AUGUSTA — Attorney General Andrew Ketterer said a state student-loan agency run by Maine Education Services should not pay a $204,000 bill for lobbying and advertising against state legislation.

The Maine Educational Loan Authority voted May 16 to pay the bill for expenses incurred by MES in its unsuccessful fight against legislation intended to provide more oversight of its administration of the loan agency.

Ketterer said the agency’s board lacked legal authority because it failed to notify the public about the meeting and its agenda in violation of the public right to know law.

Ketterer questioned the propriety of state agencies such as MELA hiring outside lobbyists to work on their behalf without obtaining prior approval from the Legislature.

MELA attorney Jon Doyle defended the agency’s action, saying MELA, which has virtually no employees and contracts its management to MES, is not a bona fide state agency.

“This is a case of reasonable lawyers disagreeing,” Doyle said, maintaining MELA has a right to protect itself from legislation that, in effect, could have put it out of business.

Doyle said he believes the bill has not yet been paid. If it turns out MELA can’t pay the bill, perhaps MES will, he added.

The loan agency came under scrutiny after lawmakers discovered that through the use of public tax-exempt bonds, MES and its entities were making millions in profits and paying high salaries, such as $248,000 in 1998 to President Richard Pierce.

Despite the MES lobbying efforts and public campaign, lawmakers voted to separate MES from MELA and the Maine Education Loan Marketing Corp. The intent of the law is to separate MES, a private organization, from access to tax-exempt public bonds used for student loans.