LITTLE ROCK — The amounts of lottery-funded scholarships would increase as students advance through college under a bill that cleared a House committee Wednesday.

The House Rules Committee endorsed House Bill 1295 by Rep. Jeremy Gillam, R-Judsonia, and Sen. Johnny Key, R-Mountain Home.

Under the bill, the Academic Challenge Scholarship for students attending four-year schools would be awarded in the following amounts: $2,000 for freshmen, $3,000 for sophomores, $4,000 for juniors and $5,000 for seniors.

Students attending two-year schools would receive $2,000 per year.

Currently, students receive $4,500 each year to attend a four-year school and $2,250 each year to attend a two-year school. Under HB 1295, students already in the program would continue to receive those amounts but students entering the program in the 2013-14 school year would receive the tiered amounts.

The measure also would increase the amount of funding available for scholarships for nontraditional students from $12 million to $16 million, under an amendment Gillam presented Wednesday.

Gillam said that if scholarship amounts are not changed and lottery revenue stays at its current level, the program will be unable to meet all its obligations next fiscal year. He said his bill would keep the program solvent.

Rep. Darrin Williams, D-Little Rock, said the lottery was sold to voters as a way to increase the percentage of Arkansans holding degrees from four-year schools — a statistic in which the state generally ranks at or near the bottom nationally.

"It appears that the hit here is being felt much more deeply by our four-year institutions," Williams said.

Gillam replied that more than 90 percent of students attending four-year institutions in Arkansas on a lottery scholarship also receive a significant amount of other financial aid.

"I do not think that this is going to be that significant a deterrent to go to universities," he said.

Rep. John Burris, R-Harrison, praised the bill and said he hoped the tiered approach would give students a new incentive to retain their scholarships.

The committee endorsed the measure in a voice vote. No "no" votes were heard. The bill advances to the House.

Shane Broadway, interim director of the state Department of Higher Education, told reporters later that the department has not taken a position on the bill but said he believed it would prevent the program from running out of funds next year.

The Legislative Oversight Committee on the lottery last year considered a proposal by Key to create a tiered scholarship system but voted instead to recommend lowering scholarship amounts to $3,300 per year for four-year schools and $1,650 per year for two-year schools. To date, no bill containing that proposal has been filed.

Also Wednesday, the House Rules Committee endorsed HB 1275 by Rep. Jeff Wardlaw, D-Warren, which would require a business applying for an alcohol permit to publish a notice of the application in a newspaper located in the same county where the business is located if there is one, or in the newspaper with the nearest physical address if there is not.

Current law merely requires that the notice appear in a newspaper that is circulated locally.

Testifying in support of the bill, Michael Langley, director of the state Alcoholic Beverage Control Division, said legal notices are more likely to be read by a business’ neighbors in the local paper than in the statewide paper.

The bill goes to the House.

The panel also endorsed HB 1280 by Rep. David Kizzia, D-Malvern, which would add gas grill lighters to a state law banning the sale of cigarette, cigar and pipe lighters shaped like objects that would appeal to children.

Kizzia showed the committee a gas grill lighter shaped like a duck to demonstrate the type of device his bill would target.

The bill goes to the House.