The Interim Finance Committee on Wednesday approved a temporary fix for the financially strapped Millennium Scholarship program, moving money from fees generated by the Prepaid College Savings program.
The $4.2 million infusion will enable the program to pay students their full scholarships through the coming school year. But Deputy Treasurer Steve George told the committee it will be up to lawmakers to decide how to fix the program financially during the 2011 Legislature.
He also made it clear that, although the funding became an issue in April when tobacco settlement money came in $3 million short of projections, the problem was created by the Legislature when it stripped $32.8 million out of the millennium program to help balance the budget.
The scholarship, available to all Nevada high school students who graduate with a 3.25 grade point average or better, is funded by tobacco settlement money supplemented with funding from the state unclaimed property account.
But to help balance the state's budget, the 2009 Legislature and this year's special session took $5 million each fiscal year from the scholarship fund. They also swept away $7.6 million in unclaimed property money originally budgeted to the program in 2009, 2010 and 2011 - a total of $22.8 million.
"The reason we came up with a problem is the funding that historically has been there was not there," he said.
George told the committee that the money transferred won't hurt those people who have accounts under the prepaid tuition program and the Nevada college savings plans. He said the money consists of the state's share of administrative fees collected under those programs, not tuition money.
Legislative Counsel Brenda Erdoes advised IFC members the fee money can legally be used to cover the Millennium Scholarship shortfall because it will still go to higher education.
The question of whether lawmakers can take that money over the objections of the college savings board was not directly addressed in Wednesday's meeting.
George said Treasurer Kate Marshall is looking at the transfer as a move to get the issue through to the 2011 Legislature.
"Hopefully, going into the next session you will be able to restore that funding," he said.
The scholarship program has provided funding for thousands of Nevada students to attend college. It offers a maximum of $9,600 in tuition support over a four year period. It was created by then-Gov. Kenny Guinn in 2001 and has been credited with increasing the percentage of Nevada high school graduates attending college by up to 10 percent.
Funding it costs about $25 million a school year.
But several years after it started, tobacco money proved insufficient to cover the costs. That's when lawmakers started covering the difference with unclaimed property money.
The vote to approve the transfer was unanimous.