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F I S C A L I M P A C T R E P O R T
SPONSOR Williams
DATE TYPED 03/03/05 HB 138
SHORT TITLE Lottery Scholarship Eligibility Duration
SB
ANALYST Williams
APPROPRIATION
Appropriation Contained Estimated Additional Impact Recurring
or Non-Rec
Fund
Affected
FY05
FY06
FY05
FY06
Roughly
$5,170.0 to
$7,750.0
Recurring Lottery Tuition
Fund
See text Recurring
General Fund –
higher education
funding formula
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to numerous student financial aid and lottery tuition scholarship bills
SOURCES OF INFORMATION
LFC Files
Commission on Higher Education (CHE)
New Mexico Lottery Authority
SUMMARY
Synopsis of Bill
Endorsed by the Legislative Education Study Committee.
The bill extends the eligibility period for a full time resident that is accepted to attend a four-year
state public, post-secondary institution to five consecutive years beginning the second semester
of the recipient’s first year of enrollment. The eligibility period is also extended to three con-
secutive years for those students that attend a two-year public post-secondary education institu-
tion.
Significant Issues
The bill is consistent with the recommendations of the Governor’s Task Force on Higher Educa-
pg_0002
Bill No. -- Page 2
tion.
This legislation may send a contradictory signal to stakeholders on the importance of timely de-
gree completion as measured by student persistence and graduation for all public, post-secondary
institutions in the state as required under the Accountability in Government Act.
FISCAL IMPLICATIONS
New Mexico substantially lags behind national averages and leading states in students complet-
ing post-secondary studies in a timely fashion. In 2004, only 41 percent of first-time, full-time
students in New Mexico completed a bachelor’s degree within six years of college entrance. In
comparison, top ranking states posted scores on average of 64 percent. Estimating one additional
year of cost for the program for six year graduates would be roughly $5 million in FY06, with
the cost growing over time, compared to the one additional year of cost for the program for four
year graduates at $7.75 million.
Further, any incentive to extend time-to-degree could increase general fund costs due to the
funding of student credit hours in the higher education funding formula.
The CHE provides three scenarios for estimating the projected costs based on existing students
who were on lottery but lost the scholarship, who might continue if given more time; 2) an in-
crease in behavior, estimated at 10 percent and 3) an increase in behavior, estimated at 20 per-
cent. The cost of these scenarios in the CHE analysis ranges from $5.2 million to $11.6 million
in the first year of implementation.
OTHER SUBSTANTIVE ISSUES
To evaluate impacts of potential changes to the lottery tuition scholarship program, the legisla-
ture may wish to consider requiring an annual review and reporting to the Legislative Finance
Committee, Legislative Education Study Committee, Department of Finance and Administration
and the Office of the Governor by:
•
New Mexico Lottery Authority on revenue situation and outlook and
•
Commission on Higher Education on
o
expenditure situation and outlook
o
fund balance situation and outlook
o
policy and fiscal impacts of each change to lottery scholarship program enacted
by the 2004 legislature
POSSIBLE QUESTIONS
1.
What are the potential impacts on student persistence and graduation targets for public,
post-secondary institutions.
ANA/sec