Legislators are discussing an overhaul of the Arkansas Academic Challenge Scholarship program, which is funded primarily by the state lottery approved by voters in 2008, because of anticipated shortfalls in revenue.
State Sen. Johnny Key, R-Mountain Home, last week proposed a tiered approach to funding scholarships — i.e., giving a smaller amount to an entering freshman and then increasing the annual amount as the student progresses toward a degree.
This year all students who qualify will receive $4,500 a year to attend 4-year universities in the state or $2,250 to attend 2-year colleges. That’s down slightly from the $5,000 and $2,500 scholarships offered in the first year of the program, 2010-11.
Key suggested to the Legislature’s lottery oversight committee that should be changed to $2,000 for a freshman, $3,000 for a sophomore, $4,000 for a junior and $5,000 for a senior — regardless of whether the student is attending a 2-year or 4-year institution. His idea is to reward success.
Actually, the program already awards success. High school graduates must show some academic success and-or potential to succeed on the college level to get a scholarship. Then they must maintain a 2.5 grade average with a normal course load to keep the scholarships.
Key’s idea to make no distinction between students attending 2- or 4-year colleges should be a non-starter. That ignores the reality of the difference in cost, not to mention the difference in value. For example, the tuition at Arkansas State University-Jonesboro is $2,172 per semester, while the tuition at Black River Technical College in Pocahontas is $77 an hour — $2,310 for two semesters at 15 hours per semester.
Key’s proposal would cut only $250 from the BRTC freshman and give the same student $750 more for a second year there. On the other hand, the ASU freshman would lose $2,500 the first year and $1,500 the second year. Only in the fourth year would that student get an increase, $500.
To begin with, legislators have no business trying to work out the details of a scholarship program. Noticeably absent from the lottery oversight committee’s hearing was testimony from representatives of the state Department of Higher Education and the colleges and universities.
The legislators are right to be concerned, though. For the fiscal year that ended June 30, the state lottery generated nearly $98 million for scholarships, and the state provides another $20 million in general revenue. The Higher Education Department will have to draw on its reserve fund this year, and an analyst for the state Bureau of Legislative Research projected that the cost for scholarships will exceed the available revenue by about $22 million in 2014 if there are no changes.
Although the lottery finished its 2012 fiscal year with some $10 million more in revenues than the previous year, this year is off to a slow start. The net proceeds for scholarships in July was down $2.4 million.
Former Lt. Gov. Bill Halter doesn’t think much of Key’s proposal either. After the hearing he said it was "in no way what was described to Arkansas voters" in the 2008 campaign for the lottery amendment. He’s right that cutting all first-year scholarships to $2,000 would fail the mission of encouraging more Arkansas students to go to college.
But Halter would like the state to find more money to make up the difference, and that isn’t likely to happen. In a weak economy lawmakers are already looking at ways to take more money away from higher education. The state has other priorities, and many elected officials believe that cutting taxes, without regard for the consequences, is the best guarantee of their own re-election.
Gov. Mike Beebe acknowledged after the committee hearing that something is going to have to be done, but he wasn’t ready to sign on to Key’s proposal.
In fact, other states that count on lotteries to help cover their college are also facing shortfalls in revenue. Georgia, which runs a merit-based program, has had to tighten its eligibility requirements for state scholarships to account for increased student demand and flat lottery revenues.
In Tennessee, where the state lottery is doing much better this year, Republican lawmakers have backed off a proposal to cut lottery scholarships in half to save money for the state. However, Tennessee’s eligibility levels for the program are significantly higher than Arkansas has.
The lottery scholarships have enabled many Arkansas students to go to college, and then to be able to afford to stay. More than 34,000 students are on Academic Challenge Scholarships this fall — at a total cost of about $134 million. Without the lottery the state’s scholarship program would be about $100 million less per year.
Meanwhile, the colleges and universities, faced with cuts in other state revenue and flagging private support, continue to raise tuition and fees.
Cut the state scholarships significantly, and you’ll eliminate the chances for many Arkansas residents to get a college education.
Roy Ockert is editor emeritus of The Jonesboro Sun. He may be reached by e-mail at email@example.com.