AP on the Quest to Cut Lottery Scholarships

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. — Psychology student Jay MacDonnchadh says a plan that would cut some students’ lottery scholarships in half is a bad idea.
“If it wasn’t for the lottery scholarship, I would have had to work my way up through community college,” said the University of Memphis senior.
MacDonnchadh, 21, is among hundreds of Tennessee students who depend on the scholarship, also called the HOPE Scholarship.
A proposal from a panel of state lawmakers would reduce by 50 percent the lottery scholarship awards for students who do not meet both standardized testing and high school grade requirements.
Right now, students can get a scholarship worth $4,000 for each of four years if they either earn a 3.0 grade point average in high school or score a 21 on their ACT college entrance exam.
Students who attend a four-year institution and meet one of the criteria would get a two-year award amount, under the plan. Those who meet one of the criteria and retain the award through year two would be eligible for a full award in year three.

The plan, which doesn’t apply to students attending community colleges, is estimated to generate about $13 million in savings the first year and $17 million each year thereafter.
But opponents of the plan say it’s unnecessary because the lottery scholarship program currently has nearly $400 million in reserves and tickets for the Tennessee Lottery’s popular Powerball game have increased by a dollar, which will likely mean additional revenue for the future.
“We just don’t need to go across the board slashing it and putting a lot of … kids off it,” said House Democratic Caucus Chairman Mike Turner of Nashville. “I think the lottery is pretty sound.”
Lottery officials announced strong second-quarter results last week that raised $78.2 million for state education programs, an increase of almost $5.8 million over the same quarter last year. Gross sales for December — $114.2 million — were the highest of any December since the lottery’s inception in 2004, officials said.
“The lottery’s mission is to raise the most dollars as possible, as responsibly as possible, to fund the designated education programs,” Rebecca Hargrove, president and CEO of the Tennessee Lottery, told The Associated Press.
“To date, we’ve done that quite successfully, raising an enormous excess over what has actually been distributed so far. How that large, remaining reserve fund is to be used, however, is a policy matter to be determined by state elected officials.”
Regardless of the surplus, some lawmakers say the state still needs to be conservative.
Currently, the cost of the scholarship program is outpacing lottery revenues. To make up the difference in the short term, the state has dipped into the lottery reserves. If nothing is done, state officials estimate the lottery reserve balance could dwindle to about $145 million by 2021, including the $50 million that state law requires remain in reserve for the program.
A bipartisan Lottery Stabilization Task Force recommended the plan to cut the scholarships in half for some students, and to maintain a minimum reserve balance of $100 million in the future.
Senate Speaker Ron Ramsey of Blountville formed the task force and said he favors its recommendations to ensure the future of the scholarship program.
“If we’re going to make this lottery financially solvent, there will be some changes,” Ramsey said. “We want that lottery scholarship to remain.”
Dick Gregory, vice chancellor for the Tennessee Board of Regents and a task force member, said he wants to “get students to the spot where they can be most successful,” which he believes the implementation time will do.
“What this allows is a time for the reforms the state are undertaking to hopefully work and prepare students better to be in a position to receive the scholarship,” Gregory said.

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