Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Leavell

DATE TYPED 2/3/05

HB

SHORT TITLE Expand Lottery Scholarship Eligibility

SB 385

ANALYST Williams

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

Very rough $0.7

to $1.2 million,

contingent upon

additional data

Recurring (with

escalation over

time; see text)

Lottery Tuition

Scholarship

Fund – private,

post-secondary

institutions

Roughly $1.2 to

$1.6 million

Recurring (with

escalation over

time; see text)

Lottery Tuition

Scholarship

Fund – two year

eligibility win-

dow

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to numerous lottery and student financial aid

SOURCES OF INFORMATION

LFC Files

New Mexico Lottery Authority

No bill analysis from Commission on Higher Education; some background data submitted

SUMMARY

Synopsis of Bill

The bill expands eligibility for the lottery tuition scholarship program to private, post-secondary

institutions in the state. The amount of the scholarship at these institutions is limited to the

amount of tuition charged by the University of New Mexico (UNM). Further, the bill authorizes

a two-year gap between graduation from high school (or receipt of a GED) and enrollment in an

institution for a qualifying student to maintain eligibility for lottery tuition scholarship funds.

The gap extension for lottery tuition scholarship program eligibility would be effective beginning

with the class graduating in May 2003.

Senate Bill 385 -- Page 2

FISCAL IMPLICATIONS

The bill has two components of fiscal impact.

Private, Post-secondary Institutional Eligibility. The first is the extension of lottery tuition

scholarship eligibility to students at private post-secondary institutions. Some students may

switch from New Mexico public, post-secondary institutions to these institutions. To the extent

that the allowed tuition charge equivalent to UNM tuition is greater than that tuition charge of

the student‘s current school, there would be some increase in lottery tuition scholarship fund

charges. This impact is not expected to be large.

The more significant cost to the lottery tuition scholarship fund is the extent to which New Mex-

ico students attending out-of-state institutions remain in-state and attend one of these private in-

stitutions. It is difficult to forecast how many students might take advantage of the change. The

following attempts to put some parameters around the potential costs of this proposal based on a

preliminary analysis.

Information from its website reflects total enrollment at the St. John’s College campus in Santa

Fe of about 450 to 475 students. Data from the IPEDS Peer Analysis System shows Fall 2002

full time equivalent enrollment of:

College of the Southwest, Hobbs 642

College of the Southwest, Carlsbad not available

College of Santa Fe 1,192

If 10 percent of these students claimed the lottery scholarship program, then approximately 230

students might be eligible. The current tuition charge at the University of New Mexico is $1,556

per semester for full time undergraduate in-state students. Thus, a first-year cost under this sce-

nario would be approximately $715.0 thousand. The multi-year cost would grow as additional

cohorts are added.

An alternative scenario could be developing using data for the state’s Student Choice student fi-

nancial aid program. CHE reports 373 students are currently receiving Student Choice awards.

The student choice grants are authorized in 21-21C-1 through 21-21C-9 NMSA 1978. These

student financial aid awards are targeted at students attending independent institutions. Eligibil-

ity for this program is based on student enrollment of at least six semester credit hours in pro-

gram leading to a degree, satisfactory academic standing, New Mexico resident classification,

and the basis of need. If 375 students were eligible for the lottery tuition scholarship program,

the potential first-year cost to the lottery scholarship fund would be about $1.2 million. Again,

the multi-year cost would grow as additional cohorts are added.

In comparison, data from WICHE and others show about 24 percent of New Mexico’s first-time,

full-time freshman attended post-secondary institutions in other states in 2001, or roughly 2,700

students. This rate is one of the highest of the western states.

Two-year Wait Out. The second component of the bill with a fiscal impact is a two-year wait

out period between high school and college to maintain eligibility for the lottery scholarship pro-

gram. Based on analyses of similar legislation in 2003 and 2004, based on an LFC/CHE survey

of institutions in 2003, the projected fiscal impact is difficult to determine. The following is

based on student eligibility and award data compiled by CHE in 2003, with some modifications.

Senate Bill 385 -- Page 3

Based on similar legislation from the 2003 and 2004 sessions, this bill would be interpreted by

institutions as similar to the current program, such that entering students would not be eligible

for lottery tuition scholarship funding until the spring semester. The one semester impact could

be about $1.2 to $1.6 million. The incremental full year cost would be about $2.4 to $3.2 mil-

lion.

ADMINISTRATIVE IMPLICATIONS

Additional reporting and verification responsibilities would impact post-secondary institutions

and the CHE.

TECHNICAL ISSUES

The bill may need to clarify if students wishing to attend part-time may do so during the grace

period.

Is the intent of the effective date to be retroactive.

The legislature may wish to consider clarifying that students attending the Santa Fe campus of

St. John’s College would be eligible for the lottery tuition scholarship program participation.

The school also operates a campus in Annapolis, Maryland.

OTHER SUBSTANTIVE ISSUES

Students at private institutions are eligible to receive Student Choice awards. CHE data indicates

373 students at those institutions receiving “student choice” awards; of those 248 (55 percent)

had previously attended one or more New Mexico public institutions.

CHE indicates that based on a survey of registrars, there are currently 29 students at St. John’s

College, College of Santa Fe and College of the Southwest who would meet eligibility require-

ments for the lottery scholarship program.

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:

1.

New Mexico Lottery Authority on revenue situation and outlook and

2.

Commission on Higher Education on

a.

expenditure situation and outlook

fund balance situation and outlook

policy and fiscal impacts of each change to lottery scholarship program enacted

by the 2004 legislature

AW/yr