(Updated at 6:57 p.m. on Thursday, June 24.)
CARSON CITY – Nevada high school graduates intending to rely on the Millennium Scholarship to attend college in state this fall could find themselves with more out-of-pocket expenses because of a $4.2 million projected shortfall in the program.
The shortfall is the result of money from a tobacco legal settlement that funds the scholarship coming in at a lower level than previously projected. The annual payments from tobacco companies are made each April. The 2010 payment was 10 percent less than projected due primarily to lower smoking rates.
Lawmakers were told today that if the scholarship revenues are inadequate to pay the full amount due each student, the payment would be reduced by a percentage based on the amount of money available.
If a shortfall in funding materializes as expected, students will likely see only a percentage of their scholarship paid in the fall semester because of cash flow issues, said Chief Deputy State Treasurer Mark Winebarger. Because the annual tobacco payment will be made in April 2011, students should get their full scholarship payments in the spring semester, he said.
After the meeting, Winebarger estimated that without any changes to the program, eligible students will receive only 65 percent of their scholarship amounts in the fall 2010 semester.
The Legislature’s Interim Finance Committee today delayed a vote on a transfer of $200,000 from a separate college savings program to prop up the scholarship. The infusion would be far short of what is needed to erase the shortfall.
Senate Majority Leader Steven Horsford, D-Las Vegas, said the Millennium shortfall will be taken up at a future meeting of the committee. More evaluation of the issue is needed, he said.
In addition to the tobacco settlement funds, the scholarship has been funded with revenues from the state’s Unclaimed Property Fund managed by the treasurer’s office. That revenue source was diverted by lawmakers to help fill a hole in the general fund budget after getting reassurances that the scholarship would remain solvent until 2014.
More recent projections on the anticipated size of the annual tobacco settlement payments show instead there will be a shortfall in the upcoming fiscal year, however.
Several other funding options to fill the shortfall were discussed by state officials but determined not to be legally viable. A proposal to use $2.6 million available in a separate college savings trust fund was also discussed but not uniformly supported by lawmakers.
Sen. Bob Coffin, D-Las Vegas, argued against taking any money from the college savings trust fund to subsidize the scholarship. He said the shortfall is the result of actions by the Legislature to balance the general fund budget.
“If there is a shortfall we did it,” Coffin said.
The program, named for former Gov. Kenny Guinn, 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.
Sen. Bob Coffin on legislative decision to take money from scholarship fund:
Coffin says it was bad policy to take money from the scholarship fund