LITTLE ROCK — The Arkansas Academic Challenge Scholarship Program will “go into the red and ... never come back” if the scholarships for new recipients aren’t cut back sharply soon, the acting head of the state Department of Higher Education warned Tuesday.
Interim Director Shane Broadway said the Legislature could decide to award first-time recipients of the largely lottery-financed scholarships in the coming school year $3,300 a year at four-year universities and $1,650 a year at two-year colleges.
Currently, students who were first awarded the scholarships in the 2010-11 school year receive $5,000 a year to attend the universities and $2,500 a year at the colleges. They will receive those amounts through their senior years. Those who were first awarded the scholarships in either the 2011-12 or 2012-13 school years get $4,500 a year at the universities and $2,250 a year at the colleges, and will receive those amounts through their senior years.
The co-chairmen of the Legislature’s lottery oversight committee — Sen. Johnny Key, R-Mountain Home, and Rep. Mark Perry, D-Jacksonville — said the committee will meet again next month to attempt to reach consensus on what program changes to recommend to the 2013 General Assembly.
Key noted that a year ago state lawmakers agreed not to cut scholarship levels for the first-time recipients during this school year with the understanding that “this year we would have to make some drastic changes” in the program for future first-time recipients.
“Obviously, the numbers have not improved any to change that situation,” he said.
Program changes are needed mostly because more students are applying and receiving the scholarships than were originally projected, and the lottery is not raising as much as needed to fund them, Key said.
In addition, lottery ticket proceeds fell short of estimates made by the lottery’s original director, Ernie Passailaigue.
Early on, Passailaigue envisioned annual proceeds as high as $116.4 million.
In the first full fiscal year, 2011, proceeds hit $94.2 million.
In response to Key’s questioning, lottery Director Bishop Woosley said lawmakers “are probably safe to assume” that the lottery will raise “somewhere in the $89 million-$90 million range” for college scholarships in the fiscal year that ends June 30 “if the sales trends continue to hold as they have over the next seven months.”
Earlier this year, Woosley projected that the lottery would raise $98.5 million for college scholarships on the basis of $480.5 million in ticket sales in fiscal 2013. In fiscal 2012, the lottery raised $97.5 million for scholarships on the basis of $473 million in ticket sales.
But ticket sales in the first four months of this fiscal year dropped by $18.3 million from the same period last fiscal year to $132.3 million, and the amount raised for scholarships slipped by $2.6 million from the same period to $27.1 million. Among other things, Woosley has said high gas prices and the summer drought hurt ticket sales.
Broadway, a former state senator, said the scholarship program could afford to award $3,300-a-year and $1,650-a-year scholarships to first-time recipients in the coming school year and through their senior years “without going totally in the red” and exhausting its $20 million reserve fund. He said he based that on a projection of the lottery raising $90 million a year for the scholarships.
He said the scholarship program would “go into the red and ... never come back” by the fall of 2014 if the Legislature awards the coming year’s first-time recipients $4,500 a year for the universities and $2,250 a year for the colleges, keeps scholarship amounts for existing recipients at their current levels, and if the lottery raised $90 million a year.
“If we are able to take in $95 million, you make it until the fall of ’15 before you totally hit red and, if it’s $100 million, pretty much the same thing,” Broadway said.
“So based on what we know as of right now, we do not see a way you can maintain the current rates of $4,500 and $2,250, keeping all of the current students at their current amount,” he told the committee.
Broadway also provided projections to show that the program could afford to maintain scholarship levels for existing recipients and begin awarding first-time recipients in the coming school year $2,000 scholarships in their freshman years, $3,000 in their sophomore years, $4,000 in their junior years and $5,000 in their senior years.
“The more I think about it, the more I like the tiered approach,” Key said afterward, referring to awarding scholarship amounts based on the number of credit hours students successfully complete no matter whether they attend a two-year college or four-year university
Broadway said 32,782 students are receiving lottery scholarships this semester, and that’s 1,218 more than received them a year ago. He said the increase is in the number of traditional students who attend college directly out of high school.
The Academic Challenge scholarship program had roughly 8,000 scholarship recipients a year before the lottery was created and the Legislature changed the program, he said.
The state still contributes $20 million a year to help fund the program.
Graduates of Arkansas public schools who have successfully completed the Smart Core curriculum must have at least 2.5 high school grade-point averages or minimum scores of 19 on the ACT or equivalent scores on ACT equivalent tests to be eligible for the scholarships, according to the state Department of Higher Education.
Graduates of public schools who haven’t completed the Smart Core curriculum must have at least 2.5 high school grade-point averages and either score proficient or higher on all state-mandated end-ofcourse assessments or achieve minimum scores of 19 on the ACT or the equivalent scores on equivalent tests to be eligible.
If the Legislature changed the program to require an ACT score of at least 19 to be eligible for the scholarships, legislative analyst Heather Tackett said that would eliminate 1,677 students from eligibility. Also, the program’s projected cost would be cut from between $130 million and $137 million a year to between $123 million and $130 million a year, she said.
State Sen. Stephanie Flowers, D-Pine Bluff, said, “Bottom line it doesn’t help much.”
State Sen. Jason Rapert, RBigelow, later concluded: “The handwriting is on the wall. Something has to be done. There is no doubt.”
Front Section, Pages 1 on 11/21/2012