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

SPONSOR Begaye

ORIGINAL DATE

LAST UPDATED

2-22-2007

HB 104

SHORT TITLE Transfer Student Lottery Scholarships

SB

ANALYST Dearing

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$1,722.0 $1,722.0 $3,444.0 Recurring Lottery

Scholarship

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

House Bill 104 carries no appropriation. House Bill 104 amends Sections 21-1-4.3; 21-13-10;

and 21-16-10.1 NMSA 1978 such that recipients of awards would be required to maintain a 2.5

grade point average for the entire time that they receive the scholarship. House Bill 104 would

allow New Mexico resident students returning from both 2-year and 4-year out-of-state

institutions the opportunity to receive a lottery scholarship for 7 consecutive semesters, provided

that they are otherwise eligible, have completed at least one (1) semester at the out-of-state

school, and have transferred in to a NM institution within 120 days of their last attendance at the

out-of-state school.

FISCAL IMPLICATIONS

The fiscal impact would be to the Lottery Tuition Fund. According to data submitted to the New

Mexico Higher Education Department, it is estimated that 513 resident students transfer to New

Mexico public colleges and universities after spending the beginning of their postsecondary

education outside the state of New Mexico. If all met the eligibility requirements to receive the

Lottery Success Scholarship, the increased liability to the lottery fund from House Bill 104

House Bill 104– Page

2

2004-2005 New Mexico

Combined State and

Federal Student

Financial Aid, in m illions

$28.3

$14.8

$183.

$142.

NM Lottery Success

Sc holar ship

Fed. & NM Other Grant &

Sc holar ship

Fed. & NM Work Study/Ser vice

Re lat ed

Fed. & NM Loan Programs

S o ur c e: T he C o nd i t i o n o f Hi g he r ed u c t io n in

Ne w M e xi co , HED, v ar io us ye ar s

Lottery Schol arshi p

Fund Fi sca l

Projections

$0 $20 $40 $60

FY12

FY11

FY10

FY09

FY08

FY07

FY06

M i ll io ns

So ur c e: HED Ex p en di t ur e Es t . ; LF C / DF A

Co n s en s us R ev e nue E s t ima t e

Fund Balance

Revenues

Expenditures

would be approximately $1,722,000 in FY08.

ALTERNATIVES, OTHER SUBSTANTIVE ISSUES

In the 2005-2006 academic year, approximately $36.9 million in Lottery Success scholarship

funds were distributed to New Mexico students. Payouts to beneficiaries continue to exceed

New Mexico Lottery Authority disbursements to the scholarship fund. Recent projections show

fund insolvency around 2012-2013. With overall flat high school graduation

rates expected over this period, projected increases in expenditures are

primarily based on tuition inflation. State student aid dollars from the lottery

program comprise an ever larger component of state spending on higher

education, increasing from 38 percent to 42 percent over the 2002-2003

academic year with subsequent reductions in work-

study and service aid.

Across the country, merit scholarship programs are

undergoing similar solvency issues. Underestimated

and rapidly increasing demand for merit

scholarships and scarce resources has forced other

states to pursue alternatives.

The Lottery program is one component among many

available federal and state student financial aid

sources. Including federal and other state grants,

work-study, and loan programs, the Lottery program

comprises just about 7.7 % of available student

financial aid in NM.

Students excluded from the Lottery Success Scholarship have the

option to apply for other state and federal financial aid programs.

RELATIONSHIP

House Bill 104 relates to:

Senate Bill (s): 110, 689, 426, 686,

House Bill (s): 275, 571, 209, 275, 361, and 740

These listed bills create various changes to lottery scholarship eligibility, distributions from the

fund, or otherwise change the Lottery Success program framework.

PD/nt