Week In Review

State Capitol Week in Review

            LITTLE ROCK – When the state fiscal year ended on June 30, lottery scholarship revenue showed a decline for the third consecutive year.

            Lottery ticket sales in Fiscal Year 2015 were $409.2 million. Most of that amount was paid back to ticket buyers as prizes. The available revenue for Academic Challenge Scholarships was down about $9 million from the previous year, to $72.4 million.

Legislators on the lottery oversight committee said they were not surprised although they were disappointed. In many other states lottery ticket sales declined after several years, when the novelty wore off.

Arkansas voters overwhelmingly approved a constitutional amendment authorizing the state lottery in 2008.  The vote was 648,000 in favor and 383,000 against. In 2009 the legislature approved Act 606, the enabling legislation that put in place the lottery and directed how revenue would fund college scholarships.

              The first Arkansas lottery tickets were sold in September of 2009, and $373 million in tickets were sold in the nine months of Fiscal Year 2010, the first fiscal year that the lottery was in operation. The lottery’s first full year was Fiscal 2011, and $464 million in tickets were sold. 

In the nine months of sales in Fiscal Year 2010, the lottery generated $82.7 million for scholarships. In Fiscal Year 2011, the first full year of the Arkansas lottery, it generated $94.2 million for scholarships. 

The following year, Fiscal Year 2012, revenue for scholarships reached its peak of $97.5 million. In Fiscal Year 2013 revenue for scholarships fell to $90.3 million and last year it fell again to $81.4 million.

In the regular session earlier this year, the legislature approved two measures to shore up the lottery’s finances. Act 1105 changes eligibility requirements for lottery scholarships. It also changed how scholarships will be paid out, to strongly encourage students to stay in college for their sophomore year.

Currently, scholarship recipients get $5,000 in their first two years if they earn good grades and maintain their eligibility. They receive $2,000 dollars their freshman year and $3,000 dollars their sophomore year. 

Under Act 1105 they still get $5,000 during their first two years at university, but they will get $1,000 as freshman and $4,000 as sophomores, beginning in the 2016-2017 school year. Scholarship amounts awarded for junior and senior years are unchanged. Recipients will get $4,000 dollars their junior year and $5,000 dollars their senior year.

Qualifying students at two year colleges will get $1,000 dollars their first year and $3,000 dollars their second year, beginning in the 2016-2017 school year. Now, students at two-year colleges who qualify for the scholarships get $2,000 dollars each year.

Act 1105 changed eligibility standards.  High school graduates no longer qualify by maintaining a 2.5 grade point average. They have to score a minimum of 19 on the ACT, a common standardized test for college admission.

These changes are designed to improve cash flow within the lottery scholarship program and to strengthen its long-term financial stability.

Act 218 of 2015 abolished the Lottery Commission and transferred its authority to the Department of Finance and Administration. The move resulted in a reduction in staff and savings of $477,000 a year in salaries and benefits.