A Dubious Bet on College and Economic Development

This op-ed ran in The Santa Fe New Mexican on March 20th.

This year marks the 20th anniversary of New Mexico’s Legislative Lottery Scholarship Program.

Unfortunately, there isn’t much to celebrate.

A well-intentioned attempt to boost access to higher learning in the Land of Enchantment, the program was crafted by a Democratic legislature and Republican governor. But it suffers from a serious, if seldom-discussed, flaw.

Lottery scholarships certainly don’t have a popularity problem. A report by the New Mexico Higher Education Department found that between 2000 and 2014, the number of program recipients doubled. Expenditures, of course, ballooned as well, rising to $66.8 million in the 2014 fiscal year.

By law, the New Mexico Lottery Authority is required to set aside 30 percent of monthly gross revenue for scholarships. But solvency has been an issue for years — in 2014, gamblers supplied just 61 percent of the program’s funding. A slumping economy and a decline in “scratcher” sales sent legislators and the authority scrambling for cost savings and new monies. Eligibility was tightened, and the number of semesters covered for a four-year degree fell from eight to seven. Tobacco-settlement revenue has been transferred to the tuition fund, and special appropriations have been made. In 2014, legislators began to divert a portion of the revenue stream from New Mexico’s excise tax on liquor. In the just-completed session, lawmakers required the lottery authority to devote unclaimed-prize cash to scholarships. (Governor Martinez vetoed the bill.)

A program that once relied on the voluntary contributions of gamblers — no one is forced to play the lottery — is now grabbing dollars any way it can. Lottery scholarships have been allowed to proceed on this unsustainable path because no state-subsidization policy enjoys greater bipartisan support. The bill to use forfeited-prized revenue passed the Senate 35-4 and House of Representatives 66-0. Praise from the program’s administrators is effusive. Bob Frank, the president of the University of New Mexico, called lottery scholarships “critical to helping New Mexico students graduate so they can contribute to our state’s knowledge-based economy.” Dan Salzwedel, chairman of the lottery authority’s board, concurs: “Helping young people acquire more knowledge and greater employment opportunities through a college education enriches all of us.”

Nice rhetoric. Here are the facts. New Mexico has one of the highest unemployment rates in the nation — and joblessnesses is typically lowest for the college-educated. The Land of Enchantment is stubbornly hostile to real economic-development policies, such as a right-to-work law, tax simplification/relief, and deregulation. With few jobs available, it’s hardly surprising that the Millennial generation sees no future for itself in the Land of Enchantment.

“New data from The University of New Mexico,” The New Mexican reported last year, “shows for the first time that the largest percentage of those leaving the state are educated professionals with a bachelor’s degree.” The paper’s Bruce Krasnow made the inconvenient observation that many Millennials “have gone to a state university tuition-free with a lottery scholarship and then left the state as they saw more opportunity elsewhere.”

How many? We don’t know. In an email interview, Harrison Rommel, the Higher Education Department’s Financial Aid Director, wrote that his agency “has not done any long-term longitudinal studies regarding retention in New Mexico after graduation. This would require data agreements with the Department of Workforce Solutions and/or other agencies, and we are not capable of performing that type of analysis at this time.”

One would think that after 20 years, the lottery scholarship’s overseers would have requested, and funded, a look at “retention in New Mexico after graduation.” Apparently, pleasing voters and rewarding higher-education personnel matter more than performing a cost-benefit review of a subsidy that spends tens of millions of dollars annually.

Sending more of New Mexico’s high-school graduates off to college, while providing insufficient employment opportunities for them after graduation, is profoundly unwise policy. It’s time to provide taxpayers an independent, honest evaluation of the lottery-scholarship program.

Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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4 Replies to “A Dubious Bet on College and Economic Development”

  1. About a year ago, there was a blurb in the Albuquerque Journal saying that the then president of N.M. Tech said the 70% of Tech graduates were leaving the state for employment after graduation. Ouch.

  2. The lottery scholarship actually IS a jobs program: for faculty and administrators in the state’s bloated higher-education establishment. It’s a middle-class entitlement for families who can afford to keep their kids in school, but offers inadequate assistance to needy students who often drop out of college. The entire program needs an overhaul.

  3. Maybe they could work it as an interest free loan program. If you go out of state the student is liable for the loan, if they get a degreed job in NM for 10 years it’s free with payback going down 10% every year the student stays in NM.

    What is really needed is RTW law and more business incentives tax breaks. What brings in the moneys, payroll-payroll-payroll, not doonboggles like ART.

  4. Review! What review; we don’t need no stinkin’ review of why NM college students leave the state after graduation. Channel 4 News, Stuart Dyson, has already answered that question. It is because we don’t spend enough money on education and it has nothing to do with a lack of jobs in NM. Channel 4 News should change their slogan from “I stand for New Mexico” to “I stand for higher taxes” since they seem to think that is the solution to all problems. Channel 4 News touts their initiative to hold officials accountable for their actions. I agree with that effort and believe that it should apply to the Roundhouse, the Governors Mansion AND the Newsrooms. Phonies, liars and incompetents should be called out wherever they are found.

    I believe that honest news would go a long way toward informing the public who could then insist that the politicians do the right thing and make this state a more business friendly environment where our graduates can find a job. Sloppy news stories that misinform the public whether deliberate or through incompetence, leave the voters confused and unable to make an informed judgement regarding the issues that have plagued our state for decades. Truth and knowledge will force needed change in this state. It is time for the news folks to step up with truth in reporting and to stop misrepresenting the news.

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