AP Interview: Lottery Scholarships May be Tweaked

ERIK SCHELZIG | Associated Press Writer

NASHVILLE (AP) – Democratic gubernatorial candidate Mike McWherter would consider annually tweaking the state's lottery scholarships to ensure there is enough money to pay for the popular program.

McWherter said in a recent interview with The Associated Press that the lottery's main focus should be to "make scholarship money available to as broad a spectrum of kids as the fund will possibly allow."

High school graduates need either a B average or a 21 on the ACT college admissions test to qualify for the main scholarship at four-year schools.

Lawmakers last increased the total annual amount to $4,000 a year in 2007. But an analysis by the Tennessee Higher Education Commission has shown that because of tuition increases, the scholarship that covered 77 percent of tuition then will now only pay for 63 percent this year.

Nevertheless, McWherter said he'd consider reducing the scholarship awards if budget pressures demand it.

"If funding is going to be an issue, then yes, I think you would have to scale that back to ensure that we maintain solvency in the fund," he said. "I don't mind if they adjust this on a yearly basis even."

Increased college enrollment and looser eligibility requirements have led to concerns that the lottery could in the future have to dip into reserves to pay for scholarships. The projected $302 million in lottery scholarship spending in the current budget year is up $42 million from two years ago.

Meanwhile, reserves have been tapped to help establish the state's pre-kindergarten program and to create a $90 million pool to help schools improve their energy efficiency.

"It's like any huge pool of money," McWherter said. "When politicians see a big huge pool of money they tend to want to come and nibble away at it."

McWherter said the pre-K money was a worthy expenditure because it fosters educational achievement.

"If you do encourage children to enjoy education and the learning process, then that is obviously going to carry across into their higher education experience," he said. "So I think it's more of an investment."

Just $3 million of the $83.5 million pre-K program was funded with lottery money in the budget year that ended in June. No lottery money is budgeted for pre-K in the current spending year.

Republican gubernatorial candidate Bill Haslam agreed that the lottery's priority should remain scholarships rather than the "three or four things that have started to siphon money off."

But the Knoxville mayor said he'd be cautious about making changes in scholarship amounts or standards.

"It has to be consistent," he said. "The first thing is you have to make sure that the rules people enter under they get to finish under."

McWherter said he also wants to look at reducing the amount of money paid to lottery ticket vendors, "because it is higher than many other states with lotteries."

McWherter's position follows a similar proposal by Memphis prosecutor Bill Gibbons, a former Republican gubernatorial candidate, who said he would fund pre-kindergarten expansion by cutting the lottery vendor payments.

Retailers receive a 6.5 percent commission on lottery sales. The lottery paid out $71 million in commissions and bonuses in 2009, and a total of $357 million since it began in 2004.

Haslam was president until 2003 of the family-founded Pilot Corp. chain of truck stops, a major lottery ticket retailer.

Haslam at the time didn't rule out evaluating proposals to trim the vendor payments, but noted that it isn't only large chains that sell tickets. Haslam said in March that he'd have to look at "how it affects independent mom-and-pop operators as well."

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