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.

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

SPONSOR HEC

ORIGINAL DATE

LAST UPDATED

2-28-2007

3/01/07 HB 209/aHEC

SHORT TITLE Lottery Scholarships for Military Dependants

SB

ANALYST Dearing

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

*($0.1)

Recurring

Lottery Scholarship

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

*($145.2) *($145.2) ($290.4) Recurring Lottery

Scholarship

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Senate Bill (s): 110, 689, 426, 688, and 686

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

Duplicates Senate Bill 687

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

SUMMARY

Synopsis of HCPAC Amendment

The House Consumer and Public Affairs Committee amends House Bill 73 such that;

1.) On page, 1, line 13, after “SCHOOL" insert “OR WHO RECEIVE A GENERAL

EDUCATIONAL DEVELOPMENT CERTIFICATE WHILE THEIR PARENTS ARE

STATIONED IN NEW MEXICO".

House Bill 209/aHEC – Page

2

2.) On page 3, line 21, after the first occurrence of “school" insert “or who received a general

educational development certificate", after “and" strike the remainder of the line and insert in

lieu thereof “whose" and strike line 22 through “their".

3.) On page 5, line 17, after “school" insert “or who received a general educational development

certificate", after “and" strike the remainder of the line and insert in lieu thereof “whose" and

strike line 18 through “their".

4.) On page 7, line 1, after the first occurrence of “school" insert “or who received a general

educational development certificate", after “and" strike the remainder of the line and insert in

lieu thereof “whose".

House Education Committee amendments make minor changes to the proposed legislation,

thereby clarifying its intention. The intent of the changes are such that there is clarification that

students earned a GEDC while in New Mexico.

Synopsis of Bill

House Bill 209 carries no appropriation. If enacted, House Bill 209 would amend Sections 21-1-

4. 3; 21-13-10; and 21-16-10.1 NMSA 1978. House Bill 209 would extend eligibility for the

New Mexico Lottery Success Scholarship program such that eligibility for scholarship program

would be extended to all military dependents of U.S. service members residing in New Mexico,

including those maintaining legal residency outside the State. The bill does not contain a

requirement that the service members pay New Mexico taxes, however it includes a requirement

that the students graduate from a New Mexico public or private high school. As written, the

added Section (e) does not provide for a military dependent who matriculates with a GEDC,

whereas other eligible students are afforded this provision.

FISCAL IMPLICATIONS

The fiscal impact would be to the Lottery Tuition Fund. According to data from the Planning and

Research division at the New Mexico Higher Education Department, it is estimated that an

additional 51 students could become eligible to receive the Lottery Success Scholarship. The

fiscal impact would be $145,200 in FY08. The impact is recurring.

Currently, the number of students enrolled under the nonresident tuition waiver for active duty

military or National Guard or dependents who would otherwise be eligible for the lottery is mini-

mal.

Participants in Military Non-Resident Tuition Waivers:

Year Students

0001 21

0102 21

0203 23

0304 21

0405 18

Based on projections of college attendance and lottery qualification rates, NMHED estimates

that a minimum of 51 students would enter the program. The fiscal impact would be an

House Bill 209/aHEC – Page

3

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

Lotte ry Schola rship

Fund Fiscal

Projections

$0 $20 $40 $60

FY12

FY11

FY10

FY09

FY08

FY07

FY06

M il li o ns

So u r c e : HED Ex p end i t u r e Es t .; LF C / D F A

C o ns ens u s R ev en ue E s t imat e

Fund Balance

Revenues

Expenditur es

estimated $145,200 in FY08. There would be a recurring impact to the Lottery Success

Scholarship fund.

RELATIONSHIP

House Bill 209 relates to:

Senate Bill (s): 110, 689, 426, 688 and 686

House Bill (s): 571, 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.

ALTERNATIVES, OTHER SIGNIFICANT 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 have

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.

AMENDMENTS, QUESTIONS

House Bill 209 does not specify the requirement of a New Mexico

issued GEDC for applicant eligibility.

PD/mt