With the continuous rise in tuition costs and increased participation in the program, the New Mexico Lottery Tuition Fund is facing a $5 million shortfall. At its current trajectory, the Fund is simply unsustainable. But that hasn’t stopped our legislators from doing what they can to shore up the program by raiding other funds.
The scholarship fund was intended to be self-sufficient and maintained by the New Mexico lottery. A fairly straight-forward concept that doesn’t involve using taxpayers’ money to pay for others’college tuition. It only used gamblers’ money that they voluntarily give up in their hopes of winning riches. So when this program exceeds its own funding, the logical thing to do is to reform it so as to fit it back into the box from hence it is given life. Whether it is through increases to the GPA requirements or class load, or cuts to benefits, as long as the costs are shrunk back down to what the lottery scholarship fund can support.
Of course, government doesn’t “cut back” or reform in order to “shrink” itself. We continue to make the same mistake thinking that this particular government program won’t do what ALL government programs inevitably do…EXPAND.
This is made evident by a few bills circulating our legislature at the moment.
The scholarship fund originally made to be self-sustaining–via the New Mexico lottery–is found to have blown up beyond the capacity of its original revenue source. So what does legislators do? Cut down the costs? Nope. They’ve decided to raid other funds in order to support the ever-expanding scholarship fund.
Senate Bill 392, sponsored by Senator Michael Sanchez, raids the tobacco settlement permanent fund for 25% starting in FY 14 to be distributed to the lottery tuition fund. And if “the balance of the lottery tuition fund is not sufficient to meet the scholarship obligations for fiscal year 2014, 2015, or 2016 then it would require the governor to transfer from the general fund operating reserve to the lottery tuition fund the amount necessary to meet that fiscal year’s scholarship obligations.”
Whoa, the program has gotten too big. Its ok! We’ll just use taxpayer money to keep it going.
A separate senate bill creates a whole new tax for the lottery fund. Senate Bill 535 creates a new severance tax in which 50% of the revenue goes to the lottery fund (the other 50% goes to “energy education and marketing” and “clean energy grants”).
Another bill brought forth (and was passed) in the House of Representatives is House Bill 27. One would think that with a scholarship fund running out of money you would increase the rather lax eligibility requirements so as to decrease the scholarships awarded out. Or, at the very least, freeze the amount that is awarded out so as not to increase the burden on the fund.
In their infinite wisdom, House Bill 27 expands the eligibility for the Legislative Lottery Scholarship! According to the LFC fiscal impact report, the expanded eligibility would generate a 10 percent increase in recipients per academic year. If there were no other restrictions on the total amount awarded in legislative lottery scholarships, the Higher Education Department estimates that this 10 percent increase would total $12.1 million between FY14 and FY16. Basically, lets bankrupt the fund as quickly as possible.
Just to recap:
Situation: Scholarship fund has become more expensive than the lottery can afford to support, thus the lottery fund is running out of money.
Government response 1: Make the taxpayers pay for it
Government response 2: Lets expand those eligible to receive the scholarship thus making it even more expensive now that the taxpayers are paying for it!
Instead of making taxpayers, especially those who chose to work and not go to college, pay for the college tuition of others, we should reform the scholarship fund so as to shrink it back down to what the lottery fund can afford. There is incredible room for reform. A 2.5 GPA requirement for all NM grads is incredibly lax. Scholarship is a privilege, not a right or entitlement. You should earn it.
There are several ways we can not only fix the lottery scholarship fund but make it more efficient without resorting to just throwing money at it and hope it goes away:
- § Increase the minimum GPA to somewhere between 3.0 and 3.3 on a 4.0 scale. I don’t know of any scholarship that gives a student a full ride to a university that only requires a 2.5 GPA. Raising the standard naturally filters out those who are not serious about their college education or those who are just not ready yet to embark upon a college education. Having a mediocre standard begets mediocrity.
- § Allow up to one or two years after completing a high school diploma or equivalent to be eligible for the scholarship. Between 25% and 35% of New Mexico high school graduates will lose the Lottery scholarship after their first semester of college. And only 15% of all people who lose their Lottery scholarships will graduate in 6 years. By essentially forcing kids into college who are just not ready for it only squanders the money that can best be used by others who are more likely to finish college. If this is an investment, then invest it wisely. Many are not suited for a college education or do not even need one for their respective career choices. Instead of throwing money at students so they can go to college for the sake of going to college is a waste when they spend most of their time lolly-gagging around studying music appreciation because their heart is not in it. Let them explore the world, gain some valuable work and life experience so that they can then decide if college is the right thing for them or not.
- § Only allow scholarship to be used on community colleges for the first year or two of an awardee’s degree program. Or what is required to fulfill the boring pre-requisites. There is no difference between an intermediate algebra class in a community college and one at a university. Why spend the money on the much pricier university when you can get the same product at a much cheaper cost from a community college?
- § Increase the required class load to 15 credits a semester instead of 12 credits. If they only do 12 credits, then lessen the amount that is awarded to them–the individual can cover the rest with the side job they must have with the increased free time.
These are only a few simple, common sense reforms. There is still means-testing or limiting the scholarship awards to specific degree programs in which the payoff matches the money spent to get the degree. Is it really necessary to pay for a 4-year degree on “Music Therapy” or “Art History”?
And automatic stabilizers should be in place if the awards begin surpassing what the lottery can fund. Automatically decrease the amount awarded across the board until the total amount is back within the capacity of the fund. Or increase GPA requirements again, etc.
Bottomline: The New Mexico Lottery fund is but another example of an ever-expanding government program that inevitably grows beyond its original capacity. Lets not facilitate the expansion until its gotten so big and people have become so dependent on it that its takes a life of its own and becomes politically untouchable with no way to scale it back down. Lets nip it in the bud now. The New Mexico lottery scholarship fund is suppose to be self-sufficient. Cut costs to maintain that self-sufficiency. Don’t make other individuals who decided to work instead of go to college pay for the college education of others. It is not exactly an equitable use of taxpayer dollars.