Lawmakers eye bills to shore up lottery scholarships

Ana Ochoa, a freshman studying business administration and accounting at the Santa Fe Community College, is one of thousands of students across New Mexico who depend on the state’s Lottery Scholarship Fund to help pay for school. But she worries about the fund’s dwindling fortunes.

She’s not alone.

Over the past few years, demand has outpaced supply for the money, and students who once had 100 percent of their tuition paid by the fund have seen that share shrink to 95 percent, and then 90 percent. The share would have sunk even lower if lawmakers had not decided to pull money two years ago from the state’s general fund and alcohol excise tax revenues to supplement the scholarship fund two years ago.

Last year the alcohol excise tax contributed about $19 million, but that supplement will end by July unless lawmakers do something to extend it.

The situation is making some legislators and students nervous, and that’s just one reason there are at least six bills working their way through the legislative hopper to address the shrinking fund.

“We’re trying to keep it as viable as possible,” said Sen. John Arthur Smith, D-Deming, who is co-sponsoring a bill that will lower the 30 percent going into the fund but, through increased marketing efforts, perhaps generate more sales to provide just as much, if not more, money, he said.

Opponents of that bill, including leaders of the Santa Fe-based think tank Think New Mexico, argue that under that bill, Senate Bill 192, lottery proceeds could drop to as low as 23 or 24 percent, further impacting students’ abilities to afford tuition.

Another bill would expand the liquor excise tax to buy the fund more time at its current rate. Yet another would prioritize students with more severe financial need for the scholarship.

Legislators have about five more weeks in this year’s 60-day session to find a solution, which would then have to be approved by Gov. Susana Martinez.

Thee scholarship fund draws 30 percent of proceeds from lottery ticket sales every year to pay for a college education for many New Mexico students.

Somewhere between 6,500 and 7,500 students at the University of New Mexico in Albuquerque take advantage of the scholarship fund every semester. At New Mexico State University in Las Cruces, about 2,950 students are using it this semester. And about 250 students at the Santa Fe Community College benefit from it.

The fund, which was created in 1996, was providing about $2,000 per semester for some 30,000 students in the state, according to a 2015 Higher Education Department report. Lawmakers, educators and students began sharing concern about the solvency of the fund at least five years ago, when lottery sales stagnated at about $40 million per year while the need for the scholarship neared $65 million. Last year the state’s Lottery Authority announced record sales of $46 million, but Smith, among others, said that was just a temporary bump that is unlikely to sustain itself over time.

Nathan Cowan, a senior at the University of New Mexico who serves as executive director of student governmental affairs, said students on the campus are worried about the scholarship’s fate. Everyone he talks to on campus assumes that their scholarship fund is “going to take a hit.”

“Things are kind of rocky right now,” he said.

For Ochoa, the scholarship is an educational lifeline. Though she grew up in Santa Fe, her parents are from Mexico, and as an immigrant student she said coming by scholarships elsewhere is difficult.

The lottery scholarship, she said during a recent break in classes, buys her a chance at success. If it did not exist she would have to work full time, cutting back the amount of effort she could put into her education, which might even “dry up or go away.”

The bills

Here is an overview of the lottery scholarship bills currently filed in this year’s legislative session. Note: Feb. 16 is the last day for lawmakers to introduce bills, so more lottery scholarship legislation may pop up in the next six days.

• House Bill 194 is a needs-based approach that would redefine who is qualified to benefit from the lottery scholarship by prioritizing students who come from families that earn $75,000 or less per year. That bill includes a provision that will exempt “legacy” students who have received the scholarship for at least three semesters effective June of 2014.
• House Bill 344 would also limit the lottery scholarship to students with limited financial means — in this case students who demonstrate financial need based on the means of their family’s expected ability to pay tuition. This bill would also exempt “legacy” students who have received the scholarship for at least three semesters effective June of 2017.
• House Bill 237 would extend the liquor excise tax, using 30 percent of it for the lottery scholarship, until July 1, 2020, to buy lawmakers more time to find a permanent solution.
• House Bill 250 would funnel unclaimed lottery prize money totaling somewhere between $2 million and $3 million back into the scholarship fund instead of returning it to the overall prize fund, as is the rule now.
• Senate Bill 192 would eliminate the the guaranteed 30 percent draw from lottery sales but invest in marketing to increase the amount of sales with the hope that students would receive at least the same amount as they get now — but that number could go up or down depending on sales.
• Senate Bill 276 would pay out lower amounts of tuition money to students in their first semester and then gradually increase that pay-out over time. For example, at a four-year institute, a student would receive just 40 percent of tuition in the first semester, 50 percent in the second and third semester, 80 percent in the fourth semester, and so on.
• Finally, Senate Bill 188 does not address the scholarship’s financial state, but would expand access to it for students with disabilities who have to attend college in other states because of the federal Individuals with Disabilities Education Act (IDEA).

Contact Robert Nott at (505) 986-3021 or rnott@sfnewmexican.com.