Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports
if they are used for other purposes.
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F I S C A L I M P A C T R E P O R T
SPONSOR Maestas
ORIGINAL DATE
LAST UPDATED
2/18/2007
3/2/2007 HB 740/a HEC
SHORT TITLE Lottery Scholarship Application Times
SB
ANALYST Dearing
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
*($0.1)
Recurring
Lottery Scholarship
Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY07
FY08
FY09 3 Year
Total Cost
Recurring
or Non-Rec
Fund
Affected
Total
*($852.0) *($852.0) *($1,704.0) Recurring Lottery
Scholarship
Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
*Potential exists that fiscal impact is significantly higher than $1.7 million over three years;
please see narrative.
Relates to Senate Bill (s): 110, 689, 426, 687, and 686
Relates to House Bill (s): 571, 209, 275, and 361
Duplicates Senate Bill 688
SOURCES OF INFORMATION
LFC Files
Responses Received From
Higher Education Department (HED)
SUMMARY
Synopsis of HEC Amendment
The amendment proposed by the House Education Committee extends the time window of
eligibility from the original amendment of 12 months to 16 months. This resolves a technical
issue, where as, the original amendment of 12 months would not have accounted for the summer
months. According to HED, the original fiscal impact was based on 16 months.
pg_0002
House Bill 740/a HEC – Page
2
Synopsis of Original Bill
House Bill 740 carries no appropriation. If enacted, House Bill 740 would amend Sections 21-1-
4. 3; 21-13-10; and 21-16-10.1 NMSA 1978. House Bill 740 would extend eligibility for the
New Mexico Lottery Success Scholarship program such that eligibility for scholarship program
would be available for all New Mexico resident high school graduates and those earning general
education development certificates (GEDC). Specifically, the time-window of eligibility would
increase to 12 months from the current 120 days.
FISCAL IMPLICATIONS
*No appropriation. If enacted, House Bill 740 would extend the amount of time that an applicant
retains eligibility to scholarships through the Lottery Success program. Under the current
framework, an individual has until the 120
th
day following the attainment of a GEDC or high
school graduation date to enter and enroll into a program.
There would be an overall negative recurring impact incurred by the Lottery Tuition Fund. A
current projection from the Higher Education department forecasts an additional 322 students
would qualify in FY08, decreasing the Lottery Tuition Fund by $852,100. The forecast is based
on an aggregate 2400 New Mexico high school graduates enrolling later than the first post-
secondary semester following high school graduation. The department’s forecast relies on only
13.4% of these students obtaining a 2.5 GPA in their first college semester to qualify for the
Lottery Success Scholarship.
*If the actual percentage obtaining a 2.5 G.P.A in their first semester is higher than the
department’s forecast, an annual negative impact to the Lottery Tuition fund exists of up
to $6.3 million.
1
TECHNICAL
House Bill 740 amends language throughout Sections 21-1-4.3; 21-16-10.1 and 21-16-10.1
NMSA 1978, clarifying language and making the bill parallel with currently used institution
names and terminology.
RELATIONSHIP
House Bill 740 relates to:
Senate Bill (s): 110, 689, 426, 686, and 687
House Bill (s): 571, 209, 275, 361, and 740
These listed bills create various changes to lottery scholarship eligibility, distributions from the
fund, or otherwise change the Lottery Success program framework.
1
(322/2400) =13.4% =$852 thousand; (($852,000/322) * (2400)) = $6.3 million.
pg_0003
House Bill 740/a HEC – Page
3
2004-2005 New Mexico
Combined State and
Federal Student
Financial Aid, in m illions
$28.3
$14.8
$183.
$142.
NM Lottery Success
Sc holar ship
Fed. & NM Other Grant &
Sc holar ship
Fed. & NM Work Study/Ser vice
Re lat ed
Fed. & NM Loan Programs
S o ur c e: T he C o nd i t i o n o f Hi g he r ed u c t io n in
Ne w M e xi co , HED, v ar io us ye ar s
Lottery S cholarship
Fund Fisca l
Projections
$0 $20 $40 $60
FY12
FY11
FY10
FY09
FY08
FY07
FY06
M ill io ns
So ur c e: HED Ex p en d it ur e Es t . ; LF C/ D F A
C o ns e ns us R ev enue E s t i mat e
Fund Balance
Revenues
Expenditures
ALTERNATIVES, OTHER SIGNIFICANT ISSUES
In the 2005-2006 academic year, approximately $36.9 million in Lottery
Success scholarship funds were distributed to New Mexico students.
Payouts to beneficiaries continue to exceed New Mexico Lottery Authority
disbursements to the scholarship fund. Recent projections show fund
insolvency around 2012-2013. With overall flat high school graduation
rates expected over this period, projected increases in expenditures are
primarily based on tuition inflation. State student aid dollars from the
lottery program comprise an ever larger component of state spending on
higher education, increasing from 38 percent to 42 percent over the 2002-
2003 academic year with subsequent reductions in work-study and service
aid.
Across the country, merit scholarship programs
are undergoing similar solvency issues.
Underestimated and rapidly increasing demand
for merit scholarships and scarce resources have
forced other states to pursue alternatives.
The Lottery program is one component among
many available federal and state student financial
aid sources. Including federal and other state grants, work-study, and
loan programs, the Lottery program comprises just about 7.7 % of
available student financial aid in NM.
Students excluded from the Lottery Success Scholarship have the
option to apply for other state and federal financial aid programs.
DUPLICATION
House Bill 740 duplicates Senate Bill 688
AMENDMENTS, QUESTIONS
House Bill 740 does not specify the requirement of a New Mexico issued GEDC for applicant
eligibility.
PD/mt