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 Jennings

ORIGINAL DATE

LAST UPDATED

2/09/06

HB

SHORT TITLE Legislative Lottery Graduate Scholarships

SB 612

ANALYST Williams

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$2,000.0

Recurring

Legislative Lottery

Graduate Scholarships

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to numerous bills regarding lottery tuition scholarships

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

Indeterminate revenue

loss

Recurring Lottery Tuition

Fund

$2,000.0

Recurring

Legislative Lot-

tery Graduate

Scholarships

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates,Relates to,Conflicts with, Companion to

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY06

FY07

FY08 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

($2,000.0)

Recurring

New Mex-

ico Lottery

Authority

operating

budget

(Parenthesis ( ) Indicate Expenditure Decreases)

Senate Bill 612 – Page

2

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

New Mexico Lottery Authority (NMLA)

SUMMARY

Synopsis of Bill

The bill directs the Higher Education Department to establish the legislative lottery graduate

scholarship program. Students would be eligible for funding based on:

•

New Mexico residency

•

New Mexico high school graduate or receipt of a general equivalency diploma (GED)

while a New Mexico resident;

•

Accepted or enrolled in a graduate program of study intended to result in a master’s or

doctoral degree at a public, post-secondary educational institution located in New Mexico

or in another state if the student is participating in a program of the Compact for Western

Regional Cooperation in Higher Education and meeting other eligibility criteria;

The maximum amount of a scholarship under the new program would be tuition for a full aca-

demic year. The award would be renewable.

In the case of out-of-state graduate program study, the student must reside in New Mexico for

one year immediately following receipt of the graduate degree or repay the scholarship amount

plus interest.

The bill creates a non-reverting fund, the legislative lottery graduate scholarship fund. The bill

diverts unclaimed prizes to the legislative lottery graduate scholarship fund. Money in the fund

is appropriated to the Higher Education Department for awarding scholarships.

FISCAL IMPLICATIONS

Unclaimed prizes vary significantly, and have ranged from approximately $2 to $4 million. The

bill diverts unclaimed prizes to the legislative lottery graduate scholarship fund. Money in the

fund is appropriated to the Higher Education Department for awarding scholarships.

New Mexico Lottery Authority notes: “Removing unclaimed lottery prizes and re-directing

these funds to other programs will have a impact on Instant scratcher sales and ultimately funds

for the State and its beneficiary the “lottery success scholarship”.

In the past, the authority has used these unclaimed prize funds to increase the percentage of the

prize payout, which has resulted in an increase in both sales and return to the State. Instant sales

have increased by 95% from 1999 to 2005. 1999 is the year in which the lottery increased the

prize percentage payout, which accounts for the 95% increase in sales. The Unclaimed prize

fund applied against prizes in the last few years has been as low as $2,025,00, and is not a stable

source of revenue per year. Unclaimed prizes most likely will also come down, if sales go down.

Senate Bill 612 – Page

3

The unclaimed prize fund is also used by the lottery to cover unexpected prizes before sales are

achieved, as well as to create specialty games which has allowed us to stimulate trial and in-

crease our player base resulting in increased sales

If the unclaimed prizes become unavailable, the end result will be less revenue as the prize per-

centage will come from revenues without supplanting of unclaimed prize monies or the lottery

will have to reduce prize percentage payout which will produce less sales. Eliminating un-

claimed prizes will have an impact on the bottom line for the authority. In addition, any un-

claimed prizes would not be reflected as a profit to the state, it would give the perception that the

lottery is returning less and less each year.”

Continuing Appropriations language

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

TECHNICAL ISSUES

The reference to Compact for Western Regional Cooperation in Higher Education needs clari-

fied.

POSSIBLE QUESTIONS

1.

What is the purpose of the program.

2.

How many students would be supported.

3.

How would program outcomes be measured.

AW/yr