Tuesday, April 8, 2003 | 9:25 a.m.
CARSON CITY -- State Treasurer Brian Krolicki delivered more grim news Monday for the Millennium Scholarship, saying the program could come to an end even sooner than expected.
Krolicki told the Senate Government Affairs Committee that if the state follows its current fiscal course, the scholarship program could be in financial trouble as soon as 2006. Two weeks ago he had predicted it would last until at least 2009.
Philip Morris, which contributes about half of the money that Nevada uses for the program under the tobacco settlement, has been hit with a $10 billion judgment in Illinois. To appeal the case, Phillip Morris would have to post a $12 billion bond. The company said that may mean the company will not be able to make its payment to Nevada due April 15.
Krolicki said a national firm projected the annual payments by tobacco companies to the states will drop an average of 8 percent annually for the next four years.
Students who have their scholarship money are not in any danger of losing it, Krolicki said. But, he said, the state might not be able to make payments starting in the fall semester.
The state receives about $40 million a year from the tobacco settlement and 40 percent of that goes to the scholarship program.
Krolicki urged the committee to approve Senate Bill 448 to allow the treasurer's office to sell off half the debt and then invest the money to ensure a secure income. Half of the debt is the amount dedicated to the scholarship and a health program.
He proposed a similar bill two years ago but it died in the Assembly. He suggested then he might be able to realize $450 million by selling off the full debt. Because of the drop in the stock market, Krolicki said, the debt could probably be sold now for only $350 million.
"We have left $100 million on the table," he said.
If the bill passed this year, Krolicki said, he probably would not sell off the debt immediately because of the poor market conditions. But if Philip Morris recovers along with the market, then he would have the authority to make the move, he said.
Krolicki had predicted two weeks ago that if the fund was "securitized," the Millennium Scholarship program could last until 2016.
Krolicki also is proposing to increase the standards to qualify for and hold a Millennium Scholarship, which is worth $2,500 a year.
Currently a high school student with a 3.0 grade-point average is eligible to receive the scholarship. That standard would be raised to a 3.1 grade-point average for graduating classes up to the 2005-2006 school year, and it would go to 3.25 after that.
To maintain the scholarship in college, a student must maintain a 2.0 grade-point average. That would rise to a 2.6 under the proposed new guidelines.
Senate Minority Leader Dina Titus, D-Las Vegas, who is a professor at the University of Nevada, Las Vegas, suggested that a student should be required to maintain a 3.0. Titus also said the scholarship should be considered a loan that would have to be paid back if the student failed to complete a degree.
Jim Richardson of the Nevada Faculty Alliance said his group supported the Krolicki bill.
The committee did not take any action on the bill.
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