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

SPONSOR Foley

ORIGINAL DATE

LAST UPDATED

2/18/2007

HB 926

SHORT TITLE Tuition Scholarships for Military Dependents

SB

ANALYST Dearing

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

*($0.1)

Recurring

Lottery Scholarship

Fund

*Please see narrative

(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

*($653.9) *($653.9) ($1,307.8) 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, 209, 275, 361, and 740

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

SUMMARY

Synopsis of Bill

House Bill 926 carries no appropriation. If enacted, House Bill 926 would amend Sections 21-1-

4. 3; 21-13-10; and 21-16-10.1 NMSA 1978. House Bill 926 would extend eligibility for the

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

would be available for all dependents of New Mexico resident U.S. service members, stationed

outside the State, provided they pay NM Taxes. Additionally, House Bill 926 extends the time-

window of eligibility for scholarships for New Mexico resident U.S. service members separating

from service from 120 days to 12 months.

House Bill 926 – 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

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 211

students could become eligible to receive the Lottery Success Scholarship. The fiscal impact

would be $557,700 in FY08.

In addition, due to an extension of the time-window of eligibility, it is estimated that 75

additional veterans of the armed forces could become eligible to receive the Lottery Success

Scholarship.

The fiscal impact would be an additional $96,200 in FY08 for a total impact of $653,900.

The impact is recurring.

ALTERNATIVES, OTHER SIGNIFICANT ISSUES

In the 2005-2006 academic years, 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.

House Bill 926 – Page

3

RELATIONSHIP

House Bill 926 relates to:

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

House Bill (s): 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.

AMENDMENTS, QUESTIONS

House Bill 926 does not specify the requirement of a New Mexico issued GEDC for applicant

eligibility.

PD/nt