With state lawmakers studying how to cut costs in the state’s HOPE lottery scholarship program, Senate Democratic leader Jim Kyle is urging them not to deny grants to thousands of college-bound kids unnecessarily.
In a letter to legislators this month, Kyle called for using the lottery fund like an economic stimulus.
He pointed out that, while the lottery fund indeed is running at an annual deficit now, it’s still flush with $373 million in reserves built up by surpluses in the early days of the seven-year-old program before many scholarships had been given.
At the current rate of expenditure, it will take until 2024 to drain the surplus to $50 million, the lowest level state law allows. So, Kyle asks, why tighten scholarship eligibility now when the economy’s in the dumps and unemployment stands at nearly 10 percent?
“Our talks so far have been all about money, when they should be about putting Tennesseans back to work,” Kyle said. “The lottery fund was designed to give more Tennesseans the opportunity at a good education and an even better job. That should be our top priority now more than ever.”
“This is like not feeding your infant child because you are saving up to buy them a car when they’re 16.”
A special committee of lawmakers and higher education officials is considering eligibility changes that would exclude nearly 3,000 students from the $4,000-a-year HOPE scholarships. With the state’s unemployment rate stuck at nearly 10 percent, Kyle called on lawmakers to focus instead on increasing access for students.
“The Lottery for Education account has more money in reserves than it pays out each year in scholarships, and yet we talk about its looming insolvency,” Kyle wrote. “I don’t know a single person with more money in their savings account than they spend in a year who considers themselves broke.”
“In this time of economic uncertainty, we must use what resources we have to ensure that people are prepared for what is to come; if we do not, the world will leave us behind,” Kyle wrote. “Rather than saving for a future that may never arrive, why not utilize the resources we have for the betterment of
Leaders of the Republican-run legislature seem more interested in putting the lottery program on solid financial footing now rather than waiting until the economy improves. Depending on what happens in next year’s session, the debate could shift to the 2012 campaign trail in legislative elections across the state.
The Haslam administration is working separately on a set of recommendations for the legislature. Gov. Bill Haslam said he’s for “a very measured approach” to the lottery money issue.
“We are spending more than we’re bringing in and we can’t keep doing that and kicking the can down the road, as they say. So I do think we should begin to come up with a way to address that sooner,” he told reporters. “I think having that savings account, the rainy day fund, allows us to work toward getting one that is in balance. But it’s not fair for us to just to keep using more than we bring in and let somebody 10 years from now worry about it. ... We’re actually as an administration looking at all the different ways that you could shrink that gap right now and I think by the time the legislature comes around we’ll have a voice in all of that.”
Some lawmakers want to implement changes now to save at least $17 million a year — the amount of the annual deficit the lottery fund is running.
Students now qualify for the basic Hope Scholarship by achieving a 21 ACT score or a 3.0 high school grade-point average. There are 20 options on the table, all proposals from higher education staffers. Among them:
• Requiring both 21 ACT and 3.0 GPA.
• Requiring both ACT and GPA for HOPE scholarships at a four-year school. Others could go to a two-year school with a $2,000-a-year grant.
• Requiring 23 ACT or 3.25 GPA.
• Reducing grants for freshmen and sophomores at four-year schools to $3,000 and raising it to $3,000 at two-year schools. Under this plan, the scholarship would stay at $4,000 for juniors and seniors.
• Eliminating high school eligibility standards altogether and requiring either 2.5 or 2.75 GPA in the first semester of college to qualify for the scholarship in subsequent semesters. That would end grants for the first semester of college.
• Capping family income on eligibility at $100,000 to save $66 million annually, at $150,000 to save $27 million and at $200,000 to saves $13 million.
Of all the ideas, the income caps are perhaps the most unlikely to clear the legislature. They were considered — and rejected — when lawmakers first developed the program. Some legislators argue HOPE scholarships should go to the “best and brightest” kids to encourage them to stay in Tennessee. If wealthy children are excluded, that would defeat that purpose, they say.
Others, like Kyle, argue the money should go to increase the woefully low percentage of Tennesseans with college degrees, meaning more scholarships should be awarded to low-income children.
The special committee is supposed to make recommendations by Dec. 1. At its last meeting a month ago, one member — Sen. Randy McNally, the chairman of the powerful Finance Committee — suggested the time to act is now.
“There certainly no emergency now but the longer it takes us to address the problem the bigger it will get and the harder it will be to address,” said McNally, R-Oak Ridge.
“We don’t intend just to kick the can down the road,” replied the committee’s chair, Sen. Delores Gresham, R-Somerville. “We’re going to do something, yes.”