Three major Lottery Scholarship bills with plans to keep the scholarship funded have seen action in the Legislature this week.
On Friday, House Bill 27, “Expand Lottery Scholarship Eligibility,” sponsored by Rep. Sheryl Williams Stapleton (D-Albuquerque), was defeated in the House Education Committee. However, a replacement version of the bill passed on Friday by a vote of 9 to 4.

The Lottery Scholarship, which provides tuition for eligible New Mexicans attending state universities, is slated to effectively run out of funds this July if full tuition continues to be awarded to the next group of eligible students starting school this fall.

The original version of the HB 27 would fund Lottery Scholarships for students entering four-year colleges within two years of high school graduation; the revision maintains the current limit of 120 days after graduation. In addition, the original version provides assistance for students who enter immediately into a two-year community college. The revision changes the limit to within two years of high school graduation, provided that the student immediately transfers to a four-year school upon completion of the two-year coursework.

The revised version also adds a provision for students planning to enter technical and vocational schools. These students may receive the Lottery Scholarship if they attend such a school full-time within two years of graduation from high school or receiving their GED.

The revised bill goes next to the House Appropriations and Finance Committee, hearing date to be determined.

Funding the scholarship with tobacco money

In the Senate on Friday, Senate Bill 392, “Lottery Tuition Fund Distributions,” sponsored by Sen. Michael S. Sanchez (D-Belen), was defeated in the Senate Education Committee. A substitute bill passed on Friday by a vote of 6 to 3.

The first version of the bill would funnel 25 percent of the state’s tobacco settlement permanent fund, consisting of money paid by tobacco companies to the state to pay back tobacco-related health care costs, into the Lottery Scholarship fund, starting this July. About $10 million from the projected $39.5 million for fiscal year 2014 would be allocated, according to the bill’s fiscal impact report.

The substitute also requires that, through FY 2016, the governor authorize the transfer of up to 1 percent of the balance of New Mexico’s general fund operating reserve to fund the Lottery Scholarship if the state treasurer certifies that scholarship does not have enough money to meet its scholarship obligation for the year. This general fund is projected to have roughly $320 million for FY 2014.

The substitute version of the bill will head next to the Senate Finance Committee, hearing date to be determined.

Requiring repayment if degree not completed

Also in the Senate, the fiscal impact report was released on Friday for SB 451, “Lottery Scholarship Requirements & Debt,” sponsored by Sen. William H. Payne (R-Albuquerque).

According to the report, SB 451 would require that students pay back their Lottery Scholarship funds to the state if they drop out of school mid-degree, fail out of school, or fail to maintain the requirements for receiving aid. Also, if a scholarship recipient receives four years of funding but fails to graduate in six years, he or she would have to repay two semesters of assistance to the state. All debts would include interest at a rate to be determined by the Higher Education Department.

The bill also adds three new requirements for receiving the Lottery Scholarship. It raises the GPA requirement for Lottery Scholarship recipients from 2.5 to 2.75; requires that recipients earn at least a 21 on the ACT or at least a 1500 on the SAT; and mandates that the 12 credit-hour requirement exclude remedial courses.

The report notes several substantive issues with the bill. The bill does not say whether students currently receiving the scholarship would be held to the new requirements. For students required to pay back their scholarship as a debt to the state, the bill does not say where the debt money would be deposited.

The report also questions whether the bill would give the Higher Education Department enough time to draw up new scholarship forms and documents in time for students eligible for assistance beginning in the fall, when the bill’s provisions would take effect. Furthermore, the report suggests that the HED is unequipped to handle the aid-to-loan program without incurring substantial administrative costs which the bill does not provide.