Once again, the state Higher Education Department is warning that scholarships funded by the state lottery – which for years paid 100 percent of the tuition for students attending state colleges and universities, but now pays only 90 percent – could fall to covering 70 percent or less of tuition by next fall.
And once again, lottery officials are claiming that the only way they can boost sales and put more money into the scholarship fund is to remove the requirement that at least 30 percent of lottery revenues go to scholarships. That’s been the refrain for years from lottery CEO David Barden, who claims removing the 30 percent benchmark will let the lottery to increase prizes, which will boost sales, which will pump more money into the scholarship fund. Dan Salzwedel, the lottery board chairman, has joined Barden’s chorus.
Here’s the concern: Between the lottery’s inception in 1996 and July 2007, it contributed an average of 23.4 percent of its gross revenues to scholarships, while spending nearly that much on administrative and operating costs. After the independent think tank Think New Mexico released a report in 2006 critical of the lottery’s low contribution to the scholarship fund, the Legislature mandated that, beginning July 1, 2007, the lottery had to contribute at least 27 percent of its gross revenues to scholarships. That mandatory contribution rose to a minimum of 30 percent beginning Jan. 1, 2009. The lottery has made that benchmark ever since.
But there are new problems. With lottery proceeds this year projected to be about $9 million less than last year’s, it’s clear that gambling revenues in our poor state might have hit a saturation point. Legislators have known since 2009 that demand for the scholarships has been outstripping the state lottery’s ability to pay for them but have yet to come up with a permanent fix. Instead, lawmakers have tried Band-Aid approaches such as supplementing the scholarship fund with liquor excise tax revenues.