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Kelley McCall, Associated Press
Gov. Jay Nixon answers a reporter's question following a Missouri Press Association/Associated Press luncheon Thursday, Feb. 9, 2012, at the Governor's Mansion in Jefferson City, Mo. In his opening remarks, Nixon said Missouri will be offering $10 million in competitive grants for public colleges and universities to create programs to allow students to graduate more quickly and affordably.

JEFFERSON CITY, Mo. — Missouri will offer $10 million in competitive grants for public colleges and universities to develop programs that will allow students to graduate more quickly and affordably with skills that can more immediately land jobs, Gov. Jay Nixon said Thursday.

As the governor outlined the new grant program, he also reiterated his admonition to university officials: Avoid increasing tuition by more than the rate of inflation in response to state funding cuts.

"We want to make college education as affordable and accessible as possible, and we also want to make sure we provide a high-quality education for students," Nixon said while hosting reporters at the Governor's Mansion for an annual event sponsored by The Associated Press and Missouri Press Association.

Nixon announced that his administration would use funds from the Community Development Block Grant program to create an incentive for colleges to come up with innovative ways of providing students on-the-job experience while holding down their educational costs.

The grant program will be modeled after an initiative already underway at the University of Central Missouri in which students can take certain college courses in high school and then participate in apprenticeship programs in college that are underwritten by corporate sponsors. The goal is that students could then be hired by those businesses after graduation.

"The feature here that sets this apart is the deliberate planning and investment by the private business to build a workforce," said Mike Nietzel, a senior policy adviser to Nixon who previously was the president of Missouri State University.

Nixon says he hopes to begin soliciting grant applications in March and have the money start flowing in July.

The governor's announcement about the grant program came just two days after Nixon said he would allot $40 million from a national settlement with mortgage lenders to soften funding cuts he had proposed for higher education institutions during the 2012-2013 academic year. In January, Nixon recommended a 12.5 percent funding cut for public colleges and universities; his budget office said the influx of money from the mortgage settlement could lower that to 7.8 percent.

Nixon met with officials from higher education institutions Thursday afternoon to explain his plan for the settlement money and the grant program, as well as to repeat his desire to hold down tuition increases.

The University of Missouri Board of Curators coolly reacted last week to a proposed 7.5 percent tuition increase at its flagship Columbia campus (and higher proposed increases at St. Louis and Rolla campuses) to help offset the potential state budget cuts. The curators said they wanted to see more spending cuts in non-academic programs before approving tuition increases.

Missouri law generally limits tuition increases to the rate of inflation unless schools receive special permission for larger increases from the state higher education commissioner. The University of Missouri sought and received such permission last year. Nixon deemed the university's tuition hike inappropriate and responded by withholding additional state funding from the university system.

He has stopped short of threatening to do the same this year, but said Thursday he wants universities will hold tuition increases to the rate of inflation.

"You would hope that would be a ceiling," Nixon said.

After receiving word of the additional money from the mortgage industry settlement, several university officials indicated at Thursday's meeting that "they are going to go back to the drawing board on tuition increases," Nietzel said.