NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to HB19, HB254, SB114, SB157, SB253, HJM 2, HJM 9

SOURCES OF INFORMATION

State Department of Education (SDE)

Commission on Higher Education (CHE)

SUMMARY

Synopsis of HAFC Amendment

The amendment changes the name of the scholarships to "legislative lottery tuition scholarships".

The amendment clarifies that New Mexico Military Institute is eligible to award these scholarships. The amendment would add the New Mexico campuses of Dine College and Crownpoint Institute of Technology to those eligible to award legislative lottery tuition scholarships.

The amendment also directs that other scholarship funds must be granted before granting legislative lottery tuition scholarships.

Finally, the amendment would authorize that the scholarships be funded, then any residual balance would be transferred to the public school capital outlay fund.

Synopsis of Original Bill

The bill would change the distribution of net lottery revenues. The public school capital outlay fund would no longer receive a distribution, and all of the net revenues would be distributed to the lottery tuition fund. In comparison, under current statute, the public school capital outlay fund receives 60 percent of the net lottery revenue, while the remaining 40 percent is distributed to the lottery tuition fund.

Significant Issues on HAFC Amendment

NMMI currently has 21 lottery scholars participating in the program.

The language to add eligible students at New Mexico campuses of Dine College and Crownpoint Institute of Technology would increase the number of students receiving scholarships and thus increase the cost of the program. However, only a small number of students would be added with this amendment. Currently, Crownpoint is not accredited for secondary education. The New Mexico campuses of Dine College have approximately 200 students; however, not all of these students are New Mexico residents and would, therefore, not be eligible. According to CHE, there are constitutional issues regarding including tribal schools. CHE has consistently cautioned against expanding eligibility.

Currently, institutions award lottery scholarships before awarding scholarships funded by other state or federal aid programs as well as before awarding scholarships from institutional, private or foundation programs. According to CHE, the amendment language would require the institutions to first award merit-based scholarships, but would not penalize those receiving need-based student aid.

Significant Issues on Original Bill

Based on current projections of lottery revenues, CHE expects to reduce the amount of each tuition scholarship to an amount less than 100 percent of the cost of tuition beginning in FY01.

In FY01, priority one requests to the public school capital outlay council totaled approximately $112 million. Lottery funds provided approximately $10 million in funding for school districts.

FISCAL IMPLICATIONS

HAFC Amendment

Public school capital outlay funding would be expected to decline over time as funding needs for lottery scholarships increases.

Original Bill

The current revenue projection from the New Mexico Lottery is for FY01 revenues of $19,850.0. Under current statute, the distribution of this revenue would be $11,910.0 to public school capital outlay fund and $7,940.0 to lottery tuition fund.

This bill would modify the distribution such that the lottery tuition fund would receive all of the distribution. Thus, with all other factors held constant, the public school capital outlay fund would receive $11,910.0 less than under current statute, while lottery tuition fund would receive $11,910.0 more than under current statute.

AW/gm/njw