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S M T W T F S

Planning Ahead for Lottery Scholarships is Fiscally Responsible

3/5/2012

The lottery scholarships play a huge role in making the dream of a college education possible in Tennessee.  This is why it is critical to adjust the structure of the program so that expenses no longer exceed revenue.  Since the scholarship was fully implemented, it has cost more than the recurring funds available.

 

This past fall, a Tennessee Senate Lottery Stabilization Task Force spent hours contemplating how to make the scholarship program fiscally sound while minimizing the impact on students.  It is a huge challenge to decide how to eliminate the $18 million deficit from the program while softening the blow on students. 

 

The bi-partisan Task Force was made up of all the higher education systems’ leaders, the State’s Treasurer, Comptroller, and Secretary of State, plus Senate leadership and select Education and Finance Committee members.  In the end, the Task Force voted unanimously in favor of a phased-in structural change that would right the financial condition of the lottery scholarship program.

 

Currently, to qualify for the scholarship, a student must have either a 3.0 high school GPA or a 21 ACT score.  This allows qualifying students to receive either $2,000 at a community college or a $4,000 at a university. 

 

Under the new proposal, the scholarship will remain the same for students who qualify with both the ACT and GPA.  Those who qualify with only the ACT or the GPA would get $2,000 for the first two years to attend either a community college or university and $4,000 for their remaining eligibility. 

 

No current students will lose their scholarships and everyone eligible under the current criteria will continue to be eligible for scholarship aid under the new proposal.  This adjustment, however, will provide the necessary change to balance the budget for the scholarship program.

 

True, there is currently a reserve of over $300 million to support the scholarship program. But, this is the very cushion necessary to delay implementation until fall of 2015 and to mitigate the impact on minority and low-income qualifiers. Putting $10 million in the need-based aid program each year will provide much needed aid to as many as 5,700 low-income students each year for ten years.  A higher percentage of minority students is helped through the need-based aid program than through lottery scholarships.

 

The implementation target of the fall of 2015 also provides students and parents ample time to prepare for the changes.  As well, it provides the Legislature time to consider the possible implications of additional revenue to the lottery scholarship program. 

 

Further, with the prospect of a continued unstable economic environment, it is important not to become overly euphoric about any projected increase in lottery revenue.  In particular, increasing gas prices have a negative impact on net lottery proceeds to the scholarship program.  Generally, it is anticipated that gas prices could reach $4 a gallon by summer, which may have serious implications on the lottery revenue.

 

Therefore, it seems most prudent for the Legislature to take action this year to pass a bipartisan agreement that balances the scholarship budget, provides more aid for low-income students, and provides advanced notice to students and families for changes that take effect in the fall of 2015.

 

 

 

Dr. Claude Pressnell

Member, Senate Lottery Stabilization Task Force

President, Tennessee Independent Colleges and Universities Association

March 5, 2012