Friday, Aug. 20, 2004 | 11 a.m.
RENO -- The Millennium Scholarship fund is in financial trouble again.
State Treasurer Brian Krolicki said Thursday that the program, which helps Nevada high school students attend the state's universities and community colleges, has been so successful that it is running short of money.
Krolicki told the University and Community College System of Nevada regents that the state predicted in 1999 it would use $43 million from 2002 to 2004 but it has spent $67 million to sustain the program during that period.
Since fall 2000, 22,427 students have used the state scholarship program to attend at least one semester of college. The average payment per semester is $890.
The money comes from the state's lawsuit settlement with tobacco companies. But because those payments from the tobacco companies are on a set schedule, the scholarship fund will fall $422,000 short next spring, Krolicki said.
The fund has a cash flow problem, but Krolicki and the university system have worked out an agreement for the system to let the state's debt ride for two months until the tobacco money arrives.
Krolicki said that for the long term the scholarship program should be considered a "critical care patient" that needs constant attention.
Without changes, the Legislature will have to pump $45 million in state money into the program over the next three bienniums, Krolicki said.
The Legislature in 2003 tightened eligibility requirements.
To help control the costs to try to make sure the scholarship program continues through 2015, Krolicki proposed paying the scholarship money only for the fall and spring semesters and not for summer school. He also said those who drop out of school or take less than the 12 credits should not be allowed to rejoin the scholarship program.
But that won't save nearly enough money to keep the scholarship fund afloat for another decade. To ensure that the scholarships are available for years to come, Krolicki recommends dipping into the unclaimed property fund that generates about $20 million a year for the state. This is money that may be a utility deposit that somebody does not collect when he or she moves or some revenue invested that a spouse did not know about when the other half dies.
Krolicki would, with approval of the Legislature, sell $100 million in bonds to help fund the scholarships. And $8 million to $9 million would be used to pay off the bonds each year.
Regent Steve Sisolak of Las Vegas said it was too harsh to remove the scholarship from a student who may drop out for a year or take less than 12 credits. Regent Mark Alden of Las Vegas suggested that the $10,000 maximum scholarship award be reduced to $8,000.
Regent Doug Hill suggested the program be used to help students in need, rather than just anyone who achieves a "B" average in high school.
Krolicki said Gov. Kenny Guinn, who started the program, is opposed to making it a needs-based program.
Krolicki said he is going to take his proposal to the 2005 Legislature.
When he ended his presentation, regents gave him a round of applause. They praised him for coming up with suggestions to save the program.
Krolicki initially sought to sell the debt owed the state from the tobacco fund. He said that would have made the program secure. The state Senate approved the plan but it never came to a vote in the Assembly.
Hill said, "I can't believe the Assembly was so stupid."