The Associated Press

FRANKFORT - The lottery-funded KEES scholarship program is expected to be short more than $3 million in 2005-06, state lawmakers said Monday.

Kentucky's Educational Excellence Scholarship Program, a merit-based grant program, would need additional funding, according to a draft of a report presented to the legislature's subcommittee on postsecondary education. Otherwise the program would be at least $3.3 million short, according to the report.

Depending on how Tennessee's planned lottery affects Kentucky's lottery, that shortfall could get even worse, said Rep. Mary Lou Marzian, D-Louisville.

KEES scholarships go to Kentucky high school students as a reward for good grades and test scores. Those with higher grades and test scores get more money from the state.

Under the program, which was created in 1998, students can receive up to $2,500 for each year of college. Students who get the grant money must attend a school in Kentucky.

Previously, the program has been funded "entirely through net proceeds from the Kentucky Lottery," according to the report. Now, lawmakers may have to either dip into the state's General Fund, or make cuts.

"If we really want to fully fund these programs, we've got to look beyond the lottery for that," said Joe McCormick, executive director of the Kentucky Higher Education Assistance Authority.

The full committee is expected to hear the final report next month.