House panel approves plan to redirect tobacco settlement revenues to the TOPS

After lengthy discussion that included rare legislative testimony from Gov. Bobby Jindal, the House Appropriations Committee Tuesday overwhelmingly endorsed a plan to redirect future tobacco settlement revenues to the TOPS college scholarship program.

That stream — more than $40 million this year — now goes to a trust fund whose interest payments support various health care and education initiatives.

The 15-3 vote sends Rep. Jane Smith’s proposed constitutional amendment (House Bill 390) and a companion bill (House Bill 457) to the House floor. The Senate budget committee approved the upper chamber’s version on Monday, putting the matter on the fast track for the matter to go before voters this fall in a statewide referendum.

Jindal’s appearance in front of lawmakers underscored the priority he places on the politically popular program that pays in-state tuition for any Louisiana high school graduate that meets certain academic requirements. “I think it is our obligation to ensure that TOPS keeps that commitment to our students,” Jindal said. “I would encourage the committee to consider the fact that this is an investment in our students.”

Smith added, “If there is anything the Legislature has done that the people of Louisiana believe is good, it is TOPS.”

The debate comes amid rising costs for a program that pays in-state tuition for any Louisiana high school graduate that meets certain academic requirements. The state is spending $130 million this year and is projected to spend $174 million next year considering tuition increases that are anticipated or already approved. That puts increasing pressure on the general fund. Jindal told legislators that he wants to fashion a way to sustain TOPS without having to strip general fund support from other functions of government, including direct support to college campuses.

Louisiana’s 1998 master settlement with cigarette manufacturers called for the state to receive $4.6 billion during the first 25 years, spread out in annual payments. Three years later, in 2001, the state elected to sell 60 percent of the income stream to investors for an up-front payment of $1.2 billion, most of which was placed in the Millennium Trust. The remaining 40 percent of the tobacco income is deposited in the trust fund annually.

Smith’s amendment would cap the fund at $1.38 billion - the balance it had at the start of this fiscal year - and dedicate the future income stream to TOPS. Even with the new dedication, TOPS will continue to require general fund support.

Jindal underscored that the current balance of the fund would continue to generate interest to support initiatives, such as charter schools, that have depended on income. He conceded that future payments to those recipients would not be as high, but he singled out TOPS as the better investment. Drawing on a Biblical parable of Jesus, Jindal told legislators that turning back his proposal would be the equivalent of “burying our talents.”

“I think it would be a mistake to bury this money in the ground,” he said. “It would be better to invest this in the children of Louisiana.”

The governor deflected concerns from Rep. Pat Smith, D-Baton Rouge, that his budget priorities place too much emphasis on TOPS, at the expense of need-based aid and investments in education and health care for children. Smith argued that too many Louisiana children are left behind early in life, giving them little chance to qualify for the college program. Jindal answered with the recent expansion of state Medicaid rolls for children and new spending on pre-kindergarten programs.

Rep. Brett Geymann, R-Lake Charles, was the only Republican to consistently question the idea, telling Jindal that he supports TOPS but questions spending the tobacco settlement on an annual basis. Jindal countered that Geymann would have to find the money somewhere else if he truly wants to maintain the scholarship program as it is configured. “You won’t find free money,” Jindal said.

Rep. Bernard Lebas, D-Ville Platte, broached the idea of raising the academic standards for TOPS - the minimum qualification is now a 2.5 grade point average in core high school subjects or the state average on the ACT - and he mentioned separate proposals to cap the award and to require repayment if students abandon college.

Jindal has not ruled out higher standards, though he hailed the program’s reach. But he promised to oppose caps or any pay-back requirement. The annual awards, he said, “are for what a student did in high school.” Once they are in college, he noted, they must continue to perform to keep the scholarship.

By Bill Barrow: [email protected]

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