totaling $400 million, including a 4 percent withhold to higher education institution operating budgets. His reasoning for the restrictions revolves around concerns over a possible override of his veto of the tax cut bill and the revenue shortfalls that may result.

For the University of Missouri System, the 4 percent core restrictions are the equivalent of $15.7 million. University-related items, such as the Missouri Kidney Program and the State Historical Society  also were withheld by 4 percent. In addition, the Governor withheld  $10 million for the MU School of Medicine cooperative program with Springfield, and $1 million appropriated for the MU large animal veterinary program.

The Governor did not impose a withhold on the $25 million in new funding, to be distributed based on the number of performance measures an institution meets. The University of Missouri System, which met all of its performance measures, stands to receive $12.4 million of that amount.

In his statement [2], Nixon expressed concern about HB 253, which reduces a number of state taxes.  The Governor vetoed the bill on June 5. The tax cut proposal is estimated to reduce state revenues by as much as $800 million.  He indicated that he would release most of the expenditure restrictions if his veto is not overridden at the September 11 veto session.

Final FY 2013 Revenue Results Announced

State Budget Director Linda Luebbering announced final revenue numbers for FY 2013 on July 3rd.  Net general revenue collections increased by 10.1 percent compared to 2012 and net general revenue collections for June 2013 increased by 7.2 percent compared to those for June 2012.  For more details, go to the Office of Administration news release here [4].

Governor signs Extension districting proposal into law

MU Extension now has the statutory authority to form single- or multi-county Extension funding districts after Governor Jay Nixon signed HB 542 [5] into law on July 2.  The language was a priority for the University of Missouri and the State Extension Council and was incorporated into the omnibus agriculture bill through an amendment by Senator David Pearce (R-Warrensburg) who sponsored the original Extension districting bill, SB 9 [6].  That bill was vetoed by the Governor after it was amended to include several other proposals, including a controversial section related to foreign ownership of land.

HB 542 [5], sponsored by Rep. Warren Love (R-Osceola), included a number of less controversial proposals that were supported by the agriculture community. Pearce, along with Rep. Bill Reiboldt (R-Neosho), championed the language this session to help Extension operate with more efficiency and streamline programming across county lines. The legislation also allows formed districts to put local property tax questions on the ballot to support local programming.  This is an important tool in some areas of the state where counties are having difficulty providing their required financial support for local Extension operations. The legislation was patterned after several other states that have formed funding districts in the past.

Public Four-Year Institutions agree to funding formula distribution

The Council on Public Higher Education announced in June that its members, including the University of Missouri System and its four campuses, came to an agreement on a new distribution formula for state funds.  The agreement outlines how future increases in state funding would be allocated among the institutions and includes variables related to performance, the cost of providing the specific type of education each institution provides, past and future enrollment growth, and other factors. The agreement also explains how potential reductions in funding would be allocated during tight budget times.

During the 2012 legislative session, lawmakers expressed concern about various attempts to redistribute funds among the institutions so they included language in a higher education bill requiring the development of a funding formula by the Joint Committee on Education. That process led to the introduction this past session of SB 437 [7] sponsored by Sen. David Pearce (R-Warrensburg), which passed the Senate but was not taken up in the House. UM and other four-year institutions opposed the formula developed in the legislation because it redistributed funding from the four-year schools to the two-year sector and also did not weight the cost of professional courses as requested by UM.

The new agreement provides an avenue to lawmakers for future distributions without legislation. To see a letter outlining the agreement, go here [8].

With no compromise reached, student loan interest rates increased July 1

Because Congress was not able to come to an agreement before the end of June, subsidized and unsubsidized student loan interest rates doubled July 1 for student loans taken out for academic year 2013-2014. Interest rates increased from 3.4 to 6.8 percent, impacting about 7 million students and families nationwide. On average, this interest rate hike would cost each student about $1,000 over the life of a loan.

Earlier in the year, the U.S. House of Representatives passed HR 1960 regarding student loan interest rates, but the Senate has not passed a bill.

On July 10, the Senate is expected to consider two student loan rate bills.  One bill, S 953 [9], is a one-year extension of interest rates at 3.4 percent, paid for by closing tax loopholes. Another bill, S 1241 [10], is titled the “Bipartisan Student Loan Certainty Act,” and will set interest rates for undergraduate and graduate student loans at the U.S. Treasury 10-year note plus 1.85 percent. Graduate unsubsidized student loans would be set at the U.S. Treasury 10-year note plus 3.4 percent. PLUS Loans taken out in a parent’s name will also be set using the U.S. Treasury 10-year note plus 4.4 percent. In this plan, students would select either the weighted average of the loans or a maximum of 8.25 percent. It would also include repayment caps for income-based repayment plans.

On June 18, UM System President Tim Wolfe visited Washington D.C. to meet with some of Missouri’s Congressional delegation about student loan interest rates. The University has communicated five “position statements” to the Missouri Congressional delegation as they work to keep student loan interest rates affordable for students. Key points in UM’s position:

  • We encourage Congress to find a long-term solution to student loan interest rates.
  • We support tying student loan interest rates to the 10-year Treasury Note.
  • We support an interest rate cap at a reasonable rate.
  • We support fixed terms for the life of the student loan.
  • We support using the interest proceeds from student loans in a manner that returns the money to students or the higher education community.

Comprehensive immigration reform passes Senate

Immigration reform continues to be a major topic in Washington this summer. S 744 [11], the Border Security, Economic Opportunity, and Immigration Modernization Act, passed the U.S. Senate 68-32 on June 27.

Senate Bill 744 includes multiple provisions related to higher education. Highlights include:

  • DREAM Act, which provides an expedited path to citizenship for undocumented immigrants who came to the U.S. prior to turning 16 years old.
  • A ‘merit-based’ green card or permanent residency system. Points would be awarded for obtaining bachelor’s degrees or higher. Forty percent of employment-based green cards would be for advanced degrees in sciences, arts, professions, or business. There would be no limit for the number of green cards available for those with advanced degrees in the STEM fields from U.S. universities.
  • International students would no longer need to establish that they don’t have immigrant intent in order to be eligible for student visas.
  • Employers sponsoring employees for green cards must pay a $1,000 fee to fund STEM education programs. These programs would support scholarships for low-income students enrolled in higher education STEM programs and K-12 STEM education programs.

When Congress returns from its 4th of July recess on the week of July 8, the House will decide how to address the Senate-passed bill. Currently, the House has been on a path of proposing multiple immigration bills rather than one comprehensive bill.

HR 2131 [12], the SKILLS Visa Act, was passed by the House Judiciary Committee on June 27. This was the first immigration reform bill to pass the House committee. Among other items, this bill would create a system prioritizing green cards for those who receive a STEM doctorate level degree, create a visa program for immigrant entrepreneurs, and include a fee on H-1B employers who sponsor employees to support STEM programs.

Dr. Joe Parks, UMSL professor, testifies before U.S. House committee

On May 22, Dr. Joe Parks, Distinguished Professor of Science at UMSL and the Director of the Missouri Institute of Mental Health, testified before the U.S. House Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce. Prior to testifying, Dr. Parks met with Congressman Billy Long (R-MO) who serves on the Subcommittee.

Dr. Parks’ testimony centered on the importance of having a national approach for increasing the psychiatric workforce, increasing federal support for mental health courts, and addressing the premature death of those with serious mental illnesses.

State Treasurer visits UMSL

Treasurer Zweifel and Awardees [13]

Treasurer Clint Zweifel (second from left) was the guest speaker on May 16 for the annual Political Science Chapter Awards and Reception at UMSL.
The organization also presented awards during the meeting to 
Gordon Heddell, B.A. Political Science, 1971; Joan Spiegel, B.A. Political Science, 1977; and Joseph Larrew, B.A. Political Science, 1974.

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