Posts Tagged ‘Millennium’

State Officials, Lawmakers Reject Claim That Transfer Of Funds To Scholarship Program Was Improper

By Sean Whaley | 4:21 pm July 28th, 2011

CARSON CITY – State officials and lawmakers are rejecting the suggestion that they acted improperly last year when fees generated from several college savings programs were shifted to shore up the cash-strapped Gov. Guinn Millennium Scholarship for academically eligible Nevada high school graduates.

But one former lawmaker, who voted for the transfer, acknowledges he remains concerned about the decision.

The Legislature’s Interim Finance Committee voted in July 2010 to transfer $4.2 million in fees from the college savings programs to the Millennium Scholarship to ensure eligible college students would get full reimbursement for classes they took last year.

The College Savings Board had previously voted to use the money for other purposes, including support for the Nevada Prepaid Tuition program, a separate fund managed by the Treasurer’s Office for Nevada families to save for college within the Nevada System of Higher Education.

The transfer was unanimously approved by the 21 members of the IFC after lawmakers were told the fees to be used to shore up the scholarship fund would not affect participants or their investments in the separately managed college savings programs. The fees are paid by families investing in the various college savings plans to brokers, who in turn remit a portion of those fees to the state Treasurer’s Office.

Just over 471,000 college savings accounts, most of them from out-of-state residents, have been opened in the four programs offered through the state Treasurer’s Office as of March 31, 2011. Just over 7,000 Nevadans are enrolled in the programs and they do not pay any fees for participating.

The Nevada Policy Research Institute, a conservative Nevada think tank, on Wednesday published an article by Steve Miller suggesting that the shift of funds was illegal and that Nevadans participating in the Prepaid Tuition program may now have grounds to sue the College Savings Board because of the IFC vote.

Miller, vice president for policy at NPRI, cited a “nationally experienced securities attorney,” who was consulted on a confidential basis for the conclusions in his article.

“Because the Prepaid Tuition program was damaged by the IFC action — made financially weaker than it otherwise would have been — investors in the program would have legal standing against the program, said the attorney, who was consulted on a confidential basis,” he said in his article.

The Treasurer’s Office rejected the notion that the Prepaid Tuition program was harmed by the IFC action.

In a press release issued Thursday, state Treasurer Kate Marshall said the Prepaid Tuition program is funded at 108 percent.

“The program is solid, as demonstrated by the dramatic increase in the funded status and a 15 percent increase in new contracts totaling 594 in 2011,” she said.

Nevada State Treasurer Kate Marshall

Steve George, chief of staff for Marshall, said the article did not indicate that the IFC vote to transfer the funds was unanimous. The College Savings Board did not object to the transfer at its August meeting following the IFC vote either, he said.

“Treasurer Marshall and this office had worked for months to try and come up with some solution that might work to keep the Millennium going forward to the next legislative session,” he said. “That was accomplished by that move, and that’s why I made the comment that this is something that works for the Millennium, and it also does not harm college savings and prepaid.”

Even with the $4.2 million transfer to the Millennium Scholarship, the College Savings Board has transferred nearly $1.56 million over the two past fiscal years to the Prepaid Tuition Program, George said.

Sen. Mo Denis, D-Las Vegas, said he believes the article unfairly singled out Senate Majority Leader Steven Horsford, D-Las Vegas, for criticism. Horsford was co-chairman of the IFC at the time. The IFC is composed of the Legislature’s two money committees.

“I believe that we were making the best decision based on the information that was available to us and our legal counsel,” he said. “And so I think we all did it together and we did something that we thought was appropriate that we could do and legal counsel said we could do it.”

The transfer was needed to ensure kids received their Millennium Scholarships, Denis said.

Minutes of the July 21 special IFC meeting show that lawmakers were told the shift of funds was legal by Chief Legislative Counsel Brenda Erdoes.

Sen. Joe Hardy, R-Boulder City, said he believes the transfer was both lawful and appropriate.

“I think that not only was it legal, but it kept students, who anticipated getting tuition money, in college,” he said.

But Hardy said he does not take issue with a watchdog group keeping an eye on the activities of the Legislature.

The allegation that lawmakers may have acted improperly has political implications.

Horsford is rumored to be considering a run for Congress in a seat as yet undefined due to a legal dispute over the required redistricting process.

Senate Majority Leader Steven Horsford, D-Las Vegas.

Horsford declined to comment on the NPRI article.

Marshall, a Democrat, is also running for congress in a special election in the vacant 2nd Congressional District against former state Sen. Mark Amodei, R-Carson City.

Miller also quotes former long-time state Sen. Bill Raggio, R-Reno, as questioning the appropriateness of the transfer, but does not point out that Raggio “reluctantly” voted for the shift.

Raggio said the article accurately describe his concerns, which remain even with the advice from legal counsel. Funds held in trust should be used for the purposes specified, he said.

“Lawyers can differ, and even though Brenda said so at the time, there is always a question,” Raggio said. “And I wouldn’t be surprised if someone did challenge it.”

Miller said today he focused on Horsford in the article because the lawmaker was the point man pushing for the transfer. The unanimous IFC vote wasn’t included because lawmakers often rubber stamp such requests, he said.

Miller said he decided to run the story based on the one attorney’s comments because of the individual’s credibility. As a result of the article Miller said he has received a comment from one Nevada attorney about the potential for challenging the shift of funds.

The Millennium Scholarship is named for the late Gov. Kenny Guinn, who created the program in 1999 with legislative approval.

Gov. Brian Sandoval recommended adding $10 million in general funds to the scholarship in the 2011 legislative session, which was approved. The scholarship is now believed to be financially whole through at least 2015. It was originally intended to be fully supported by money from a tobacco company settlement, but those funds have declined annually due to lower smoking rates.

Audio clips:

Treasurer’s Office Chief of Staff Steve George says the vote by the IFC kept the scholarship program whole without harming the college savings or prepaid tuition programs:

072811George1 :23 savings and prepaid.”

George says the Prepaid Tuition Program is financially sound:

072811George2 :27 to go forward.”

Sen. Mo Denis says lawmakers made a unanimous decision based on the best information available:

072811Denis1 :20 could do it.”

Sen. Joe Hardy says the vote was legal and kept kids in college:

072811Hardy1 :19 stay in college.”

Hardy says he has no problem with watchdog groups keeping an eye on lawmaker activities, however:

072811Hardy2 :17 doing what’s right.”

Former Sen. Bill Raggio says he would not be surprised if someone does challenge the transfer:

072811Raggio1 :12 did challenge it.”

NPRI’s Steve Miller says he focused on Horsford in the article because the lawmaker was the point man pushing for the transfer:

072811Miller1 :32 some political power.”



Future Of Millennium Scholarship Focus Of State Lawmaker Interest In Upcoming Session

By Sean Whaley | 3:34 pm January 27th, 2011

CARSON CITY – While several state lawmakers say they are seeking changes to the popular Millennium Scholarship for Nevada’s academically successful high school graduates, no one yet is pushing for income eligibility restrictions to ensure the program’s continued viability.

None of the five bills requested so far dealing with the program, which has faced funding problems in recent years due to budget cuts and reduced revenues, seeks to restrict eligibility to those in financial need.

Two measures, one by former state Sen. Bill Raggio, and another requested by the Senate Finance Committee, were requested to ensure continuation of the program.

The need for these two measures will now be evaluated based on Gov. Brian Sandoval’s recommendation to continue the program as is. He has proposed adding $10 million in general funds to ensure its financial viability through 2016.

Dale Erquiaga, senior adviser to Sandoval, said the governor would consider legislation to impose a means test for eligibility, or seek to restrict the scholarship to students who pursue specified courses of study.

“The first priority was to keep the program whole,” he said. “And really there are two schools of thought in this building and I don’t think there is consensus yet so we will participate in that conversation.”

Sen. Joe Hardy, R-Boulder City, said he is seeking a requirement that high school students perform community service in addition to the GPA requirement to qualify for the scholarship.

“It would teach them the concept of service, get them out into the community and make them more well-rounded persons,” he said. “They would network with people, do good things and have a better resume.”

Sen. James Settelmeyer, R-Gardnerville, said his proposal would require eligible Millennium scholars to first fill out a federal financial aid form. Students eligible for federal aid or private sector scholarships would then use those funds first, offsetting the need for the Millennium scholarship awards.

“We have the potential to make the Millennium scholarship last longer if eligible students take advantage of other sources of funding first,” he said.

If a student was ineligible for other funding, there would be no restriction on the use of the Millennium Scholarship in his proposed legislation, Settelmeyer said.

Probably the most restrictive of the measures sought so far comes from Sen. Ben Kieckhefer, R-Reno, who said he will introduce a bill to limit eligibility for the scholarship to students who pursue specified courses of study.

“It makes sense to reform the program to make it more tailored to our areas of special need,” he said. “It would be a good incentive to lure new people into education as a way to help fund the education training that we need for new teachers.”

Courses of study critical to Nevada’s economic development would also be part of his proposal, which remains a work in progress, Kieckhefer said.

“As our needs change as a state in creating new jobs, we want to have the educated workforce to fill those areas of need,” he said. “If we can leverage something like the Millennium scholarship to ensure that people are trained to fill those jobs, I think that makes sense.

“It is a subject area test, not a means test,” Kieckhefer said.

Sen. Steven Horsford, D-Las Vegas, chairman of the Senate Finance Committee, said the purpose of the committee bill draft is to extend the life of the scholarship.

“I was very pleased that the governor announced $10 million in his budget for that and hope that we will be able to sustain that throughout the budget process so we can extend the life of the program because it is important to the students of the state,” he said.

Horsford said he would not support a change to the program based on financial need.

“I think that the merit based emphasis based on GPA is important to preserve,” he said.

While a separate issue, Horsford said that if student fees are increased in the coming two years as expected, it will be important to ensure there is financial aid available to those in need.

The scholarship currently provides about $25 million per year to Nevada high school graduates who attend a Nevada institution of higher learning. Initial eligibility requirements include graduating from a Nevada high school with a minimum 3.25 grade point average.

About 8,000 high school graduates per year are eligible to receive a millennium scholarship, of which about 60 percent choose to activate their award.

The scholarship ranges from $40 to $80 per college credit hour depending on the college attended. The scholarship limit is $10,000.

The scholarship is named after the late Gov. Kenny Guinn, who established it during his first term as governor.

Audio clips:

Sandoval Senior Adviser Dale Erquiaga says the governor is open to possible changes to Millennium Scholarship eligibility:

012711Erquiaga :22 the program alive.”

State Sen. Ben Kieckhefer says it makes sense to tailor the program to Nevada’s specific needs:

012711Kieckhefer1 :08 of special need.”

Kieckhefer says teaching and areas of study relating to economic development should be the focus of the scholarship:

012711Kieckhefer2 :11 of economic development.”

Kieckhefer says leveraging the scholarship to help develop an educated workforce makes sense:

012711Kieckhefer3 :15 that makes sense.”

Sen. Steven Horsford says the scholarship is important to Nevada’s high school graduates:

012711Horsford1 :14 of the state.”

Horsford says he does not favor a means test for the scholarship:

012711Horsford2 :05 important to preserve.”

Nevada Officials Pleased With Sandoval’s Funding Of Millennium Scholarship

By Sean Whaley | 1:11 pm January 25th, 2011

CARSON CITY – State officials said today they are pleased that Gov. Brian Sandoval has proposed continuing the Guinn Millennium Scholarship program in his budget, including a one-time infusion of $10 million from the general fund to keep it solvent through 2016.

“I was pleased to see that,” said Senate Majority Leader Steven Horsford, D-Las Vegas, in a budget hearing today.

Sandoval received a standing ovation during his State of the State speech Monday when he said the scholarship, named after the late Gov. Kenny Guinn, is continued in his budget. The program has been in jeopardy because of budget cuts and revenue shortfalls. Guinn established the scholarship during his first term as governor.

The Legislature must still approve the funding when the 2011 session convenes Feb. 7.

State Treasurer Kate Marshall, whose office manages the scholarship funds, also expressed appreciation to Sandoval for his support of the program.

In addition to the $10 million general fund contribution, the scholarship will continue to receive funding from Nevada’s tobacco settlement agreement, as well as a $7.6 million transfer each year from the treasurer’s Unclaimed Property Division.

The decision to continue the scholarship, “is a welcome message to students and parents across the state of Nevada,” Marshall said. “My office continues to receive many inquiries about the future of the Gov. Guinn Millennium Scholarship program from students, parents, and high school counselors concerned about the opportunity to utilize the program’s benefits in upcoming years.”

The program has been used by more than 60,000 Nevada high school graduates who have met the eligibility criteria. Currently, there are approximately 21,000 students receiving millennium scholarship benefits. Since its inception, over 22,000 millennium scholars have earned a degree from a Nevada institution of higher learning.

The Legislature’s Interim Finance Committee infused the scholarship with College Savings Plans program funds last year to keep it solvent through this school year, but its future was in doubt due in part to lower amounts of funding coming from the tobacco settlement agreement. The annual tobacco payment to Nevada is declining mostly because people are smoking less.

The scholarship currently provides around $25 million per year to Nevada high school graduates who attend a Nevada institution of higher learning. Initial eligibility requirements include graduating from a Nevada high school with a minimum 3.25 grade point average.

About 8,000 high school graduates per year are eligible to receive a millennium scholarship, of which about 60 percent choose to activate their award.

The Nevada System of Higher Education (NSHE) says the scholarship covers about 56 percent of a student’s tuition costs at a Nevada university.

Nevada State Treasurer, Opponent, Trade Jabs In Televised Debate

By Sean Whaley | 8:44 pm October 11th, 2010

Republican state treasurer candidate Steve Martin faced off against Democratic incumbent Kate Marshall in a debate Monday, with Martin continuing to criticize his opponent for failing to fully disclose details of a $50 million failed 2008 investment.

Marshall countered that she fully disclosed the loss with the September 2008 bankruptcy filing by Lehman Brothers and rejected any suggestion by Martin that she should have been aware of the impending failure of the firm that cost states and local governments $3 billion nationwide.

Martin took the opportunity during the debate on Jon Ralston’s Face To Face television program to correct the suggestion that he had lost money for his private clients with the Lehman Brothers collapse, a claim made by Marshall and her staff.

Martin said he was not providing investment advice at the time and so could not have lost his clients any money.

Marshall emphasized her leadership in her first term as treasurer and rejected Martin’s criticisms that she misled the Legislature about the financial status of the Millennium Scholarship program or mismanaged the office’s unclaimed property fund.

An audit of the unclaimed property fund did identify areas that needed to be fixed, but she said: “I think the first paragraph of the audit says it all, it says that our office has done a phenomenal job.”

Martin, a certified public accountant, also said he is better qualified to serve as treasurer given his financial background versus Marshall, who is an attorney.

Martin again emphasized the $50 million Lehman loss and the failure of Marshall to be up front about it.

“If they say they have transparency in the office, why did the report that was filed in 2009 make no mention of Lehman Brothers,” he asked. “Why in June of 2010 did the treasurer request an attorney general’s opinion that said we couldn’t talk about this at the Board of Finance meeting.”

Martin also asked why the next Board of Finance meeting was delayed until after the Nov. 2 general election.

Marshall countered by saying she disclosed the Lehman loss the day after the company filed for bankruptcy. The loss to the state may now be less than $50 million because Lehman Brothers is now profitable, she said.

“First off I think it is dishonorable to say that I should have known when my opponent admits his own clients lost money on Lehman’s, so I find that a disingenuous statement,” she said.

Martin said Marshall’s comment is in error.

“Well let’s correct the record right now,” he said. “None of my clients lost money in the stock market. Absolutely none. That is twice your office has accused me of having said that. It is absolutely incorrect.”

Audio clips:

GOP treasurer candidate Steve Martin says Marshall has not been open about the Lehman loss:

101110Martin1 :16 of Finance meeting.”

Marshall says Martin should not criticize her office on Lehman because  his clients lost money:

101110Marshall1 :10 a disingenuous statement.”

Martin says Marshall’s claim he lost his clients money is false:

101110Martin2 :17 is absolutely incorrect.”

Marshall says audit on unclaimed property says her office has done a great job:

101110Marshall2 :05 a phenomenal job.”

New Bill Draft Requests Focus On Wide Range of Issues

By Sean Whaley | 7:00 am September 8th, 2010

CARSON CITY – More than 250 new bill requests were filed for drafting last week by lawmakers and others on issues ranging from requiring health insurance plans to cover acupuncture treatments to implementing a four-year cooling off period before former lawmakers could work as lobbyists.

Other measures would require the precise language of pending legislation to be posted on the Legislature’s website at least three business days before a vote, change the posting dates of campaign contribution and expense reports to make the information more readily available to voters and make changes to the modified business tax to encourage more hiring.

Assemblyman Joe Hogan, D-Las Vegas, said he requested a bill to change the dates of when campaign reports must be filed by candidates so voters would have more time to analyze the information. The current filing deadlines are right before the primary and general elections and give little or no time for voters to review the contribution and expense reports, he said.

The information isn’t available at all to the majority of people who choose to vote early, Hogan said.

Careful voters will try to have a look at the reports to see if a candidate is “wholly owned” by some special interest, he said.

The bill would also require a candidate to list a specific beginning and ending balance each year, he said.

“It would bring completeness to the reporting system that has been needed for a long time,” Hogan said.

The new bill drafts also include a number of proposals from outgoing Gov. Jim Gibbons, including measures to create a voucher program for students and eliminate mandatory collective bargaining for local governments and their employees.

The proposals, which now total 520, will be drafted into legislation for consideration by the 2011 Legislature. Sept. 1 was the deadline for state and local agencies to submit bill drafts. Lawmakers were also required to have some of their requests submitted by the same date.

Assemblyman Ed Goedhart, R-Amargosa Valley, requested the cooling off and bill posting measures.

“We always talk about how we are going to reform government – it has to start with transparency,” he said. “With transparency you will have increased accountability.”

Goedhart said he requested the cooling off measure for lawmakers and statewide office holders even before the controversy arose recently regarding Morse Arberry, who resigned as a long-time Assemblyman to accept a lobbying contract with the Clark County District Court system. That contract was rejected today by the Clark County Commission.

Goedhart said he has seen examples of lawmakers positioning themselves to take advantage of their connections when they leave office. A future payday should not be a reason for someone to run for public office, he said.

Requiring a four- or two-year cooling off period should eliminate that as a reason to run for elective office, Goedhart said.

The bill posting request is to ensure lawmakers and the public have a chance to read a measure before it is voted on, he said.

Goedhart mentioned two specific incidents, one in 2009 and the other in the February special session, where measures were rushed through without time for review. One was dubbed the “absolution resolution” which he said was intended to give lawmakers cover to vote for tax increases. The other was the last-minute vote in the special session on a bill to create construction jobs in Nevada. The bill in part eliminated the sunset of a tax levy in Clark County to fund the projects.

“It was the biggest tax increase that was never mentioned in the last (special) session,” Goedhart said. “These are the types of abuses that my bill hopefully will, if not make downright impossible, will at least make them a lot more difficult.”

Assemblyman James Settelmeyer, R-Gardnerville, requested the modified business tax (MBT) measure as a way to encourage hiring by Nevada businesses.

The proposal would be to exempt new employees from the MBT to provide an incentive to employers to hire more workers, he said.

“We have to look at ways to get new jobs,” Settelmeyer said.

The bill requiring acupuncture treatments to be covered by health plans offered in Nevada was requested by Assemblyman Tick Segerblom, D-Las Vegas, who sought a similar measure without success in the 2009 session.

In testimony in 2009, Segerblom said the coverage is not costly and results in health care savings. The state health plan offers acupuncture treatments and the benefit has not cost the plan a significant amount of money, he said.

Insurance company officials and small business representatives expressed concern, however, about the cost of adding mandated coverage because of the increased cost to consumers.

“Frankly this is a noninvasive medical procedure that in fact saves money,” Segerblom said today. “If it cures people, or deals with their pain problems, then it is better for everybody.”


Audio clips:

Assemblyman Tick Segerblom says requiring acupuncture coverage will reduce medical costs:

090710Segerblom :14 better for everybody.”

Assemblyman Ed Goedhart says a cooling off period would ensure people run for public office for the right reasons:

090710Goedhart1 :21 payday for themselves.”

Goedhart says giving lawmakers and public time to read bills before vote would reduce the number of questionable measures:

090710Goedhart2 :20 a lot more difficult.”

Goedhart says transparency will bring about accountability, fiscal responsibility:

090710Goedhart3 :18 fiscally responsible government.”

Millennium Scholarship Recipients Could Get Shortchanged In Upcoming School Year

By Sean Whaley | 1:57 pm June 24th, 2010

(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.

audio clips:

Sen. Bob Coffin on legislative decision to take money from scholarship fund:

062310Coffin1 :15 taken that money.”

Coffin says it was bad policy to take money from the scholarship fund

062310Coffin2 :20 rather than later.”

Lt. Gov. Krolicki says Nevada Missed Out on Chance to Protect Tobacco Settlement Funds

By Sean Whaley | 4:46 pm May 6th, 2010

CARSON CITY – Lt. Gov. Brian Krolicki says it is now clear the Nevada Legislature should have “securitized” the money the state was scheduled to receive as part of a settlement with the tobacco companies a decade ago to protect it from the current reality of lower than expected annual payments.

Securitization essentially would have sold off the future value of the annual tobacco payments projected to come to the state over 25 years to investors, projected at $1.2 billion, for a lesser upfront value, allowing the state to receive and invest about $500 million.

Krolicki, asked this week about the failed securitization effort in response to the current financial problems facing the Millennium Scholarship program, said the evidence is in.

“It is no longer opinion, it is reality,” he said. “After the passage of a decade, we now know the answer to the question. We should have securitized.”

Tobacco settlement revenue predictions a decade ago suggested the state would get nearly $52 million this year, but the state actually received just under $42 million, Krolicki said.

“We’re getting very roughly a 20 percent haircut from where we thought we would be 10 years ago,” he said.

Krolicki, who served as Nevada State Treasurer for two terms when the master settlement agreement with the tobacco companies was signed by Nevada and 45 other states, proposed the securitization concept to the 2001 Legislature. Using the process would have protected the money from the vagaries of the tobacco industry and the annual payment estimates that have now proven to be overly optimistic, he said.

The securitization effort, and another attempt in 2003, both failed to win legislative support.

Assembly Speaker Barbara Buckley, D-Las Vegas, who voiced concerns about the proposal in 2001, disagrees with Krolicki’s assessment that securitization was the right move.

“Securitization would have in my opinion caused us to run out of money a long time ago,” she said. “With securitization you get pennies on the dollar. It would have probably been used up the first time we were hit with a financial crisis.”

Securitization was essentially a bet that the tobacco companies were going to go out of business and so would have stopped sending annual payments to Nevada under the master settlement agreement negotiated more than a decade ago, Buckley said.

“That didn’t happen,” she said. “People are still smoking.”

Krolicki maintains that using securitization would have protected Nevada from the reality that payments from the tobacco companies are declining because people are smoking less.

From Fiscal Year 2001 through 2010, the state has received $416.1 million in tobacco settlement funds, according to information provided by the Treasurer’s Office. Projections used by Krolicki in 2001 showed the state anticipated receiving $469.1 million or nearly 13 percent more during the same period.

In part because of declining cigarette consumption, Nevada’s payment this year was about $5 million less than what the Treasurer’s Office had projected and has affected the solvency of the scholarship program.

Krolicki’s securitization proposal, contained in Senate Bill 488, passed the Senate by an 18-3 vote in 2001 but never emerged from the Assembly Judiciary Committee for a vote.  Minutes from the committee hearings show there were concerns about the idea of giving up $1.2 billion worth of tobacco payments over 25 years in exchange for an estimated $500 million.

“I wish we would have done it,” Krolicki said. “If we had locked in the amount of money we thought we would receive, the programs funded with the money would still be very viable.”

The market has fluctuated since 2001 but the money today would be largely intact, he said.

A number of states went the securitization route with their tobacco funds a decade ago, including North Dakota, Alaska, Alabama and South Carolina. The value of the settlement money at the time had a higher credit rating than Nevada-backed bonds, he said. Today their status is junk and the securitization opportunity has been lost, Krolicki said.

Buckley said states that used securitization for their tobacco funds have long since spent the money.

Nevada is still receiving its annual payments, she said.

The issue isn’t securitization but the fact that the College Savings Plans board did not transfer $2 million to the scholarship in March as lawmakers anticipated, Buckley said. In addition, the scholarship is a victim of its own success with many students taking advantage of it, particularly during this economic downturn, she said.

The scholarship is provided to Nevada high school graduates who must earn a minimum GPA and who go on to college in state.

The Legislature in 1999 agreed to use 40 percent of the settlement funds for the scholarship program proposed by then-Gov. Kenny Guinn. The remainder goes to public health related programs except for a small amount that goes to the Nevada Attorney General’s office.

Buckley also noted that some Assembly Republicans, along with Krolicki, proposed securitizing the Unclaimed Property Fund managed by the state Treasurer’s Office as a way to help balance the budget in the special session held earlier this year.

Lawmakers chose not to move forward on the proposal after current Treasurer Kate Marshall said such a move could hurt the state’s credit rating.

Buckley, who will not be returning to the Legislature next year, said she believes the scholarship program should and will be continued. A temporary solution is needed to fund it through 2011, giving the Legislature time next year to consider ways to fit the program within the available funds, she said.

Giving the scholarship only to those in financial need is one likely topic for that discussion, Buckley said.

Krolicki, who is running for re-election as lieutenant governor, said he supports continuation of the scholarship. As chairman of the Commission on Economic Development in his current position, the scholarship is clearly helping generate the educated workforce Nevada needs for its economic development efforts, he said.

But he did criticize Marshall’s office for failing to properly project tobacco revenues for lawmakers so they could make informed judgments to maintain the program.

Lawmakers would not have eliminated transfers to the scholarship from the Unclaimed Property Fund, or transferred money out of the scholarship fund itself, if there was any suggestion doing so would have rendered it insolvent, Krolicki said.

Lawmakers approved taking $32.8 million in total from the scholarship at a special session earlier this year to help solve a more than $800 million shortfall in the state’s general fund budget.

“People need to take responsibility for their actions and projections,” Krolicki said.

Marshall said today the missed tobacco payment projection was a first for her office and has come at a time of unprecedented economic crisis.

Marshall reported to lawmakers this week the scholarship needs about $4.2 million to say solvent through next fiscal year. She has presented three alternatives to keep the program going that lawmakers will consider in June.

“During our global financial crisis there have been a lot of firsts,” she said. “Part of my job in a financial crisis is to find financial solutions I can present to the Legislature so they have options. I have provided leadership and I am proud of my record.”

In a letter to lawmakers sent Monday, the Treasurer’s Office said the record shows Marshall expressed concerns to lawmakers that the decision to use $32.8 million destined for the program to balance the general fund budget could put it at risk. Information was posted on the office website to keep parents and students informed as well.

Marshall also said the annual tobacco payment came in April, several weeks after the Legislature had made its decisions regarding the scholarship funding.

In a fact sheet posted on the treasurer’s website, the reason for the lower than expected tobacco payment received in April is because national tobacco sales were down about 9 percent.

“However, there is no present information that would clearly indicate that the lower-than-projected amount was an anomaly or a pattern for future payment amounts,” the fact sheet says.

State Treasurer’s Office Tells Lawmakers Millennium Scholarship Will Be Short $4.2 Million by End of Fiscal Year 2011

By Sean Whaley | 6:21 pm May 3rd, 2010

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.

Charges, Countercharges Fly Between Martin and Marshall in Race for State Treasurer

By Sean Whaley | 8:08 am May 1st, 2010

CARSON CITY – Nevada GOP state treasurer candidate Steve Martin and Democrat incumbent Treasurer Kate Marshall engaged in a war of words this week over her management of the office for which she is seeking a second term.

Martin, a former state controller, initiated the exchange on Tuesday with a release criticizing Marshall on several issues including putting the Millennium Scholarship program at risk and running commercials for the Nevada College Savings Plans featuring her name and voice in an election year. She was also criticized for using her state office for her re-election efforts.

Martin said Marshall has shown failed leadership stemming from her “improper stewardship of the public’s money.”

Martin said Marshall has not been upfront about the deteriorating fiscal health of the Millennium Scholarship fund, suggesting it could have a $3.4 million shortfall by June 2011. He also said Marshall has not kept lawmakers and the public informed of the status of the fund.

On Thursday, the Marshall campaign issued a lengthy point-by-point rebuttal on the Millennium Scholarship issue, calling Martin’s criticisms false and distorted misrepresentations. The response also accuses Martin of violating the code of fair campaign practices which he signed March 3. The code prohibits malicious and unfounded accusations.

The Marshall campaign said it was the Legislature’s decision to take nearly $28 million in funding from the Millennium Scholarship program over three years to balance the state budget that has put it at risk. The response also says Marshall warned the governor and lawmakers about what taking the funds would do to the program, and that she has continued to communicate with them and the public on the status of the scholarship program.

Marshall has been open and honest with the governor, Legislature and Nevadans and has “repeatedly advised against under-funding and removing funds from the Millennium Scholarship,” the response from her campaign said.

“Steve Martin has misrepresented, distorted and falsified information through malicious and unfounded accusations,” the response said.

Martin’s campaign team on Friday pointed to a discussion at the Legislature’s Interim Finance Committee on Thursday as evidence lawmakers have not been fully informed as to the health of the scholarship fund.

At the meeting, Assemblywoman Heidi Gansert, R-Reno, and Senate Majority Leader Steven Horsford, D-Las Vegas, both said they believed the scholarship was to be funded through 2014 through an infusion of $4 million from the College Savings Plans account over two years based on Marshall’s testimony during the special session that ended March 1.

The five-member College Savings Plans board rejected the idea of transferring $2 million to the fund, however, approving only a $200,000 transfer to keep it funded through the 2011 fiscal year.

“If legislators were properly informed, as Treasurer Marshall’s campaign claims, then why at yesterday’s IFC meeting did a bipartisan group of legislators seem to state otherwise?” Martin’s campaign team asked. “This is just another item in the growing list of scenarios where Kate Marshall and her team are literally and figuratively writing checks they can’t cash.”

Marshall’s office has already responded to the radio ad issue, saying the expenditure of non-taxpayer money to promote a contest to school children publicizing the College Savings Programs managed by her office is appropriate and was approved by the board.

Martin said the $12,000 worth of ads are running on radio stations and programs aimed at voters, not children.

“How many ten year olds listen to KOMP Rock or Sunday morning talk radio sports programs on KBAD?” asked Martin. “These ads are targeted to parents who are voters, and for Marshall to claim otherwise undermines even basic credibility.”

“The give away will award $529 to just six children, so she is spending more on the advertising than the actual prizes,” said Martin.

Marshall’s office has also discounted a Nevada State Republican Party ethics complaint over the alleged use of her official office for her campaign, saying the issue was the result of an error in posting information by the secretary of state’s office.

Millennium Scholarship Program Slated for $12.6 Million Hit in Governor’s Budget Balancing Plan

By Sean Whaley | 6:03 pm February 16th, 2010

CARSON CITY – Among the multiple proposals identified today by Gov. Jim Gibbons to balance a state budget that is out of balance by $890 million is a hit to the Gov. Guinn Millennium Scholarship program for Nevada high school graduates.

The program, established by former Gov. Kenny Guinn and the Legislature in 1999, provides a per credit payment to qualified Nevada high school graduates who go on to college at a state institution.

Gibbons is proposing to defer a transfer from the state’s unclaimed property fund to the scholarship program to the tune of $3.8 million a year. He is also proposing to take $5 million from the scholarship fund itself in the 2010-11 fiscal year.

Steve George, a spokesman for state Treasurer Kate Marshall, who oversees the fund, said the taking of such an amount could put the program in jeopardy. Scenarios are being run on the ramifications of the proposal and will be made available in the next few days, he said.

But the taking of the $12.6 million could put the program in a deficit situation, George said.

Dan Burns, spokesman for Gibbons, said the taking of the $12.6 million won’t kill the program or eliminate the scholarship for students who are now receiving it.

“The governor doesn’t want to do anything to destroy the program,” he said. “The governor understands that education is the intellectual infrastructure of the future. But we need the program to give a little bit to keep the entire state alive. That’s the reality of the situation.”

Burns said the scholarship was never expected to last forever, and it may be time to consider means testing as a qualification so that the money only goes to those who really need it to make college affordable.

“If you look at our list, the money is coming from just about everywhere,” he said. “No area is not pitching in. The Millennium Scholarship is one of those areas.”

George said the scholarship program is expected to receive about $18 million this year and next from tobacco settlement funds, which flow to Nevada as a result of an agreement entered into between cigarette manufacturers and most states earlier this decade. The fund is then augmented with unclaimed property funds to keep it solvent, he said.

But the fund is currently paying out about $25 million a year to scholarship recipients. So the transfer of $12.6 million to help balance the state budget shortfall is a concern, he said.

“It definitely could put the program in jeopardy in the future,” George said.

Eligible students receive $40 to $80 per credit hour depending on where they attend and the level of the course. Students must maintain eligibility as determined by grade point average. The scholarship cannot be used for remedial coursework.

George said that since its inception, about 59,000 Nevada high school graduates have taken advantage of the program, with about 20,000 earning degrees at one of the campuses of the Nevada System of Higher Education.