Lottery scholarship students could see costs rise $700 - Albuquerque Journal

Lottery scholarship students could see costs rise $700

Copyright © 2017 Albuquerque Journal

University of New Mexico undergraduate students on a state lottery scholarship could pay up to an additional $700 per semester if lawmakers don’t take action to shore up the New Mexico Lottery program, according to projections from the New Mexico Higher Education Department.

The state’s scholarship program is on track to lose a key chunk of financial support this year that could drop tuition coverage from 90 percent to as low as 60 percent for students.

a00_jd_15jan_lottery_pie-chart“It’s important that lawmakers find a balanced and responsible fix for the scholarship that has a minimal impact on students,” said Robert McEntyre, a spokesman for the New Mexico Higher Education Department, in a statement to the Journal.

While there are plans to make changes to the lottery system and scholarship program that could help, there appears to be little support to keep tuition coverage at the 90 percent level in light of the state’s continuing budget crunch.

The program, nearly two decades old, has delivered $716 million in tuition support to roughly 109,000 students, according to data from the New Mexico Lottery. But the combination of rising tuition and flat revenues from the lottery have made cuts necessary.

Originally, the scholarship covered 100 percent of tuition, but the coverage dropped to 90 percent in the 2015-16 school year. To keep coverage as high as 90 percent, the revenue from lottery ticket sales was supplemented by the state’s alcohol excise tax for the past two years.

That support is scheduled to expire this year, which means tuition coverage would drop to 60 percent, the Higher Education Department estimates. The Legislative Finance Committee has predicted that figure could be 71 percent based on pulling funds from the lottery and a delayed transfer in funds from the alcohol excise tax.

For students at UNM, the university with the highest number of recipients, the change would mean students would have to cover about $1,000 in tuition costs per semester, compared with $300, based on the Higher Education Department’s prediction and current tuition rates at UNM. The scholarship doesn’t cover fees, which run about $832 per semester for undergrads, or room and board.

Former Democratic Senate Majority Leader Michael Sanchez of Belen, who has been a champion of the program and pressed for the excise tax support, was defeated last year by Republican newcomer Greg Baca.

Sanchez is concerned about the future of the program and increasing costs for students.

“Anything could happen with that scholarship (now),” he told the Journal .

The scholarship is available to graduates of New Mexico high schools who attend state institutions of higher education. They become eligible for the scholarship after a semester in college if they take at least 15 credit hours and maintain a 2.5 grade point average.

Planned changes

Sen. John Arthur Smith, D-Deming, chairman of the Legislative Finance Committee, said he thinks covering 60 percent of tuition is “a pretty good deal,” though he would like to see a soft landing for students.

New Mexico residents who are not on scholarships pay $2,643 per semester for tuition.

In prior years, Smith proposed weaning off the alcohol excise tax as a way to slowly decrease the coverage. He also favors exploring ways to increase lottery ticket sales.

Smith said he’s looking at allowing the sale of lottery tickets via debit cards at gas station pumps, which if it boosts sales could mean more money for scholarships.

But he noted that given other financial challenges in the state, legislators may force the universities to increase tuition again, which would further strain the scholarship fund.

Smith previously sponsored a plan to remove a rule requiring that 30 percent of the New Mexico Lottery earnings be funneled into the scholarship. He said he was looking at pursuing a similar measure this year.

The idea is that allowing the lottery to spend more money on payouts and advertising would result in a greater number of lottery tickets being sold and increase the amount of money going to the scholarship, even if the percentage is lower than 30 percent.

Wendy Ahlm, a spokeswoman for the New Mexico Lottery, said the agency would back such a measure if it were introduced in this year’s session.

“We believe the elimination of the mandate would allow the lottery to increase sales and return more dollars to the scholarship fund,” Ahlm said.

Fred Nathan, the executive director of the think tank Think New Mexico, opposes removing the 30 percent requirement and argues that the limit holds the New Mexico Lottery accountable. Nathan said the introduction of the minimum resulted in an additional $9 million going to the scholarship.

“Before the 30 percent law was enacted, the lottery delivered only about 23 percent of revenues to scholarships and spent far more on its overhead than it does today,” Nathan said in a statement to the Journal.

Rep. Jason Harper, R-Rio Rancho, knows the benefits of the scholarship well. His wife, Mary Harper, graduated from Cibola High School and attended the New Mexico Institute of Mining and Technology on the scholarship.

But he believes 60 percent is generous for a state that has some of the lowest tuition rates in the nation. He said he is drafting a plan that would reshape the program by making the scholarship one of “last resort,” one that would pay for costs not covered by other awards.

Currently, the lottery scholarship is the first to be tapped for a student’s tuition with other awards tacked on – and sometimes that total amount exceeds the tuition amount, providing extra money for the student.

“If the lottery scholarship is really about access, then I don’t think we should be paying above and beyond what tuition is,” Harper told the Journal.

His other proposed changes include increasing the eligibility window for the scholarship. The current rules require that students immediately attend college after graduating from high school, but Harper’s plan would give them 18 to 24 months to begin taking advantage of the scholarship.

Another tweak would require the lottery authority to funnel unclaimed prizes into the scholarship account. The authority currently retains that money.

Harper’s plan does not call for the renewal of alcohol excise tax funding.

Needed at UNM

Chaouki Abdallah, UNM’s acting president, said the scholarship program had helped to increase the total number of graduates and graduation rates overall.

“Our data clearly shows that students with need who receive the lottery scholarship succeed at a much higher rate than those who do not,” Abdallah said in a statement to the Journal.

Abdallah said he hopes current funding levels can be held steady so UNM can “continue the progress we have made in closing the achievement gap and in increasing our four- and five-year graduation rates.”

Kyle Biederwolf, head of the association that represents undergraduate students at UNM, said he is aware of the challenges the scholarship faces.

Biederwolf said the group will fight to renew, partly or fully, the alcohol excise tax funding. That would give all parties more time, he said, to find a way to make the scholarship solvent.

“We are aware of the danger that the lottery scholarship is in and how important this upcoming legislative session is to find a solution,” he said.

In the same statement, he said the group also will work with other student leaders around the state.

Previous changes

Students used to be able to take 12 credit hours at four-year institutions and maintain the scholarship, but now they have to take at least 15 credit hours.

The New Mexico Lottery did report a record return of $46 million to the scholarship in the 2016 fiscal year. That haul was spurred by increased Scratcher and Powerball ticket sales.

In the past two years, the agency delivered roughly $41 million to the scholarship. The alcohol excise tax contributed about $19 million.

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