Commercial Appeal - The Big Idea: Will Tennessee Promise Hurt Hope Scholarships?

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By Michael Collins

Today's Big Idea: Gov. Bill Haslam's Tennessee Promise scholarship program offers two years of free community college or technical school to all of the state's high school graduates. It was funded by transferring $312 million in reserves from the Tennessee Lottery-funded Hope Scholarship program.

Gov. Bill Haslam's Tennessee Promise program so intrigued the White House that President Barack Obama decided to use it as a model for a similar program on a national scale.

With Haslam looking on, Obama announced in January his own proposal to give two years of tuition-free community college to students who enroll in programs that meet certain academic standards and who maintain at least a 2.5 grade-point average and make steady progress toward completing their degree.

But U.S. Rep. Steve Cohen, a Memphis Democrat, is unimpressed with Haslam's Tennessee Promise. It's a false promise, he says, one that will destroy another program -- the Hope lottery scholarship -- set up more than a decade ago to give scholarship money to academic achievers.

"It sounds good -- it's a PR delight," the Memphis Democrat said. But, "Plato wouldn't like it. It doesn't make sense."

Cohen's concerns start with the way Tennessee Promise was funded -- by taking millions of dollars in reserves from the lottery-funded Hope program. Stripping the money from Hope leaves those scholarships with no room for growth and eventually will kill the program, said Cohen, who as a state senator shepherded the legislation paving the way for the Tennessee Lottery and Hope.

What's more, Cohen argues, Tennessee Promise essentially punishes students who have made decent grades by taking scholarship money away from Hope and giving it to students who haven't distinguished themselves academically and who are unlikely to complete their degree.

Let's take a closer look -- first, at the funding question.

Tennessee Promise was funded by transferring $312 million in reserves from the lottery-funded Hope program and putting it into a new "irrevocable trust" endowment for free tuition at two-year schools. The $312 million is expected to generate interest that will help fund Tennessee Promise in coming years. Future lottery reserves also will be directed into the Tennessee Promise trust.

The transfer of lottery funds into the Tennessee Promise trust left $110 million in lottery reserves for Hope and other programs -- $10 million more than state law dictates remain in the reserves.

In any given year, the lottery generates several hundred million dollars in revenues. (In fiscal year 2014, the lottery brought in $337.2 million for education. The year before, the figure was $339.7 million. The revenue is used to pay for scholarships and other programs, and whatever is left over is stored away, with the surplus now going into the Tennessee Promise trust.

State officials insist the lottery will continue to bring in enough money to pay for Hope scholarships, which totaled $279 million in the 2013-2014 academic year. "This won't hurt Hope," said Mike Krause, executive director of Tennessee Promise.

Eligible students can still receive $16,000 in Hope scholarships over four years, just as they could before Tennessee Promise was created, Krause said. The only thing that's different is how the money is distributed. The state Legislature decided last year to reduce the Hope awards for freshman and sophomores to $3,500 a year, down from $4,000 a year. But Hope awards for juniors and seniors were increased to $4,500 per year, a $500 increase each year.

Reducing the scholarship awards in the first two years and increasing them for the last two years was meant to give students an incentive to persist in their studies, "which we think is important," Krause said.

And what of Cohen's argument that directing future surplus lottery money into Tennessee Promise will ultimately doom that program?

"The Hope lottery scholarship," Krause said after a long pause, "is going to continue to serve students very effectively."

Cohen's concerns about who will be getting the money can be traced to academic standards and graduation rates.

To be eligible for a Hope Scholarship, entering college freshmen must have a 3.0 GPA or at least a 21 on their ACT. There are no academic requirements for getting a two-year Tennessee Promise scholarship, although to keep the money, students must maintain a 2.0 GPA.

"You don't have to have any grades at all in high school to get Tennessee Promise -- you simply need to graduate," Cohen said. "And if you've got good grades, you've already got money from Hope."

Studies have shown that lottery scholarship recipients graduate from four-year schools at much higher rates than those attending community college.

Among students who enrolled in 2008 with a lottery scholarship, 37 percent of students at four-year institutions had graduated within five years, while just 26 percent of community college students had finished, according to a report by the Tennessee Higher Education Commission. Of those students who enrolled in 2007 with a lottery scholarship, 61 percent attending a four-year college had graduated within six years, while 43 percent of community college students had completed their degree.

In general, the graduation rate for students at Tennessee's community colleges is low. Just 6 percent of 2010 enrollees at Southwest Community College in Memphis went on to graduate, according to the National Center for Educational Statistics. Elsewhere across the state, the numbers weren't much better -- 8 percent at Chattanooga State, 12 percent at Nashville State and 22 percent at Pellissippi State in Knoxville, which recorded the highest graduation rate.

To increase the state's number of college graduates, you've got to get more students to go to college -- and that is what Tennessee Promise is aiming to do, Krause said. "That happens through a culture change," he said.

Tennessee Promise, he said, is changing the way Tennesseans think about a college education. As proof, he pointed out that 58,806 high school seniors -- more than 90 percent -- already have signed up for Tennessee Promise.

In Shelby County, 8,308 seniors, or 82 percent, have signed up. In Knox County, the percentage is even higher -- 3,711, or nearly 99 percent.

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