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Governor calls for balanced reforms to save scholarships

By Susan Montoya Bryan

Gov. Susana Martinez wants lawmakers to try again next year to develop what she calls meaningful and balanced reforms to ensure the solvency of the state’s lottery scholarship program.

She vetoed legislation Wednesday that would have allowed unclaimed prize money to be transferred to the state’s lottery tuition fund.

Lawmakers did not address the solvency of the lottery scholarship program during the recent 30-day session. However, they approved the unclaimed prizes measure, saying it had the potential to boost the fund by more than $2 million.

That’s just a fraction of what’s needed to keep pace with higher tuition, growing demand among students and declining lottery ticket sales.

Annual revenue from ticket sales has plateaued at about $40 million, while tuition costs for eligible students are expected to top $65 million a year, according to state higher education and lottery officials.

In her veto message, Martinez said she supported the spirit of the legislation but that signing the bill would result in less money being available for the lottery to reinvest in new games and offer higher payouts in hopes of boosting revenue.

Martinez said she would work with lawmakers to adopt reforms during the next session “to preserve this important school assistance for as many New Mexico students as possible.”

Senate Majority Leader Michael Sanchez, who sponsored the unclaimed prizes measure, said he was disappointed with the governor’s veto. The Democrat also sponsored the original legislation in 1996 that created lottery scholarships.

“Given the demand for college-educated workers today, getting a college education is more important than ever,” Sanchez said in a statement Thursday. “We should be doing everything we can to help more of our students and families in New Mexico afford, and graduate, college.”

Participation in the program has grown exponentially since it began two decades ago. Now, more than 30,000 students receive the scholarships.

If nothing is done, higher education officials have warned that students could face a 30 percent reduction in their scholarships starting in fall 2017.

Several other states with lottery-funded scholarships have been forced to tighten eligibility or reduce the amount of the awards in recent years due to shortfalls. New Mexico is no exception, and the governor ordered the Higher Education Department in 2014 to develop more than 30 possible solvency scenarios for lawmakers to consider.

The governor’s office said the ideas are still on the table. The proposals include everything from raising the grade-point average to qualify for scholarships to shifting the merit-based system to one that focuses more on lower-income students.

Some say it could end up being a combination of changes given that state coffers are already stretched thin and volatile oil and gas prices have left New Mexico with less money to spend on government programs.

Sanchez said the answer should be finding permanent funding sources rather than reducing the number of students receiving the scholarship.

In 2014, he proposed using a portion of liquor excise taxes to fund the program, but House Republicans agreed only to tap the taxes temporarily. Sanchez plans to revive the proposal during the next session and urged the governor to support the effort.