Tennessee’s lottery scholarship program, which began in 2004 and now provides scholarship help to 100,000 Tennessee students per year is running a multimillion dollar deficit and must be cut, lawmakers say.
According to a recent article in the Nashville Tennessean, the program will run a $17 million deficit this year, which is expected to rise to $27 million by 2011.
Originally the program was designed to encourage high school students who maintained at least a B average to choose Tennessee schools. The program has been expanded several times since then to include other groups such as returning veterans, foster children, high-schoolers enrolled in college classes, students in teaching curriculums, and technical school students.
Recently the GPA requirement of 2.75 was removed so that students who could not maintain at least a 2.75 GPA could keep the scholarship. The removal of the GPA requirement pushed the program into an accelerating deficit.
Officials who oversee the scholarship program are apparently not all that upset about the looming deficits, because they expected it to be much higher, at several hundred million. There is a very healthy rainy day fund of $319 million that is raining red ink in the scholarship program right now. Lawmakers periodically raid the fund to get money for their pet projects. The last time they withdrew $70 million to make Tennessee schools more energy efficient.
Officials realize that they can’t continue to rely on the rainy day fund and they must get the program under control. Some tough decisions will have to be made about which part(s) of the program to cut. Reinstating the 2.75 GPA requirement and taking a hard line on it would be a good first start.
Unfortunately it appears that the problems in the scholarship program are not related to a decrease in gambling, because the money coming into the program would have been more than adequate had the rules of participation remained unchanged.
Tennessee’s program is not the only state scholarship program in trouble. For example, last year Michigan had to eliminate a $140 million scholarship program. The state universities were forced to scramble to replace the program with their own funds.
It is evident that, for many institutions, their own funds could be adequate to provide a merit-based scholarship fund, or at least to contribute significantly to one. Many colleges and universities have massive endowments that are sitting in accounts earning interest or sometimes being destroyed by bad investments in an economic downturn year.
Why not use some of that money to help deserving students?