Task Force unanimously recommends Lottery Stabilization Plan

(NASHVILLE, TN), November 29, 2011 – A State Senate Task Force today unanimously recommended the General Assembly adopt a lottery scholarship stabilization plan designed to reward academic achievement, while not cutting off those who barely qualify for the HOPE scholarship program.  The plan will be considered by the full General Assembly when lawmakers return to Capitol Hill in January.

The Senate Task Force, which is chaired by Senate Education Chairman Dolores Gresham (R-Somerville), is comprised of state senators, Tennessee’s constitutional officers (Secretary of State, Comptroller, and Treasurer), and higher education leaders from the Tennessee Board of Regents, the University of Tennessee, the Tennessee Higher Education, and the Tennessee Independent Colleges and Universities Association. The group was charged with looking at revenue forecasts for the program and any avenues for increasing the amount of funds contributed to the Tennessee Student Assistance Corporation which administers the lottery scholarship program.

The total costs of the scholarship program are currently outstripping the lottery revenues — the net proceeds from the lottery games played plus interest from the lottery reserves.  To make up the difference in the short term, the state has dipped into the lottery reserves.  If nothing is done, the lottery reserve balance would dwindle to approximately $145 million in fiscal year 2021, including the $50 million in which state law requires remain in reserve for the program.  The Task Force voted to recommend maintaining a minimum reserve balance of $100 million in the future.  

The plan adopted by the Task Force requires students who attend a four-year institution to meet both the ACT and grade point average (GPA) requirements to receive the full award beginning in the fall semester in 2015.  The panel decided on a four-year delay in implementation to level the playing field for high school students who are currently working to achieve a scholarship and to give those in eighth grade or below plenty of time to adjust to the changes.   When implemented, students who attend a four-year institution and meet one of the criteria (ACT or GPA) would be eligible for the two-year award amount.  It also provides that students who meet one of the criteria and retain the award through year two would be eligible for a full award in year three. Award amounts for students who attend two-year institutions would remain unchanged.  It is anticipated that this plan would ultimately generate about $13 million in the first year and $17 million in savings each year thereafter.

 “We heard a wide range of proposals as we look to stabilize the program so students can depend on the funds being there in the future,” said Chairman Gresham.  “In the end we opted for one that does not cut off students who do not meet both requirements, but rewards academic achievement if they do.  This option also gives students who receive the reduced scholarship an opportunity to receive the full amount during their junior and senior years.  In the meantime, they can attend either a community college in which their scholarship will cover tuition costs, or it can be applied towards the cost of attending a four-year school.”

Education officials recently announced a plan to better allow students to transfer their credits from two-year to four-year schools utilizing 50 transfer paths.  Entering college freshmen must now have a minimum of a 21 ACT (980 SAT) to receive a standard HOPE scholarship or an overall weighted minimum 3.0 grade point average (GPA) in high school. 

Gresham said there is also potential for some lottery funding to be directed to the  Tennessee Student Assistance Award Program (TSAA).  This program was established to provide non-repayable financial assistance to financially-needy undergraduate students who are residents of the state.  Approximately 5,600 more recipients would be served for each $10 million in funding provided to TSAA.  The grants can also be used by non-traditional students of any age, including laid-off workers and other students.

“This is an excellent tool as we look to recruit new jobs to Tennessee,” added Gresham.  “A better education system means a better economy.  I am very pleased with work of this committee and hopeful it will be approved when the legislature convenes in 2012.”

Since it began in 2004, the lottery has provided nearly $2.1 billion for education. 




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