Articles

HOPE Faces Money Crunch; Estimates Project Funds Gap

James Salzer, AJC Staff
July 31, 2003

The cost of HOPE scholarships and pre-kindergarten classes could outpace the lottery funds needed to pay for them by $221 million within three years, numbers released Wednesday show.

Without changes to the programs, the cost of HOPE and pre-k will near $1 billion annually by the fiscal year that begins in July 2006, according to state estimates. Georgia Lottery President Rebecca Paul said she doesn't expect lottery revenue for education programs to top $800 million in the near future.

The figures, released at the first meeting of a study commission on HOPE's future, fuel concern that lottery revenues won't be able to keep up with the popular program's rising costs.

That could mean some students will receive smaller HOPE scholarships in the future, or that more students might not get them at all.

University System Chancellor Thomas Meredith, a member of the commission, has been sounding the alarm about a funding gap for more than a year. But he hadn't seen the projections until Wednesday's meeting.

"That really blew me away," Meredith said.

Based on current estimates by the state Office of Planning and Budget, the two programs will outstrip the lottery's ability to pay for them by $39 million during the fiscal year that starts in July 2005, and by $221 million the next year.

Lottery reserve accounts contain $203 million, but under current estimates, the programs probably would drain those by 2007. The lottery provided $751 million for HOPE and pre-k during the past fiscal year. The state would need $972 million to fund them by 2007. "We're not going to raise $900 million," Paul said.

The 20-member commission -- made up of lawmakers, state officials, parents, students and educators -- was created to find solutions to the HOPE funding crunch. It is expected to make recommendations by the end of the year.

"What we hope to do is take a comprehensive look at lottery programs ... to make sure we plan for the future," said Senate Higher Education Chairman Bill Hamrick (R-Douglasville), co-chairman of the HOPE panel.

The scholarships pay tuition and mandatory fees and provide book money for students who maintain a B average at public colleges. The program also pays for students to attend technical schools and provides grants to students at private colleges who maintain good grades.

State lawmakers, mindful of HOPE's popularity with voters, have been skittish about making changes that would hold down costs.

"The HOPE scholarship is the best thing to happen to higher education, and ... this state, in the 20th century," said House Higher Education Chairwoman Louise McBee (D-Athens), who co-chairs the panel with Hamrick. "We hope there will not have to be any big changes."

The cost of pre-k is rising, but not nearly as much as HOPE. When started by Gov. Zell Miller in the early 1990s, the college scholarships were available only to students from families with incomes under $66,000. Expenses exploded when the income cap was raised, then removed.

The number of students receiving the scholarships at state universities has jumped 186 percent since 1995, the first year HOPE was extended to all four years, said Shelley Nickel, executive director of the Georgia Student Finance Commission. Tuition and fees also have increased, pushing up HOPE costs.

Nickel, speaking to commission members Wednesday, offered a range of cost-cutting possibilities, although she couldn't say how much they would save. They included: eliminating payments for books and fees; providing a minimum grant and then extra money for poor students who qualify; re-establishing a family income cap; limiting the number of technical school hours, certificates and diplomas HOPE would pay for; and changing the grading scale.

Hamrick and McBee stressed that no decisions have been made.

The commission will meet each month through November.

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