Budget cuts would break Millenium Scholarship program

Gov. Jim Gibbons' proposed cuts to the Millennium Scholarship program would put it in the red, unable to pay all of its costs, as early as 2013.

The governor's budget plan, to go before a special session of the Legislature on Feb. 23, calls for eliminating $12.6 million in funding for the scholarship - eliminating $3.8 million in 2010 and 2011 from the treasurer's Unclaimed Property account and sweeping $5 million out of the scholarship's trust fund.

The cuts are part of almost $900 million in proposed changes designed to close the state's budget gap, now estimated at $880 million and growing rapidly.

If the Millennium cuts are approved, Chief Deputy State Treasurer Mark Winebarger said, the fund would be short in covering the scholarship's cost to the university system in just three years.

System of Higher Education Vice Chancellor Jane Nichols and Robin Reedy, chief of staff to Gov. Gibbons, both said they believe the state has an obligation to the 20,570 students already receiving the scholarship. But that doesn't cover future students.

Nichols said taking the money would kill the program.

"It would be a huge blow because, being cut as we are (10 percent across the board), we would not have the resources to make that up in financial aid," she said.

She said the cuts would force the 2011 Legislature to enact tough changes, possibly reducing the number of students eligible for the scholarship, putting a means test on it so only poorer students could receive it or even cutting off accepting new high school graduates to the program.

"Can you imagine the students planning to go to school this fall?" she said. "Families who have been counting on this would not have it any longer."

Nichols said the proposal comes at a time when, because of the recession, more people are trying to get into college to better their job prospects.

"The unemployment rate is 13 percent and Nevadans are feeling under siege from every side," she said. "To take away the Millennium Scholarship doesn't seem to me something that would bode well for the future of Nevada."

The program was created by Gov. Kenny Guinn in 2000 to provide every Nevada high school graduate with a 3.0 grade point average or better with money to attend college.

While the GPA requirement has since risen to 3.25 with additional restrictions, the scholarship still provides about 60 percent of the class fees for a four-year university student - nearly all of the costs for community college classes. Thus far, it has helped 11,969 students receive bachelor's degrees and another 6,591 get an associate's degree.

Nichols said the scholarship no longer covers the entire cost of university and community college credits, and students have to make up the difference, about 30 percent of the total.

"Its value has been going down since it's never been increased since inception," she said.

She said the scholarship is "the hope of Nevada to get our people educated and have an educated workforce."

"To kill it would be disastrous to the state."

But she expressed some hope lawmakers will see things differently than the governor:

"I am confident the Legislature will not take an action that would precipitously eliminate the Millennium Scholarship for new students."

Winebarger and Chief of Staff Steve George said the present cost of the scholarship is about $25 million a year. Even without the governor's proposed changes, the program only has $21.8 million to cover those costs this year - $18 million from the tobacco settlement and the $3.8 million in unclaimed property money.

The reason for the shortfall is that the 2009 Legislature cut the $7.6 million Unclaimed Property transfer each year to $3.8 million. Current statute would restore the transfer to $7.6 million in 2012, but statutes can be changed.

Taking the $12.6 million in 2011 would leave the program $12.4 million short, forcing the state to use most of the $18.7 million ending fund balance in the trust fund to cover that commitment.

Winebarger said that within a few more years, the fund would be empty, and the state would fall just under $100,000 short by 2013. The funding would fall progressively farther below the amount needed to cover costs, jumping to $1.33 million in 2014, $3.3 million the following year and millions more each year beyond that.

One proposal reportedly being considered by lawmakers is to pull $2 million a year out of the College Savings Trust Fund. That account currently receives $2 million a year from the contractor who manages the college savings program for Nevada. It currently holds about $8 million but some $5 million of that has already been committed to fully funding the Prepaid College Savings Program.