Gov. Mike Parson wants ‘big ideas’ for using Missouri budget surplus
State coffers holding billions from state tax surplus, federal COVID relief
An artist’s view of the proposed Missouri Protoplex, a $100 million project at Missouri University of Science and Technology in Rolla. The University of Missouri wants $50 million in federal coronavirus relief funds to help finance the project. (Image from online presentation by Missouri S&T)
Gov. Mike Parson wants to do big things with the budget surplus of billions of dollars and federal aid coming to Missouri, state lawmakers were told last week.
During a hearing of the Federal Stimulus Spending Subcommittee, higher education leaders offered their wish-list for projects the state couldn’t afford in the past.
Southeast Missouri State University in Cape Girardeau wants $11 million for an expanded performing arts center. The State Technical College of Missouri in Linn wants $20 million to renovate its engineering and welding technology centers.
And the University of Missouri wants $115 million to develop a new research complex in Columbia centered on nuclear medicine and the campus research reactor.
“I don’t want to speak for the governor’s office, but I can tell you that they’re really interested in, you know, making a proposal that includes some of the big ideas that haven’t been within our reach in previous budgets,” Zora Mulligan, Parson’s higher education commissioner told the committee.
The committee heard from K-12 schools, higher education and the Department of Natural Resources.
If Parson wants to go big in the budget proposal due in January, he will have a lot of money to do it with.
The treasury already holds more than $4 billion in unappropriated funds, with $2.6 billion available for almost any purpose allowed by the Missouri Constitution.
The other $1.4 billion is federal pandemic aid from the American Rescue Plan Act passed by Democrats in March, which has an expansive list of uses related to recovery, economic development and infrastructure.
Money on the way is almost $4 billion more. There’s another $1.4 billion more in federal aid for general purposes and $1.2 billion over the next two years because the state expanded eligibility for Medicaid.
The money with the fewest restrictions is general revenue. On Oct. 31, the general revenue fund held $2.3 billion, almost five times the balance two years earlier.
Taxes brought in $1 billion more than expected above last fiscal year. That is enough to generate another $1 billion surplus in the current year because the budget was written with much lower expectations.
Lobbyist Jim Moody was state budget director when lawmakers spent $600 million – $1.5 billion in current dollars – from a bond issue in the mid 1980s.
“I think you are going to get some spending that is going to be a pretty good size multiple of what the Third State Building Fund was, say $2-, $3-, or even $4 billion,” Moody said. “The big challenge is, if you get a package that big, how do you make sure you are not creating ongoing obligations.”
The subcommittee’s work began in April, when the Missouri State Highway Patrol asked for $88 million for a new academy building amid other pitches for funding. Those seeking federal money, subcommittee Chairman Doug Richey, R-Excelsior Springs, said last week, must prove the long-term value to the state.
The state’s share is from money borrowed by the federal government, he said. If Missouri doesn’t spend it, he added, it won’t be spent.
“We have to steward these dollars effectively because we are contributing to debt ultimately, that will have to be paid at some point by future generations,” Richey said. “So with that being said, that does not mean that ideas that come across this committee’s desk are just simply going to receive a no, but those that receive a yes will be projects that are worth the debt.”
In testimony last week, Commissioner of Education Margie Vandeven asked lawmakers to find money to increase teacher pay.
Missouri is 50th in the nation in teacher starting pay and 45th for average pay. Only Montana has lower starting pay. Only Arkansas has lower average pay among surrounding states, Vandeven said, and that state is spending money to increase salaries.
Pay is one of the big reasons the state is struggling to keep enough teachers in classrooms, Vandeven said.
“It is very, very easy for our teachers to cross state lines, and that’s something we need to pay very close attention to,” she said.
Missouri has a minimum teacher pay law, but there is no mechanism in state law for directing how much local districts pay above that amount. The state does not make direct appropriations for teacher pay.
Vandeven said she wants to spend $52 million on a program called Grow-your-own, a development program providing scholarships to high school students who want to be teachers and will promise to return to the sponsoring district after graduation.
But her suggestions that lawmakers should devote money for raising pay drew some pushback from some members of the committee. Richey said comparisons leave out Missouri’s generous pension system.
He also said local districts, like the one where he lives, can ask voters to approve new taxes to raise pay.
“So it’s not that the state of Missouri and our budget in terms of funding the foundation formula is holding us back,” Richey said. “There are other options.”
Vandeven, however, noted that state funding is intended to minimize the differences between rich and poor districts. School districts rely on property taxes and many have too small a base to generate significant new funds.
“It creates a greater challenge in our communities who cannot do that,” she said. “And in many cases, those are the communities who really need great teachers.”
The $172 million the state’s smaller higher education institutions requested during last week’s hearing wasn’t nearly visionary enough for one subcommittee member.
“I want to know what it looks like to have a once-in-a-lifetime opportunity to revitalize institutions, not just a shiny building for each campus or a renovation, one per campus,” said state Rep. Kevin Windham, D-Hillsdale. “What does it look like to make institutions look like state of the art institutions throughout the state?”
Paul Wagner, executive director of the Council on Public Higher Education, had just presented the list. It totaled $172.5 million spread over 10 schools, the smaller four-year universities and the State Technical College.
“I would say that this list is tailored to what the governor asked us to provide, which was big, the bigger, more transformational type of projects,” Wagner said.
The University of Missouri, with four campuses, is asking for $263 million, Ryan Rapp, vice president for finance, told the committee. Along with the new research center in Columbia, the request is for $50 million for each of the other three campuses.
All the higher education requests represent 50 percent or less of the total cost, with each campus promising fundraising or internal funds for the balance.
At Missouri University of Science & Technology in Rolla, UM would put the money toward the Missouri Protoplex, an advanced manufacturing research center. At the Kansas City campus, the money would support the Health Sciences District Development and a 25 percent increase in graduates from the UMKC School of Medicine, Rapp said.
At the St. Louis campus, the funds would support campus consolidation and redevelopment of the property no longer used.
The largest request, Rapp said, is intended as the next move for the university following the opening of the Roy Blunt NextGen Precision Health building, a $214 million, 265,000 square-foot research center built with minimal state support.
The university has the nation’s largest campus-based research nuclear reactor and wants to develop its potential for supplying isotopes used in medicine.
“So it’s really wanting to set forward to say over the next 10 years, how do we rebuild that research infrastructure at Mizzou?” Rapp said.
For Windham, the request from the UM System begins to meet his expectations.
“I wish everybody was as aggressive as Mizzou when making an appropriation request,” he said.
In an interview after the hearing, Wagner said the institutions he represents could present more ideas. While Windham wants more, Richey is cautioning that lawmakers will be picky as they spend federal stimulus funds.
The schools think that is a workable deal, Wagner said.
“We are happy to do business with the committee on those terms,” Wagner said. “Facilities that improve educational opportunity and improve the workforce at the same time are exactly the kind of investments that would fit that criteria.”
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