The New Mexico lottery scholarship program will be millions of dollars in the red by next year, potentially leaving some students without the aid, according to a Legislative Finance committee report released this week.
Officials at an LFC meeting on Wednesday announced that the fund, which provides scholarships to New Mexicans with a minimum 2.5 GPA in high school, is projected to have a gap of more than $5 million by fiscal year 2014, which begins next July. “That fund will be broke by 2014,” said Rep. Luciano “Lucky” Varela, LFC vice chairman. “I am trying to think of anything we can do legislatively to try to preserve the time on that lottery scholarship. It’s a very important lottery in terms of the (students) they’re serving.”
About $60 million worth of lottery scholarships was awarded this year, but there may only be $40 million available next year, according to the LFC data. The fund is managed by the state Higher Education Department, which for years has been warning that an increase in the number of students requesting the scholarship, along with decreasing lottery ticket sales and increasing tuition costs would leave the fund in jeopardy.
“The status of the fund has been known for quite some time, but since the requirements to use the fund are set in statute, making changes requires legislative action,” spokesman Larry Behrens said in a statement.
The scholarship fund, which was started in 1996 along with the state lottery, has collected a total of $535.6 million, New Mexico Lottery spokeswoman Linda Hamlin said.
About 75,300 students have received the scholarship, which pays tuition to a public New Mexico school for eight consecutive semesters, as long as students maintain a minimum 2.5 GPA. The lottery directs 30 percent of its revenue to the scholarship fund, per state law.
But ticket sales have decreased over the last five years “for a combination of reasons that include the uneven economy,” Hamlin said. The lottery saw a 1.3 percent decrease in gross revenue last fiscal year, a reduction of about $1.75 million. Still, the lottery provided $41.3 million to the scholarship program last fiscal year.
Also, more students have enrolled in New Mexico universities, and tuition has continually increased.
Varela said it’s up to the HED to come up with ways to make and keep the fund solvent.
“We’ve been looking at any kind of potential infusion, but we’re trying to balance the budget. We’re looking at not trying to divert recurring revenue from the general fund at this point in time,” Varela said.
Sen. John Arthur Smith, LFC chairman, said using general state funds for the scholarship fund is not an option.
“It’s the economic environment. I mean, all of our revenue streams are struggling except for oil,” said Smith, D-Deming. Smith added that 60 percent of the state budget already goes to education, both K-12 and colleges and universities.
Some of the possibilities discussed include raising the minimum GPA requirement and/or providing scholarships on a financial need basis.
Asked whether it had a backup plan if students were to lose their scholarships, University of New Mexico president Bob Frank said Thursday the school is counting on the Legislature to “figure out a way to shore up and save this vital program.”
“We have already weathered substantial state budget cuts in recent years. …” he said.
More than 8,700 students attended UNM on the lottery scholarship last year, Frank said, accounting for 40 percent of the undergraduate population.
“The Legislative Lottery Scholarship is critical to helping New Mexico students graduate so they can contribute to our state’s knowledge-based economy,” he said.
Janie Merchant, director of financial aid and scholarship services at New Mexico State University, said more than 4,000 students on the school’s main and branch campuses rely on the lottery scholarship for tuition.
“Any reduction in benefits from the Lottery Scholarship will reduce our students’ ability to meet tuition costs,” Merchant said in a written statement. “This would hit our students at the start of their college career most, as nearly half of our freshmen at the Las Cruces campus receive this scholarship.”
Behrens, of the HED, said the situation is concerning.
“Working with the Legislature, we will continue to make every effort to explore solutions that are fair to students and financially sound,” he said.