Endowment can fund Millennium Scholarship, State Treasurer Zach Conine says
State Treasurer Zach Conine is bringing a plan to lawmakers he says is designed to fund the Governor Guinn Millennium Scholarship program in perpetuity.
He will present the plan to create an endowment using unclaimed property funds to the Senate Judiciary Committee on Monday.
The scholarship program was created in 1999 by then-Gov. Kenny Guinn using tobacco settlement money. But since then, the program has grown dramatically and has helped nearly 125,000 Nevada students pay college tuition costs up to $10,000 apiece.
But the program quickly outgrew the available tobacco settlement funding, which produces about $15.5 million a year. Lawmakers expanded the funding to include $7.6 million in unclaimed property money annually but, in recent biennia, it needed General Fund cash as well.
Conine said to date the state has put $72 million in General Fund money into the program to cover shortfalls.
“This gap is expected to grow as Nevada’s college-going population continues to increase,” he said. “It requires more money from the General Fund every two years.”
The proposed budget has another $33 million in General Fund money to cover costs through the coming two-year budget cycle.
Conine said existing programs should have stable funding, so his office began looking into ways to fund the Millennium Scholarships long term.
“Our intention is to fund that program forever,” he said.
Right now, he said, the Abandoned Property Trust Fund gets a significant amount of money every year that currently goes to the General Fund. He said Senate Bill 44 would, beginning in 2022-2023, transfer that money to the Governor Guinn Millennium Scholarship Trust Fund that it creates.
“We take the rest of that money that isn’t used to cover the (shortfall) in a specific year and begin funding an endowment,” Conine said.
He said after about seven years, that endowment would have projected base assets totaling a bit more than $250 million and could begin paying the scholarship costs out of earned interest, making the General Fund appropriations unnecessary.
Those projections, he said, are based on conservative growth rates with interest returns in the 3 percent range.
He said it creates a self-sustaining program similar to the endowments universities use to fund merit-based scholarship programs.
Conine said the plan would save the state an estimated $200 million in General Fund expenditures over the next 20 years.
“As soon as that bucket gets full, we don’t have to worry about the program anymore,” he said.