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The haves vs. the have nots 

Does merit scholarship race deprive needy kids?

It’s not a debate you’d ever want to have to choose sides for. And it’s not how anyone on either side of Senate Bill 300, approved in amended form last week by the Senate Education Committee, really wanted to frame the discussion. But the bill, which would cap how much state universities could spend on non-need-based scholarships, couldn’t help but play up the two groups’ often conflicting interests. At the same time, the debate touched on existing tensions between Arkansas’s “rich” public universities and those that are less so. And although it was weakened almost to the point of meaninglessness last week — thanks to the influence of UCA President Lu Hardin, whose previous jobs include both director of the Department of Higher Education and chair of the Senate Education Committee — the debate over how best to serve the state’s college-material young people probably isn’t going away. Nor is it limited to Arkansas. The bill would limit the percentage of a school’s tuition and fee income it could spend on undergraduate scholarships based on academic or artistic merit. The original bill lowered it gradually to 15 percent by 2009. It followed exactly a recommendation from the Blue Ribbon Committee on Higher Education, which released its findings last June. The goal was to create a more level playing field among the state’s universities and cut down on what the commission saw as bidding wars for Arkansas’s brightest high school students, said Stan Williams of the Higher Education Department. The state’s 10 four-year universities spent a total of $45.5 million of tuition and fee income on merit scholarships in 2002-03. That worked out to an average of 17.8 percent of all tuition and fee income. “What these are is tuition discounts,” Williams said. “If you’re discounting to one-third of students, others have to pay for that. The idea is that this tuition discounting has contributed to inflation in tuition.” But Hardin argued that keeping Arkansas’s brightest students in the state is a worthwhile goal, and one that requires being able to offer them full-ride-plus scholarships. It’s not an arms race, he said. UCA’s Honors College scholarships go to students with ACT scores of between 28 and 32. “Those students generally will be able to get [full] scholarships anywhere they want to go. ... So if we’re able to get a higher number of those students, it’s not buying students — they’ve simply chosen UCA over another school.” Restricting the amount of tuition and fee income schools could spend on scholarships wouldn’t so much end the bidding war as it would throw the advantage heavily toward the university system’s flagship campus. In 2002-03, the most recent year available, the University of Central Arkansas spent 32.1 percent of its tuition and fees income on merit and performance scholarships — more than double the 15.7 percent logged by the University of Arkansas. Arkansas Tech came in second at 27.3 percent. Henderson State, Arkansas State, Southern Arkansas and UA-Pine Bluff all spent a higher proportion of their tuition and fees income on merit scholarships than Fayetteville did. That’s because literally hundreds of merit scholarships at Fayetteville are bankrolled with private money. Its Honors College has the buying power of a $300 million Walton Foundation gift behind it. Fayetteville would have felt barely a twinge under the original form of SB 300, while UCA and its Honors College would have been hit hard. At any rate, for now, UCA and the other five higher-spending schools appear to be off the hook. Hardin’s negotiations with the bill’s sponsor, Sen. Jerry Bookout, and members of the education committee resulted in the proposed limit being set permanently at 30 percent. Still, SB300 tapped into a legitimate — and nationwide — debate over how public universities and state aid programs should distribute college scholarship money. Some merit scholarships do go to financially needy students, of course, but the income-to-achievement correlation is an undeniable fact. Oklahoma already caps its colleges’ merit-scholarship spending. Getting an apples-to-apples comparison is a little dicey, though: Oklahoma’s limit is 3.5 percent of a university’s overall general education budget, of which usually about one-third comes from tuition and fees. So Oklahoma’s limit might loosely translate to a cap of 10.5 percent of tuition and fees income. Sandy Baum, a senior policy analyst with the College Board, said it’s very hard to compare what different states’ colleges spend on merit scholarships, because many scholarship programs have both merit and need-based elements. In the past couple of decades, though, merit-based programs have gained a lot of ground: according to the College Board, merit scholarships used to account for about 10 percent of all aid to college students, and now make up 25 percent. The perhaps unintended side effect of merit-based scholarship programs is that aid is increasingly going to students from middle-class backgrounds rather than those from lower-income families. “It’s a huge concern,” Baum said. “Policy analysts have been saying for a number of years that they’re really worried about where this is going.” At UCA, at least, it won’t be going anywhere if SB 300 passes. Hardin’s relieved, though, that the school won’t have to backtrack nearly as far as the original bill would have required. UCA will have to trim its merit scholarship spending a bit — Hardin said the school would probably cut out merit aid to students with ACT scores under 25 — but the Honors College and its $7.4 million scholarship budget is safe. There’s a second, similar bill still out there, filed by Rep. Jodie Mahony, that would cut the spending cap to 8 percent effective this fall, but it’s hard to imagine a scenario where it would make it past Senate Ed. At least not as long as Lu Hardin’s standing in the way.
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