Budget problems scrambling plans for Tenn. Lottery funds - WMC Action News 5 - Memphis, Tennessee

Budget problems scrambling plans for Tenn. Lottery funds

NASHVILLE, Tenn. (AP) - Legislators facing lower-than-expected lottery revenue must now decide how to fund initiatives such as providing more scholarships for students and making structural improvements to state school buildings.

In December, the State Funding Board said lottery revenue for next year could range from $280 million to $290 million. But the board said last week that the range is now $275 million to $278 million.

David Wright, chief policy officer for the Tennessee Higher Education Commission, said interest on the state's more than $400 million in lottery reserves that can be used to fund educational programs will also be lower than expected because of a downturn in the economy.

With fewer dollars, Democrats and Republicans may be forced to compromise on certain proposals in order for them to pass, but Senate Speaker Ron Ramsey says that approach isn't looking too good.

"Apparently instead of getting closer together, there's areas where we're getting further apart," the Blountville Republican said of negotiations with Democrats.

Among the proposals being debated are those that would lower the cumulative grade point average needed to keep a lottery-funded scholarship.

Under current rules, a student must be enrolled full time in college, have a GPA of at least 2.75 after the freshman year and a cumulative 3.0 GPA for subsequent years to keep the merit-based HOPE scholarship.

Many lawmakers on both sides of the aisle and Gov. Phil Bredesen believe reducing the required cumulative GPA to 2.75 would allow more students to keep the scholarships and stay in school to finish their degrees.

However, the tight budget year has some lawmakers arguing for a more frugal approach.

Ramsey said there are other ways to pay for lottery scholarships with existing revenues. He said one option would be to offer the lower retention requirements to only the first two college classes, while keeping the original 3.0 requirement for both the junior and senior years.

Ramsey is also still pitching his proposal to penalize students who only meet the lower retention threshold with a lower annual scholarship. Those students would receive only $3,000 per year - down $1,000 from the full rate.

Another contentious issue is the use of lottery funds for K-12 capital projects.

House Speaker Jimmy Naifeh, D-Covington, said there's wide agreement among Democrats that giving the money to school districts wouldn't be the best use.

"There's a lot of members of the House that think that would be throwing that money away and that we'd never see it again," he said. "Especially at this time with the economy the way it is, I just think we need to be more conservative with it."

Sen. Jim Tracy, R-Shelbyville, is sponsoring legislation that would use $100 million of the state's lottery reserve money for K-12 capital projects. Despite the shortage in lottery revenue, he believes it's still possible to provide more scholarships and do capital projects.

The constitutional amendment that created a state lottery allowed proceeds to be spent on scholarships, after-school programs and capital projects.

"I'm still hopeful. I'm not giving up," Tracy said.

(Copyright 2008 by The Associated Press.  All Rights Reserved.)

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