Both Nevada's Millennium Scholarship program and the state's prepaid college tuition plan are facing financial troubles, according to Wednesday testimony before the Assembly Ways and Means Committee.
Chairman Morse Arberry, D-Las Vegas, said a legislative fiscal analysis shows tobacco money may not be enough to keep the Millennium Scholarship program afloat by 2006.
"If it continues the way it's going right now, we're going to have to have an infusion of new revenue," said Arberry.
"I agree with you the (tobacco) monies will be substantially reduced as we go forward," said Krolicki.
But he said later he doesn't think the program will run low in just three years.
"I have said the Millennium Scholarship program, as designed, should be able to fulfill all its obligations through the end of the decade," he said in an interview.
The Millennium Scholarship is Gov. Kenny Guinn's signature program, created four years ago. It guarantees every Nevada high school graduate with a 3.0 grade-point average or better $2,500 a year to attend a Nevada college for four years. It has resulted in an 8 to 10 percent increase in the percentage of high school graduates going on to college.
But the program is partly the victim of its own success. Not only are more graduates than expected attending college, they are keeping grades high enough to maintain the scholarship for multiple years.
More than 12,000 students are receiving the scholarships, which cost nearly $20 million. An estimated 18,000 will receive the money in two years, which will cost more than $31.4 million.
Arberry said it could cost the state millions to maintain the program if tobacco money declines.
Krolicki said that would also apply to health programs that rely on tobacco money, including Senior Rx, providing prescription drug coverage for eligible seniors.
Krolicki also told lawmakers the Nevada prepaid college tuition program will have to increase enrollment costs as much as 60 percent when the board meets March 1. The program allows parents and others to pay a lump sum now that guarantees a student whatever amount is necessary for four years of tuition at either Nevada university.
The cost is based on the student's age at enrollment -- lowest for newborns since the state would have the money longer to invest.
The program is self-supporting with tuition eventually paid from interest earned on the enrollment fee.
Krolicki said the rates were based on projections that tuition would increase 5 percent a year. But because of budgetary problems, the university regents have voted to increase tuition and fees 15 percent by fall 2005.
In addition, interest on the prepaid tuition investments have fallen dramatically in the past two years because of the economy and weak stock market.
Krolicki said that translates to a tuition increase of up to 60 percent -- which would put the cost of enrolling a newborn above $10,000.