As Millennium Scholarship funds dry up, calls for changes

It’s one of the most universally loved programs in the state: the Gov. Guinn Millennium Scholarship, which provides the top-achieving Nevada graduates up to $10,000 toward college and has been used by about 91,000 students since its inception in 1999.

But the scholarship fund, which is built on a diminishing pool of money from a national settlement with tobacco companies, faces insolvency as soon as 2018. It’s raising alarms among lawmakers and higher education officials, including some who want to tweak the funding mechanism and others who question whether the state’s only financial aid program should be merit-based.

“Everyone’s trying to make it survive as it is, but maybe we need to make it a little different,” Republican Sen. Ben Kieckhefer said.

The Millennium Scholarship fund receives 40 percent of the money Nevada collects each year from the settlement. The state receives 0.6 percent of the sale of each cigarette pack, but as fewer people smoke and more people turn to e-cigarettes, the scholarship’s annual revenue is shrinking.

Patches have been applied to keep the scholarship going. The program gets $7.6 million per year from the treasurer’s Unclaimed Property Division. In 2013, Gov. Brian Sandoval allocated $5 million to the program, and the Legislature kicked in an additional $2 million.

Newly elected treasurer Dan Schwartz has said funding the scholarship is one of his top priorities, but he hasn’t revealed a detailed plan of action. Demand for the scholarship will outpace annual revenue by 2021, if eligibility rules don’t change, but funds could dry up as early as 2018 if bills adjusting the rules pass the Legislature.

In a legislative hearing in February, Kieckhefer warned that “2018 ain’t that far away.”

“We probably need to have some broader discussions about that as we go through the rest of this legislative session, that’s for sure,” he said.

The scholarship, which goes to Nevada high school graduates who’ve earned a 3.25 grade point average and who attend a Nevada college or university, has lost its value over the years as tuition climbs. While the scholarship used to cover virtually all tuition and fees, it now only covers about 42 percent of the cost of an undergraduate credit.

As the value of the scholarship has fallen, fewer of the highest-achieving Nevada students are persuaded to stay in-state. About half of the students who are offered the scholarship decline it, and 46 percent of those who receive it need to take remedial classes.

“I think we need to ask ourselves whether we’re getting the results we intended — retaining the best and brightest students,” Kieckhefer said.

Meanwhile, others question the focus of the award.

Trying to retain the smartest Nevada graduates is “absolutely laudable we want to still do that,” said Crystal Abba, vice chancellor of the Nevada System of Higher Education. But she asks whether giving money to high-achieving students whose families can afford college is the best use when the state doesn’t have a need-based program.

Abba said big changes to the scholarship would be a “tough sell” for lawmakers.

“They’re talking about affordability,” she said. “They’re not talking about a shift from a merit to a need-based program. That’s absolutely an important discussion.”

Three bills addressing the scholarship would make modest changes. One sponsored by Republican Assemblyman Lynn Stewart would allow students whose GPAs are under 3.25 to qualify for the scholarship with a high ACT score.

Two others would raise the number of credits students must take to receive the scholarship. The proposals align with the college system’s goal of getting students to take a heavier course load, which makes them statistically more likely to graduate.

But absent any bills that would restructure the scholarship, the Nevada System of Higher Education is taking another stab at creating a separate, need-based award.

The proposal, which hasn’t been introduced, would provide needy students $2,000 per semester for tuition and fees, books or living expenses.

A similar measure failed last session. NSHE is seeking $5 million for the program this biennium, but faces an uphill battle because Sandoval has not included the item in his budget proposal.

“We’re trying to be a little modest,” said NSHE lobbyist Constance Brooks, “and hopeful that we’ll achieve that kind of win.”