Governor’s Distinguished Scholars Could Be Cut By One-Third

One of the top scholarship programs in Arkansas is on the chopping block in the proposed budget for the Arkansas Department of Higher Education.

According to an email sent last week by interim Higher Education Director Shane Broadway, the Governor’s Distinguished Scholars program may be able to award only around 100 scholarships for the upcoming year down from around 300 in previous years.  This scholarship is awarded to some of the top high school students in Arkansas with a 32 ACT or 1410 SAT score and a GPA of at least 3.5 or a National Achievement Finalist or National Merit Finalist.

But the fund that provides for this scholarship has been depleted to the point where the new awards will have to be drastically cut. In addition, several other state scholarships may suffer a similar fate.

“Based on projections right now that are subject to change, we anticipate that we will be able to award 75-100 Governor’s Distinguished Awards next fall, that is down from 300 in most years.  So without new funding there will be an impact, it will also impact students wanting to attend dental school, optometry school, students of military and law enforcement parents killed or disabled in the line of duty etc,” wrote Broadway in an email last week.

Broadway explains in the full email below that the cuts in new awards are a result of a depletion in the Higher Education Grants fund.  It was anticipated that this fund would be depleted by 2017 however a couple of factors caused this date to be moved up to 2014.

“Two things happened.  First the lottery passed and we converted our system from a paper system to an on-line application that told the student that they may be eligible for more than just one scholarship, so that drove up the number of students qualifying for other programs, which accelerated the fund balance down quickly.  The second one that had the most impact is that a decision was made to move $20 million of the fund balance over to a Lottery Reserve account for if a problem arose with lottery proceeds and number of students on the Academic Challenge scholarship.  We came close to having to utilize the reserve this semester, but fortunately did not have to, but it is set aside and no longer part of the grants fund,” wrote Broadway.

The cuts will affect new awards but is not supposed to affect those currently already receiving scholarships.  Nevertheless, the projection has many parents and those in the world of higher education concerned about the impact.  The cuts are a part of the Higher Education appropriation bill – SB122 – which is current before the Joint Budget Committee.

Full email from Broadway…

The explanation of what is going on currently is a long one, but will try my best to explain.

Around 2007, the Higher Education Grants fund had a fund balance of about $55 million dollars. It was decided that we needed to expand the eligibility criteria and add slots to programs in order to get that money in the hands of students. Each year we receive $47 in general revenue, has been that amount for as long as I can remember. We currently administer around 20 different programs including the Governor’s Scholars program. Since the 2007 session the fund balance started to go down because more students were accessing the scholarship dollars. It was projected at the time that the fund balance would go down slowly and eventually be spent down around 2017. Two things happened. First the lottery passed and we converted our system from a paper system to an on-line application that told the student that they may be eligible for more than just one scholarship, so that drove up the number of students qualifying for other programs, which accelerated the fund balance down quickly. The second one that had the most impact is that a decision was made to move $20 million of the fund balance over to a Lottery Reserve account for if a problem arose with lottery proceeds and number of students on the Academic Challenge scholarship. We came close to having to utilize the reserve this semester, but fortunately did not have to, but it is set aside and no longer part of the grants fund. Doing that then changed the date of the balance going down from 2017 to 2014.

So in order to keep the students currently on the various scholarships funded until they complete and to keep the programs adding additional students next fall we requested in our budget request an additional $7million dollars. That additional general revenue would keep us at the currently level of awards that we presently have. Without it, we will have to reduce each program proportionately to stay within our $47 million of general revenue. Based on projections right now that are subject to change, we anticipate that we will be able to award 75-100 Governor’s Distinguished Awards next fall, that is down from 300 in most years. So without new funding there will be an impact, it will also impact students wanting to attend dental school, optometry school, students of military and law enforcement parents killed or disabled in the line of duty etc.

We have been working on this for the past couple of years, trying to ease down some of the programs as much as possible. We presented the information in the fall budget hearings and really before then, all of the institutions were alerted last summer and at every chance I have had before the General Assembly we have explained the situation. We have met with the Education Committee Chairs and Vice-Chairs, the Budget Chairs, Senate and House leadership and Governor. As you know budgets are tight with all of the discussions focused on many issues right now. But we are doing all we can to make sure we are a part of the discussion. One thing to point out is that the legislature is not considering further cuts to our budget, they cannot cut us below the $47 million we already receive or they will run afoul of the constitutional amendment on Lottery and the language about supplanting scholarships. So they are not considering cuts as was mentioned in the email. The cut would be the ending of the fund balance through a series of events.

I know that this is way too much information, but wanted to provide the best information to you. Take a look and if you have any questions, please let me know.

Thanks.

 

The Honorable Shane Broadway

Interim Director

Arkansas Department of Higher Education