Higher education officials cautioned lawmakers Monday that they will have to substantially shrink the state's two popular merit-based scholarships next year absent an increase in funding beyond what the Legislature currently envisions.

In ordinary times, the Utah System of Higher Education's problem would be something to celebrate: a near doubling every year of the number of high school seniors who qualify for the Regents and New Century scholarships.

But these budget-constrained times are far from ordinary.

Officials are $4.3 million short to fully fund the 2,000 students expected to attend college under New Century this fall, associate commissioner of higher education David Buhler told an appropriations panel. New Century is a decade-old program to encourage high schoolers to earn an associate degree early: if they do, New Century will cover up to 75 percent of their tuition during their first four semesters in college.

Under current projections, the state would have to cut New Century awards to just 20 to 25 percent of tuition, or a flat sum of $800 to $1,200, according to Buhler.

"We have made every effort to encourage students to look for other scholarships. We've tried to get the word out," Buhler said. "We said, 'Don't plan on the full amount,' but when the same thing happens year after year, people tend to expect it."

Proposed legislation that would raise the scholarship's qualifying requirements would not take

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effect until 2011-12, so its passage would have no impact on reducing the shortfall.

Another option would be to fully fund 547 New Century scholars, but that would mean 1,400 qualifying students would get nothing.

The newer Regents program, which gives a $1,000 base award to qualifying students and an exemplary award equal to 75 percent of tuition for two years, is in less trouble. But Buhler expects almost 600 students will qualify next year and officials are bracing for a shortfall as high as $1.4 million, he said. Without a funding boost, officials would have to either slash the base award for all who qualify or trim the exemplary bonus.

"We would rather see the full funding on the base award and a reduction in the exemplary award," said Sen. John Valentine, R-Orem, co-chairman of the higher education appropriations subcommittee.