The Georgia Lottery may not have enough money to pay for the state's HOPE scholarships in three years, according to a report released Wednesday.

The program, which pays all tuition and fees at state colleges for any Georgia high-school graduate with at least a B average, could cost nearly $1-billion a year by July 2006. That amount exceeds expected lottery proceeds by $221-million. The $203-million in the lottery's reserve accounts could be drained by 2007.

The numbers were released at the first meeting of a 20-member commission that is examining the future of the scholarship program, which has inspired similar merit-based awards by other states and the federal government. The lawmakers, parents, students, educators, and state officials on the panel will consider the estimates, by the state's Office of Planning and Budget, when they make recommendations this year to the legislature on the program's future.

The numbers are not surprising, said Donald E. Heller, an associate professor of education at Pennsylvania State University at University Park who has studied lottery-financed scholarships. The program is extremely popular, and the number of scholarships awarded has risen steadily, he said. Tuition costs have increased as well.

"Something has to give," he said. "The state will have to take a real hard look at the eligibility criteria for the scholarship, and consider an income cap. Right now, everyone is eligible, regardless of family income."

Mr. Heller said similar lottery-supported scholarship programs in Florida and New Mexico would face the same situation in the next few years.

Thomas C. Meredith, chancellor of the University System of Georgia, said college officials had been warned of the problem years ago.

When the program began, in the early 1990s, it had an income cap. The cap was then raised, and eventually removed. The program was also expanded to cover book purchases, mandatory fees, and tuition at technical colleges.

Mr. Meredith declined to say what changes to the program he would support. Besides restoring an income cap, the options would include cutting the amount of the scholarships or the number of recipients.

"It's sort of a good-news situation, in that so many people are now attending college in Georgia," he said. "I'm withholding judgment early on."