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THEC warns lottery scholarships face future shortfalls; asks for outcomes and capital funding
Summary
Tennessee Higher Education Commission Director Steven Gentile told the Finance, Ways and Means Committee that lottery-funded scholarship programs face pressure in future years, outlined agency requests including $74M outcomes funding and $350M in capital maintenance, and previewed a two-part memo on the lottery’s finances.
Steven Gentile, executive director of the Tennessee Higher Education Commission, told the Finance, Ways and Means Committee on Feb. 23 that Tennessee is a national leader in state financial-aid programs but faces financial pressure in its lottery-funded scholarships.
"My name is Steven Gentile. I am the executive director of the Tennessee Higher Education Commission," Gentile said in his opening remarks, and he later noted: "For the first time in the history of the lottery program, there is a projected deficit in the coming years" (as shown in the governor’s budget table included in the presentation).
Gentile said THEC processes more than 250,000 scholarship awards a year and credited an outcomes-based funding formula with improving on-time graduation rates, but he outlined a set of agency budget requests that the governor’s proposal did not fully include. Gentile said THEC requested roughly $74,000,000 for outcomes funding (the agency received about $16,000,000 in the proposed budget) and asked for $350,000,000 in capital maintenance (the proposal included about $70,000,000). He also listed recurring requests including $12,000,000 for the Tennessee Student Assistance Award (TSAA) and a $16,000,000 recurring "Careers Start Here" program to sustain advising and completion supports.
The director said THEC will release part 2 of a memo later this year recommending changes to lottery scholarship portfolios "to avoid being in the deficit in future years," and that early projections in the governor’s budget show a deficit of just under $30,000,000 for a coming year. Members asked about options ranging from a "last in, first out" approach to trimming recently added programs to adjusting eligibility windows; Gentile said any change would be evaluated against what is best for students.
The committee did not take a formal vote on THEC requests during the hearing; the discussion focused on priorities, trade-offs, and timing for follow-up analysis. Gentile said THEC will share part 1 of its lottery primer with any member who requests it and will provide part 2 later in the legislative session.
