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 SEC

ORIGINAL DATE

LAST UPDATED

2/19/07

3/1/2007 HB

SHORT TITLE Lottery Scholarships for Military Dependants

SB 687/SECS

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

*($557.7) *($557.7) ($1,115.4) 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, 209, 275, 361, and 740

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

SUMMARY

Synopsis of Bill

Senate Education Committee Substitute for Senate Bill 687 carries no appropriation. If enacted,

Senate Bill 687/SECS would create a new section of statute. Senate Bill 687/SECS would

create a mechanism whereby certain dependants of U.S. service members could obtain a New

Mexico high school diploma. These diplomas would be available to dependants existing in the

State and attending out-of-state schools, provided they maintained regular enrollment in a State

school, provided advance notification of the transfer, immediately enrolled in the out-of-state

school, and receive no other degree or GEDC. Senate Bill 687/SECS would in effect extend

Senate Bill 687/SECS – Page

2

Lottery S cholarship

Fund Fisca 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 d it ur e Es t . ; LF C/ D F A

C o ns e ns us R ev enue E s t i mat e

Fund Balance

Revenues

Expenditures

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 maintain state residency.

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. The impact is recurring.

RELATIONSHIP

Senate Bill 687/SECS relates to:

Senate Bill (s): 110, 689, 426, 686, and 687

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.

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.

Senate Bill 687/SECS – 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

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.

PD/nt