New Mexico's lottery scholarship bill clears Senate Finance Committee

The Senate Finance Committee on Wednesday gave its blessing to a bill that would establish a required minimum amount transferred to a popular scholarship program for New Mexico students.

The proposal, previously passed by the Senate Education Committee, now goes to the Senate floor.

The legislation, Senate Bill 283, sponsored by Jacob Candelaria, D-Albuquerque, and John Arthur Smith, D-Deming, proposes to remove the mandate that the New Mexico Lottery transfer 30 percent of gross sales and require it to turn over a minimum of $40 million to the Legislative Lottery Scholarship program in fiscal year 2020. That minimum would increase to $40.5 million in fiscal 2021 and to $41 million in fiscal 2022 and subsequent fiscal years. In addition, an amendment was added to the bill that would transfer forfeited lottery prizes to the tuition fund starting in fiscal 2023.

"We're trying to find a compromise that puts the Lottery in a stronger financial footing," Candelaria told committee members. "The 30 percent cap sounds good. Over the years, however, we have not seen growth in the amount of money in the Lottery Tuition Fund."

If the changes didn't work out in three years, the proposal provides for a return to the 30 percent requirement.

Lottery officials have backed similar proposals in recent years, contending that the 30 percent mandate hurts sales by limiting the funds available for prizes, but the Legislature has resisted doing away with the mandate. The 30 percent law, enacted in 2008, has resulted in scholarships receiving an average of about $42 million a year over the past five years, according to Lottery statistics.

The bill would also set up a schedule restricting operating costs to no more than 17 percent of revenues in fiscal 2020, decreasing to 16 percent of revenues in fiscal 2021 and 15 percent thereafter. The proposal defines operational costs as everything that is not prizes or transfers to the tuition fund. Vendor fees are considered part of operational costs.

More than 117,000 students from across the state have attended New Mexico public colleges, universities and technical colleges since the Legislative Lottery Scholarship program started in 1996. More than 66,000 of those students have graduated from college, according to the lottery.

The lottery's contribution for scholarships has had ups and downs through the years. It dropped to $37.8 million in 2017 from $46.3 million in 2016, a decrease of 18 percent. A recovery took place last year, with $40.2 million earmarked for scholarships.

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