The New Mexico State Senate voted 39-1 Tuesday to ensure that more proceeds from the New Mexico Lottery go toward the scholarship fund and less go toward administration.
Senate Bill 364 would require that at least 27 percent of revenue from lottery sales go toward scholarships starting July 1, and then at least 30 percent starting Jan. 1, 2009. Current law requiring that at least 50 percent of revenue go toward prizes will remain in effect.
The bill comes on the heels of a report last fall from the public policy group Think New Mexico that showed New Mexico's lottery spends a larger percentage on administration than all but four other states.
The percentage now going to scholarships is 23.97 percent, and that is projected by the Lottery Authority to drop to 22.07 percent by 2010, according to the report.
"This helps protect our fund. It helps fulfill the promise we made to the people of New Mexico," said Majority Leader Michael Sanchez, D-Belen, one of the original architects of the lottery scholarship. "If we can get more money to the scholarship fund, we keep that promise we made. This helps with that process."
Sanchez said 42,000 New Mexico high school graduates have taken advantage of the scholarship, and about 13,000 are now actively using it. He said the number of incoming freshman is up at every college in the state, putting a strain on the fund.
Sanchez said it is predicted that at the current rate, the fund would be insolvent by 2011.
Sen. John Arthur Smith, D-Deming, who cast the only "no" vote, said he was concerned this bill could have the exact opposite effect as is hoped for by Sanchez. He said the New Mexico lottery has defied national trends and has continued growing while other states have seen their revenues decline.
"The challenge we're facing now is as a result of the success of the lottery scholarship," Smith said. He said a provision of the bill requiring the New Mexico Lottery Authority to follow the procurement code would limit its flexibility and ability to operate on an effective business model.
Another provision that would have added college officials to the Lottery Authority Board was amended out. Sen Caroll Leavell, R-Jal, said he thought it was "like the fox guarding the hen house."
Sanchez conceded it was possible the restriction on administrative expenses could reduce promotions and impact sales.
"I think its something we have to be careful of," he said.
This issue has been around in NM since before the Lottery even started up.
There are a lot of areas where they can trim expenses - for example they are top heavy in staff for their size. They will also look to wring cost concessions from whoever wins their new online system contract.
That said, I always hate to see a minimum % to beneficiaries requirement. Beneficiaries spend dollars - not percentages. The ONLY way this lottery can hit 30%, given its very big geographical size and low population density, will be to limit payouts. That will see sales decline and along with sales, dollars to scholarships.
This issue has been around in NM since before the Lottery even started up.
There are a lot of areas where they can trim expenses - for example they are top heavy in staff for their size. They will also look to wring cost concessions from whoever wins their new online system contract.
That said, I always hate to see a minimum % to beneficiaries requirement. Beneficiaries spend dollars - not percentages. The ONLY way this lottery can hit 30%, given its very big geographical size and low population density, will be to limit payouts. That will see sales decline and along with sales, dollars to scholarships.