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Published in Print: March 9, 2005, as Nevada Leaders Strike Agreement Over Popular Scholarship Program

Nevada Leaders Strike Agreement Over Popular Scholarship Program

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The future of Nevada’s Millennium Scholarships, which state Treasurer Brian K. Krolicki warned last fall were in jeopardy because of a drop in supporting revenues and an unexpectedly high number of enrollees, appears to be taking a turn for the better.

Gov. Kenny Guinn and several legislators have reached an agreement that would infuse more than $40 million into the program, an amount they say would ensure its existence until 2017.

Nevada Gov. Kenny Guinn
Nevada Gov. Kenny Guinn talks about his plan to help shore up the popular but fiscally ailing Millennium Scholarship program at a news conference on Feb. 16 at the Capitol in Carson City.
—Cathleen Allison/Nevada Appeal

“The legislators I worked with agree that the Millennium Scholarship is very important for Nevada high school students in getting the opportunity to go on to college,” the governor said in a statement late last month.

He noted that the program has spurred record-setting enrollments and set the state on the road to a more diversified economy and a better-educated workforce. “Since we have reached an agreement on this pressing issue, this will allow lawmakers more time to work on other critical matters,” said Mr. Guinn, a Republican.

The program allows graduating high school seniors with grade point averages of 3.1 or higher who attend in-state colleges or universities to receive up to $10,000 in total tuition assistance. To keep a Millennium Scholarship, a student must maintain at least a 2.5GPA in college.

‘Gentlemen’s Agreement’

Mr. Krolicki, a Republican, began discussing the program’s impending financial difficulties with Gov. Guinn in late 2003. Potential changes to help improve the financial situation were then discussed with the board of regents for the Nevada university and community college system last August. ("Nevada Scholarship Program in Trouble, Treasurer Warns," Sept. 8, 2004.) Two main problems lie behind the financial crisis.

First, the program receives its funding from a settlement in a multistate lawsuit against tobacco companies, and decreasing cigarette sales have resulted in a significant drop in revenues from that source. The scholarship program will receive 40 percent of Nevada’s $1.2 billion in payments over 25 years from the 1999 settlement.

In addition, when the program was first conceived in 1999, the state treasury department estimated that only about 50 percent of graduating high school seniors would use the scholarships, leaving the state to pay out $43 million for scholarships by 2004.

Nearly 74 percent of students from the class of 2004 are currently receiving aid under the program, however, and the amount allocated reached $67 million in that time. At that rate, state treasury officials knew that the program would begin seeing critical funding shortages by the fall of 2005.

To avert the looming crunch, Gov. Guinn met with legislators in late February and proposed that the state dedicate half of the $16 million it collects in unclaimed property, such as forgotten bank accounts and utility deposits, as well as nearly $32 million in reallocated funds from various state offices, to the scholarship program.

A spokesman for the governor’s office confirmed that leading lawmakers have given a nod of approval to the plan. Officials with the treasurer’s office say that if the legislature approves the proposed plan, the scholarship program will receive a one-time shot of $38 million for the 2006-07 biennium, and an additional $8 million in each subsequent fiscal year until 2017.

“It’s a gentlemen’s agreement,” said Greg Bortolin, the governor’s press secretary. He called early concerns that the program might be dissolved a lot of smoke with no fire. “The Millennium Scholarship is the governor’s program, and as long as Governor Guinn is here, it will not be in jeopardy,” he said.

State officials say the program has drastically improved the rate at which Nevada high school graduates go to college, from 30 percent in 1999 to 50 percent in 2004.

More Change Needed?

But new funding alone would not be enough to save the program, according to Kathy Besser, the chief of staff for the state treasurer’s office. “The money only works if we make changes,” she said. “We have to make $10 million in cost savings to make [the governor’s plan] work as agreed.”

The treasurer’s office has proposed several changes to the program that could close the gap, including limiting the number of course credits per semester for which the scholarship will pay to 12 at four-year universities and six at community colleges.

Legislators will also be asked by the governor and the treasurer to consider eliminating the funding of remedial and summer school classes, possibly raising the GPA required for eligibility, and preventing students who lose their scholarships because they fail to maintain a 2.5 GPA in college from regaining them later.

Others, though, worry that such changes could turn the scholarships into an elite program reserved for the highest-achieving students, and counteract the spirit of the system by eliminating the opportunity for average students.

“We have to make some adjustments,” acknowledged Mr. Bortolin, who believes that such concerns will be voiced in the legislature.

Vol. 24, Issue 26, Page 21

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