As revenue declines, grants could cover less of rising in-state tuition
Declining revenues from the S.C. lottery and increasing demand for the scholarships it provides means students could see their tuition grants drop.
It's already happened in Georgia, where tighter standards for winning lottery-funded scholarships have cost 18,000 students once-free rides.
"Some day, we will have to cap the cost," S.C. Senate Finance Chairman Hugh Leatherman said. "The general fund cannot afford to have open-ended accounts like that."
But some senators disagree.
"We made an obligation to those scholarships, and that obligation was heightened when we allowed tuition to rise during the 2002-2004 economic downturn," state Sen. Larry Martin, R-Pickens, said.
Even if the scholarships hold at current levels, they rarely are enough to give students a free ride at in-state schools, where double-digit tuition increases have been common in recent years.
Like most lotteries, South Carolina's has experienced a drop in revenues, partly from a decline in interest and partly from the competing lottery that started in neighboring North Carolina, which launched in March 2006.
Profits from the S.C. games were $273 million in fiscal year 2007. That's down from a peak of $320 million for the year ending June 30, 2006.
Those profits go in part to pay for a set number of student scholarships, which cost an estimated $245 million last year. About $50 million from the state's general fund was needed to make up the difference and continue to pay for the LIFE scholarships, and lawmakers say the taxpayer portion could increase to $80 million next year.
Lottery profits also pay for other education programs, such as $30 million a year for endowed chairs that S.C. universities say helps them recruit nationally recognized research professors.
But it is the scholarships and other tuition grants that college leaders say is most important.
"These awards have had an absolutely phenomenal impact," University of South Carolina President Andrew Sorensen said.
"More and more, the bright students are deciding to stay in the state. Naturally, I'd prefer that they come to the University of South Carolina, but we all are benefiting from this program," he said.
Sorensen cited Clemson University research that showed 60 percent of S.C. students with SAT scores higher than 1,390 now stay in state to attend college, compared with 17 percent before the start of the scholarships.
If the scholarships are reduced, he said, "as surely as night follows day, we will become less competitive for these students."