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2011 February 7 - 12:00 am

MONEY TREE: Scholarships at Stake in Ark. Lottery Legislation Debate

LITTLE ROCK, Ark. (AP) — New members of the Arkansas Lottery Oversight Committee will inherit a set of proposed changes to the lottery law, including one that would reduce college scholarship award amounts by 10 percent.

Democratic Rep. Barry Hyde, former co-chairman of the committee, said he hopes the new group looks at the numbers before trying to restore the scholarship amounts to a level that matches awards to the first scholarship class.

“When we make a commitment to a scholarship amount, we have to sustain it to the end,” Hyde said. Using current numbers, the lottery would run out of money in the fourth year of the next scholarship class if funded at last year’s levels.

The first scholarships awarded last fall were for $5,000 for students at four-year schools and $2,500 for students at community colleges. Organizers expected 65 percent of those scholarships to go to university students and 35 percent to community college students. But when applications came in, 80 percent were from university students, which strained the budget.

At a late December meeting, oversight committee members said scholarship levels for the next class of recipients should be $4,500 for university students and $2,250 for those at two-year schools.

Hyde said that’s not a failure on the part of the lottery.

“It’s a result of participation,” Hyde said. “In this tough economy (the lottery is) maintaining its income level.”

The lottery is on track to provide about $100 million dollars next fall to fund the Academic Challenge Scholarships, though revenues for the first six months suggest it could come up a little short.

Arkansas Lottery Commission Chairman Dianne Lamberth said the panel wants to increase profits in the hopes of increasing the next batch of scholarship awards. Commissioner Mike Malone said the scholarship amount is what constituents want to talk about, not the variety of problems that have beset lottery director Ernie Passailaigue.

One way to increase the lottery’s take is join more multi-state games. Powerball and Mega Millions have been very successful for the lottery, and a new multi-state game, Decades of Dollars, is waiting for Arkansas to join.

But for that to happen, the Legislature needs to approve a minor change in the lottery law. The game’s rules require that unclaimed prize money be returned to help fund the game. Under the present Arkansas law, unclaimed prize money is rolled into scholarships. The commission would like another change regarding unclaimed prize money so some of it can be used for marketing, which would be a way to further increase money for scholarships well above the amount of the unclaimed prizes.

Lamberth said the lottery could join the Decades of Dollars game before the fiscal year ends on June 30. With a full year in the game, the lottery is expected to net an additional $3 million for scholarships.

Lamberth said there are other ways to improve the revenue picture, such as recruiting new retailers.

Passailaigue has commissioned a detailed market study of lottery ticket buyers in Arkansas, which will enable the agency to fine-tune its advertising.

“We need to concentrate on what makes our customer base happy and what they want to play,” Lamberth said.

Hyde said he has not expressed a preference for whether he wants to return to the oversight panel.

Whether he is on the committee or not, Hyde said members should stick with the minor changes suggested by the Lottery Commission, the Higher Education Department and the governor’s office.

“It would be extremely premature to try to make any kind of fundamental changes in how the lottery is run,” Hyde said.

In developing the legislation under which the lottery operates, Hyde said organizers approached lottery administrators in other states for advice on what worked and what didn’t in getting those lotteries running.

“They told us what they
had done wrong, what they
had done right and what they would change if they had the opportunity,” Hyde said.

“Whether people like, or whether some folks’ constituents don’t like the lottery, it is the law of the land. Two-thirds of the people of Arkansas want a lottery,” Hyde said, referring to the popular vote in 2008 on the ballot item that authorized the lottery.

The lottery was launched in September 2009, a quick start for which Passailaigue still draws praise.

But Passailaigue also has been criticized for issues ranging from his $324,000 salary to 13 problems identified in a state audit of the agency’s books. Two members of the nine-member Lottery Commission want Passailaigue fired.

The commission recently met for several hours behind closed doors to evaluate Passailaigue’s performance.

Commissioners wouldn’t divulge what was said, but Passailaigue got to keep his job.

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