SANTA FE, N.M. — A lottery-financed college scholarship program is running out of money, and lawmakers are looking for a fix that won't hamper efforts to encourage young New Mexicans to attend universities and colleges in the state.
The scholarship fund could be depleted by 2014 if nothing is done in the Legislature this session and tuition rates continue to rise sharply, according to the latest state projections.
The Senate Education Committee unanimously endorsed a measure Wednesday that would shore up the program by freezing tuition for students who receive one of the state's lottery scholarships. The bill must clear two more committees before it reaches the Senate for consideration.
Senate Republican Leader Stuart Ingle of Portales said his measure would slow the growth in spending on the program by locking in tuition at the rate when a student first qualifies for a scholarship.
However, the bill means colleges would receive less money at a time when the state has been cutting the higher education budget. There's also a potential for cost-shifting among students.
If tuition is frozen for lottery scholarship recipients, other students could end up paying more than they otherwise would had tuition increases been spread among everyone, Brandon Trujillo of the Higher Education Department told the committee.
About 19,700 students, or 26 percent of full-time undergraduates attending New Mexico's two-year and four-year colleges, are receiving a lottery scholarship, according to the department.
Senate President Pro Tem Tim Jennings of Roswell and Senate Majority Leader Michael Sanchez of Belen, both Democrats, joined Ingle in sponsoring the measure.
Sanchez sponsored legislation in 1996 that established the scholarship program and is one of its staunchest defenders. More than 68,000 New Mexicans have gone to college with lottery scholarships.
The scholarships pay for tuition, but students still have other college expenses, such as books, fees and housing. To qualify for a scholarship, New Mexico students must enroll in a public college or university in the state the semester after their high school graduation, attend full time and maintain a 2.5 point grade-point average.
The program faces a financial squeeze because costs are growing faster than lottery revenues, which are down from last year. Tuition increases averaged almost 40 percent at four-year institutions and 13 percent at two-year schools from 2008-09 to the 2010-11 academic year.
A more far-reaching lottery fix ran into trouble in the committee. The measure would require students to repay the state for their scholarships if they didn't graduate from college within six years.
Currently, students can receive the tuition assistance for eight semesters but they can't take a break without losing their scholarship. There's no repayment requirement.
The proposal by Sen. William Payne, R-Albuquerque, would allow students to remain eligible for a scholarship but wait before starting college or possibly take time off after attending school for a year or more.
Payne said the legislation might improve graduation rates by forcing students to decide if they are college-ready before accepting the state's scholarship.
"This is not as draconian as it seems because most kids don't wait until after eight semesters to decide college is not for them," said Payne. The proposal was developed by a task force that studied government restructuring last year.
Of students who have received lottery scholarships, about 60 percent graduated. That compares with a 40 percent graduation rate for non-scholarship students in 2009.
Carmen Stone of Santa Fe, whose son attends the local community college, objected to a provision in the measure that would increase the class load required for students to receive a scholarship from 12 to 15 credit hours a semester. She said that's too much for most students, who also hold jobs to pay their expenses.
Without the lottery scholarship program, "I would not be able to provide him a college education," she said.
The committee set aside the bill to consider whether it should be changed.