A little-known state fund — the Idaho Opportunity Scholarship Account — is in the news at the Statehouse.
What is this account? Why do lawmakers want to take money out of it? And what could that mean for at-risk readers and college students?
Let’s do a walkthrough.
What is this account, and its history? That goes back to 2007, Butch Otter’s first year as governor.
Otter wanted to build a $100 million endowment for college scholarships, $10 million at a time. And for the first two years, lawmakers went along with the idea.
Then came the Great Recession. Lawmakers stopped making deposits, and the idea of a $100 million endowment faded into the forgotten.
“It’s obvious that that’s not ever going to happen,” said Sen. Steve Bair, R-Blackfoot, co-chair of the budget-writing Joint Finance-Appropriations Committee.
How much is in the account? About $18.5 million, as of the end of the 2017-18 budget year. Most of the original $20 million is still sitting in the bank. And some prominent lawmakers — such as Rep. Wendy Horman, an Idaho Falls Republican and key JFAC member — said they had pretty much forgotten the fund even existed.
But wait a minute. Doesn’t the state award Opportunity Scholarships? Yes. But with the endowment idea off the table, the Legislature decided to fund the college scholarships on a pay-as-you-go basis. The Opportunity Scholarship covers up to $3,500 a year at a two- or four-year college in Idaho.
The state has put more and more money into the scholarships — from $5 million four years ago to a $13.5 million line item this year.
New Gov. Brad Little wants to boost Opportunity Scholarship spending to $20.5 million in 2019-20. And he wants it all to come from the state’s general fund budget, from sales and income tax collections.
So that old account doesn’t pay for scholarships at all? Not exactly. Here’s where it gets a little confusing.
Each year, the State Board of Education wants to award as many scholarships as possible — there is a student waiting list, after all, and the board doesn’t want to leave any state dollars on the table.
So the board will offer more scholarships than the state line item will cover, about 10 percent more. The assumption is that some students won’t accept the scholarship — perhaps because they decide against college, or they decide to go to college outside Idaho.
And in 2017-18, the board had more scholarship takers than expected. The board withdrew nearly $1.3 million from the account to cover the difference. That withdrawal wasn’t a secret; State Board Executive Director Matt Freeman has testified about it at the Statehouse this session.
The account provides a buffer of sorts. It ensures that the State Board can make good on its scholarship offers, spokesman Mike Keckler said, and offer scholarships for four years even in another downturn.
And it’s a misnomer to suggest the account has gone unused for years — untouched since the Great Recession. The account has covered student scholarships, and very recently.
But lawmakers want to tap into the account anyway? Yes, and they want to use it to cover another one of Little’s priorities: doing more for at-risk readers.
JFAC voted unanimously Monday to take $3.1 million from the scholarship account and put it toward a $26.1 million literacy program.
And they might not be done. Budget-writers are likely to tap into the account again, to help fund Little’s request to add $7 million into next year’s Opportunity Scholarship pool, Horman said Tuesday. (More on this issue from Betsy Russell of the Idaho Press.)
In essence, a $7 million transfer amounts to withdrawing from the scholarship account in order to award more scholarships in 2019-20.
Is the State Board on board with this idea? Asked specifically about the $3.1 million transfer for literacy — the one proposal officially on the table — Keckler said the move will not affect the scholarship money the board can award in 2019-20. Withdrawals could have a long-term effect, however. A smaller account means less interest that the board can use for scholarships.
Keckler acknowledged the balancing act confronting lawmakers.
“The board strongly supports the governor’s effort to double funding for literacy intervention, and with approximately 4,500 applicants on the wait list for the Opportunity Scholarship, the board has an equal interest in ensuring the state’s signature scholarship remains strong,” he said Tuesday.