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Lawmakers question State Treasurer’s Office over financial health of Millennium Scholarship Fund


By Sean Whaley, Nevada News Bureau: When the Legislature adjourned its special session to balance the budget on March 1, lawmakers went home believing they had ensured the financial viability of the Millennium Scholarship program through 2014.

But the program, hit by declining tobacco settlement revenues and the diversion of financial support to help fill a more than $800 million budget shortfall, remains in jeopardy.

The Legislature’s Interim Finance Committee was told today the proposal to use $2 million per year over two years from the College Savings Programs managed by the state treasurer’s office to shore up the scholarship was not approved by the College Savings Programs Board.

Instead, the five-member board approved $200,000 in support for the scholarship program, enough to keep it running only through fiscal year 2011.

Some lawmakers said they were under the impression from Nevada State Treasurer Kate Marshall at the special session that the $4 million would be transferred to the fund. It is legally permissible to transfer funds from the College Savings Programs, which are paid for by families investing in the plans, to the scholarship, which is funded through various state revenues including tobacco settlement funds.

“I can tell you that it was represented during the special session that we were going to have that money transferred and that’s why many of us agreed because we thought the Millennium Scholarship would be solvent, that it was represented by the treasurer’s office that there was the ability to move the money and that it would be solvent,” said Assemblywoman Heidi Gansert, R-Reno.

Senate Majority Leader Steven Horsford, D-Las Vegas, agreed with Gansert that it was represented to lawmakers the money would be transferred to keep the scholarship solvent through 2014.

“That was our expectation and I am sorry the board did not agree with that approach,” he said.

Horsford asked the treasurer’s office to keep lawmakers informed on the financial projections for the scholarship fund so they can be prepared to take action.

“We need to know now where the shortfalls may be so that we can start formulating options for next session,” he said.

Steve George, chief of staff to Marshall, said the college savings board was “vehemently” opposed to the transfer because of concerns about the scholarship’s future. Approving the $200,000 ensures that students receiving the scholarship will get the money next year, he said.

The Legislature in the 2011 session will have to address the future of the scholarship program, George said.

“When it was brought up there was a lot of heated discussion about it and they just weren’t going to go down that path,” he said.

Marshall, who has been criticized by her Republican opponent on the issue, is one of five members of the board, and it was made clear to lawmakers that the full board would have to approve the $2 million transfer, George said.

Minutes of the March 18 meeting of the board show that Marshall said the college savings plan fund could afford to make the $2 million transfer.

Steve Martin, the GOP treasurer candidate and a Las Vegas certified public accountant, criticized Marshall for what he said was her failure to apprise lawmakers of the true financial status of the scholarship program.

Martin said in a campaign statement the scholarship fund is in far greater financial jeopardy than Marshall told lawmakers at the special session. Martin is also a former state controller.

It appears the Millennium Scholarship is approximately $1.6 million short of funding and could be $3.4 million short of projections by June, 2011, he said.

According to Martin, the reason for the shortfall comes from the fact that the tobacco settlement that funds most of the scholarship saw its annual April payment to Nevada come in 10 percent less than projected. If the April 2011 payment is approximately the same as this year, a $3.4 million shortfall will occur before June 2011, he said.

“Why are these true potential deficits finding the light of day only after the special session?” Martin asked.

“Had this shortage been openly and publicly highlighted by Marshall the Legislature may have acted differently,” he said.

The Gov. Guinn Millennium Scholarship program was proposed by former Gov. Kenny Guinn and approved by the 1999 Legislature.

The scholarship, which ranges from $40 to $80 per college credit hour depending on the college attended, is available only to students attending one of the campuses of the Nevada System of Higher Education. The scholarship limit is $10,000.

Students must qualify by earning a high enough grade point average in high school. Students must also maintain a minimum GPA while in college to continue receiving the scholarship.

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