State Treasurer’s Office Tells Lawmakers Millennium Scholarship Will Be Short $4.2 Million by End of Fiscal Year 2011
CARSON CITY – In a letter sent today to the Legislature’s Interim Finance Committee, the state Treasurer’s Office said the Millennium Scholarship will run out of money in 2011 unless action is taken to preserve the program.
The letter, sent on behalf of Treasurer Kate Marshall by Chief of Staff Steve George, says the scholarship program needs $4.2 million to remain whole through Fiscal Year 2011 and $11.7 million to survive through Fiscal Year 2013.
The shortfall estimate comes just a few days after it was believed the program would remain financially healthy through fiscal 2011.
The letter was in response to questions from lawmakers on Thursday about why a College Savings Trust Fund was not tapped for a $2 million transfer into the scholarship program as the Legislature had intended when it adjourned its special session on March 1.
Two lawmakers said they believed the proposal to transfer $2 million this year and next from the trust fund was agreed upon by the treasurer as a way to keep the program whole through 2014.
But in the letter, George said it was made clear to lawmakers that transfer request would have to be approved by the five-member College Savings Plans board. The board rejected the idea at a meeting in March, opting instead to transfer $200,000 to the program believing it would be enough to keep the program solvent through June 30, 2011.
George said the Treasurer’s Office will work with lawmakers to find solutions to preserve the scholarship, which provides funding to Nevada high school graduates with a high enough GPA who go on to college in state.
The office, “stands ready to assist the Legislature in any way economically feasible to prolong the life of the Gov. Guinn Millennium Scholarship Program, to the benefit of thousands of Nevada students,” he wrote.
George said tough budget decisions faced by lawmakers in the special session to close a more than $800 million shortfall led to the financial difficulties for the scholarship, which was created in 1999 using the proceeds from a national settlement among the states and tobacco companies.
Those decisions included eliminating a $7.6 million a year cash infusion into the program from the Unclaimed Property Fund for 2009, 2010 and 2011. The Legislature also decided to make a $5 million cash withdrawal from the scholarship fund itself in 2009 and in 2011.
These current and impending transfers, along with declining revenues from the tobacco fund to support the scholarship program, have created the shortfall, George said.
One recommendation to lawmakers to keep the scholarship program going through 2011 is to not take $5 million from the program next year.
Another option would be to transfer $10 million in unanticipated revenues coming into the Unclaimed Property Fund to the scholarship program. George said the proposal will be submitted to the Interim Finance Committee for consideration at its June meeting.
A third option would be to change the eligibility criteria to reduce the number of students eligible for the scholarship.
Steve Martin, the GOP candidate for treasurer, last week criticized Marshall for not being forthcoming about the true health of the scholarship fund, an allegation rejected by her campaign team as false.
Martin said in his release he believed the scholarship fund would have a shortfall of $3.4 million by June 30, 2011.
When told of the new estimate, Martin said the purpose of his criticism was to get information about the health of the program to lawmakers so they can take appropriate action.
“My whole intent was to get the issue out there,” he said. “We need to make sure we don’t have a shortfall if the intent is to continue with the program.”
Martin said he believes the scholarship could be continued using the tobacco funds if means testing was implemented so only students in financial need could get the funding.
“It should be based on need,” he said.
George said the program costs about $25 million per fiscal year, with that amount projected to rise to $26 million in fiscal year 2012. About 21,000 students are using the scholarship, with 60,000 students participating since its inception in 2000.
The scholarship ranges from $40 to $80 per college credit hour depending on the college attended. The scholarship limit is $10,000. Students must qualify by earning a high enough grade point average in high school. Students must also maintain a minimum GPA while in college to continue receiving the scholarship.