Lottery scholarship program changes proposed

Copyright © 2018 Albuquerque Journal

New Mexico lawmakers are once again angling to change the waning Legislative Lottery Scholarship, proposing various bills they say would improve the program that benefits about 26,000 students annually.

Solvency concerns have prompted frequent attempts in recent years to tweak the 22-year-old scholarship – one that has diminished in value amid rising tuition and growing demand. The scholarship currently pays 60 percent of eligible students’ tuition at state colleges and universities – a dramatic decline from the 90 percent it covered a year ago.

Funding comes from the New Mexico Lottery, which must put at least 30 percent of its gross sales into the scholarship program.

Its contribution has varied through the years. It dropped to $37.8 million in 2017 from $46.3 million in 2016, a loss of 18 percent. But that came after a year that saw 13 percent growth.

Lottery representatives contend that the 30 percent mandate hurts sales by limiting prize payouts, and they support legislation from Rep. Jim Smith, R-Tijeras, to lift that requirement.

They point to an Oklahoma Lottery sales surge after that state lifted its 35 percent mandate and say students in New Mexico could reap any similar benefits here.

“The New Mexico Lottery believes mandates are arbitrary sales barriers which do not support maximization of profits for students,” spokeswoman Wendy Ahlm said in a written statement.

But critics argue that the 30 percent requirement, implemented in 2008, actually has meant more money for scholarships and say removing it would enable the lottery to spend more money on administration and third-party costs.

Fred Nathan of Think New Mexico called the potential change a “bad gamble” for students.

“The thing that needs to be remembered is the scholarship fund has received more dollars every year since the 30 percent requirement took effect in 2008 than it did in any year before that,” he said.

Nathan’s organization highlights the difference between lottery scholarship contributions in 2003 and 2012. The lottery’s gross revenues were almost identical both years – nearly $134 million – but $33.1 million went to scholarships in 2003, compared with $41.3 in 2012, according to documents the lottery provided to the Legislature last year.

Student government leaders from the University of New Mexico, the state’s largest school, have objected to Smith’s bill as currently written and are recommending changes.

Smith’s bill, House Bill 147, would reinstate the 30 percent mandate if the lottery fails to contribute at least $38 million to the scholarship in any given year.

But the Associated Students of UNM say they want a $40 million guarantee – and a reversion to a 35 percent mandate if it falls below that. They also want all unclaimed prize money funneled into the scholarship fund, as well as 50 percent of any new lottery revenue.

“We’re going to continue to push against this and try to make sure it’s fair for students,” said Noah Michelsohn, ASUNM spokesman.

Smith indicated this week he’s open to working with the students, but said some of the proposed amendments could be problematic.

Meanwhile, other new scholarship proposals aim to change how officials determine its value.

Rep. Larry Larrañaga, R-Albuquerque, and Sen. William Soules, D-Las Cruces, each have introduced so-called “decoupling” bills that would untether the scholarship’s value from the cost of tuition.

Higher Education Secretary Barbara Damron said her office supports the concept of “decoupling,” though it does not favor one particular bill.

Soules’ bill, Senate Bill 140, sets base rates: $1,400 per semester for students at the state’s three research institutions – including the University of New Mexico – $950 for other four-year institutions, and $350 for community colleges.

It still allows HED to make adjustments depending on available funding – and Soules said he expects it to wind up higher – but he wanted to at least provide more certainty for families.

“It makes it a whole lot simpler for students and families and, quite frankly, universities to plan each year,” Soules said.

Some have argued that schools more readily raised tuition in the past because they knew the lottery scholarship would cover it. Soules said he did not know if that was true, but “this just totally takes it away from the tuition discussion.”

Larrañaga’s proposal, House Bill 178, sets flat rates – $1,500/$1,000/$750 – which change the proportion of money that goes to each kind of school, significantly raising the value of community college scholarships. HED could adjust downward in lean years or offer supplemental scholarships if the fund balance permits.

Soules’ bill has the support of the Council of University Presidents, which represents New Mexico’s four-year institutions.

Executive Director Marc Saavedra said the council’s ultimate goal is finding new revenue to bolster the scholarship fund, but decoupling at least helps students know what to expect.

Saavedra said Soules’ bill sets “worst-case scenario” rates, and that available funding should permit HED to raise the value. The scholarship currently pays $1,721 per semester at research institutions.

Soules’ legislation “just allows that as a starting point,” Saavedra said, “and at a very conservative level.”

Currently, university students have to maintain a 2.5 GPA and take at least 15 credit hours per semester to qualify for the lottery scholarship.

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