Gov. Mitch Daniels proposed the Hoosier Lottery lease to fund incentives for higher education.
Just how much will $1 billion buy?
Daniels wants to put $600 million in a permanent endowment to finance Hoosier Hope Scholarships aimed at retaining the state’s top high school graduates. Endowment proceeds, Daniels said, will pay for 1,700 scholarships annually in perpetuity.
The program will hand out $5,000 annual scholarships for four-year colleges and $2,500 annual scholarships for two-year degrees. The payouts would be considered loans, but recipients who agreed to stay in the Indiana work force for at least three years after graduation would have their debt forgiven.
Sounds great on paper. And the idea has plenty of proponents.
“I think this is a brilliant stroke on the governor’s part, another way to help jump-start the Indiana economy by moving its higher education system to a new level,” said John Mutz, chairman of the locally based Lumina Foundation for Education.
But how strong an incentive is it?
Pam Norman, executive director of the Indiana Chamber of Commerce’s Indiana INTERNnet program, thinks the program would have more impact if it required recipients to live in Indiana five years or longer.
“By the time you get five years down the road, you’re getting past your mid-20s and looking to settle down,” she said. “I don’t know if [three years is enough] to keep them in Indiana long term.”
Kristy Guthrie, channel sales repre
sentative for the local education software startup DyKnow LLC, shares her skepticism.
A 2005 Butler University graduate, Guthrie stayed in Indiana to participate in the Gov. Bob Orr Indiana Entrepreneurial Fellowship, which provides networking opportunities for top college grads, who often have plenty of scholarship money available elsewhere.
“I think it’s great that he’s trying to pass an initiative that will try to keep students in the state. But the biggest problem isn’t student loan debt,” she said. “It’s the opportunity to interview and find great experiences with Indiana companies.”
Daniels would devote the other $400 million to a World Class Scholars Fund. To attract superstar academics, the state would offer each $500,000 to $3 million with a required university match. The program would last 10 years, attracting 16 to 100 academics annually.
When the money runs out, Daniels has no plan to replace it. But by then, the top scholars it would attract might have brought along billions of dollars worth of ongoing federal research grants.
Both programs require professional money management. State Budget Director Chuck Schalliol hasn’t determined how the money should be invested. But he hopes the Legislature will allow it to be spread across a range of investment options, with the same flexibility the state’s pension funds enjoy.
“We’ve got a lot of water to cross over the dam over what the Legislature will let us do,” Schalliol said.