Lottery Scholarships to pay out less

Sen. Johnny Key at the podium

LITTLE ROCK (KATV) - The Senate and House have passed legislation to create a tiered scholarship approach for students awarded money from the state lottery. Governor Beebe is expected to sign the bill into law.

The lottery generated roughly 80 million dollars before they started awarding scholarships, but that surplus is almost gone because they didn't anticipate how many eligible applicants they'd have. So changes have to be made.

The scholarship currently pays $4,500 per year for university students and $2,250 for community college students.

Sponsor of the bill, Senator Johnny Keys says, "It just cannot sustain. So this will address that problem and over the next four years get us under control."

Under Senate Bill 294, students at four year schools will receive $2,000 their freshman year and an additional thousand each year, ending at $5,000 their senior year. Students enrolled full-time at two-year colleges will be eligible for a $2,000 scholarship each year.

Shane Broadway with the Arkansas Department of Higher Education says more students are applying than anyone could have anticipated. He says net proceeds from the lottery are flat and won't be able to sustain the scholarships at the current payout amount.

The program is only three years old and there hasn't been a graduating class. Broadway says it's too soon to tell if the 2.5 grade point and 19 ACT score needs to be increased, "You really only have two years worth of data and not enough to say this is a trend, this is the direction we need to go." It's a decision that can only be made in the General Assembly.

Broadway adds, "With the newness of the program, applications will continue to grow for a little while and then it will level off. That's the difficulty when you're trying to project out making payments because the way we run our models because when you make a commitment to a student, then you have to have enough money to see them all the way through four years from now."

Right now, lawmakers are concerned with cash flow because the lottery has to make 90-million in proceeds to fund scholarships. Broadway explains, "They're pretty close. Based on predictions they'll make 90, but if they don't we'll be back here next time having the same conversation looking at adjusting award amounts."

Senator Key says the way it's written, the tiered scholarship basically rewards students for advancing through college.

Opponents fear it will deter teens from going to a four year college because the payout is cut in half for a student's first years in college.

About 40% of college freshmen lose the scholarship. About 60% of non-traditional students who have been out of school for several years lose the scholarship. {}

The nearly 33,000 students already receiving lottery-funded scholarships will be grandfathered in and continue to receive funding at the current levels.

COMPLETE COVERAGEOfficial: Without changes, lottery scholarship program to go broke in 2014 (Nov. 20)Ark. panel recommends cut in lotto scholarships (Dec. 18)Changes ahead for lottery scholarship program (Dec. 27)Bill would alter Ark. lottery scholarship formula (Feb. 12)Lottery scholarships to pay out less (Feb. 26)