LITTLE ROCK — For the second consecutive month this fiscal year, Arkansas’ lottery ticket sales dipped compared with the same months last fiscal year. For the two months, sales are down a total of $5.3 million and the amount raised for college scholarships is down by $2.7 million.
Last month’s sales dropped $3.1 million as compared with August 2011 to $35 million, said lottery spokesman Julie Baldridge.
The lottery’s net proceeds for college scholarships slipped, too, from $7.5 million in August 2011 to $7.1 million last month, she said Tuesday.
Asked why ticket sales dropped again, Baldridge said, “We can’t know how each player makes the decision, but the last two months have been marked with high gasoline prices and a heat wave that came close to or broke records, as well as a drought.”
She added that the state’s sales-tax collections declined last month by $4.6 million from August 2011 and that national movie box-office sales were the lowest last weekend since mid-September 2011.
“It appears anecdotally that people are not spending as much money on taxable goods,” she said.
The lottery’s fiscal year started July 1.
Its sales for July and August totaled $68.8 million compared with $74.1 million for the same months last year, Baldridge said.
The lottery’s ticket sales in May and June also lagged behind ticket sales from the same months a year ago, according to the lottery’s reports to the Legislature’s lottery oversight committee.
The lottery’s net proceeds for college scholarships totaled $11.9 million during the past two months compared with $14.67 million during the same period last month, according to Baldridge.
Last month, lottery Director Bishop Woosley told the nine-member Arkansas Lottery Commission that rising gas prices and electrical bills could have cut into ticket sales in July.
For fiscal 2013, which started July 1, Woosley has projected $98 million in net proceeds based on projected total ticket sales of $480.5 million.
In fiscal 2012, the lottery raised $97.5 million for scholarships based on $473 million in ticket sales.
Woosley, whom the commission promoted from chief legal counsel to the lottery’s director in February, said the lottery’s first $20 scratch-off ticket was relatively new in July, August and September in 2011 as compared with 2012, and “that has made a major difference [in ticket sales]” along with the other issues cited by Baldridge.
“By contrast, our current $20 ticket is almost 8 months old,” he said.
The lottery will release another $20 ticket in October with bigger and better prizes, Woosley said.
Comparing ticket sales from one month to the same month a year ago “is one way to measure our progress, but it is certainly not reflective on how we are doing given that there may have been a large multistate jackpot or a new ticket that would have a huge impact on sales to skew that number one way or the other,” he said.
“Even though our sales are down a bit for August, our transfer [for college scholarships] is actually more than last August, which is the ultimate bottom line,” Woosley said.
Asked how that could be in light of Baldridge’s figures showing $7.1 million in net proceeds for scholarships last month compared with $7.5 million in August of 2011, Woosley replied, “With unclaimed prizes, which are withheld until the end of the year, we are around $100,000 up over last year.”
State Sen. Johnny Key, cochairman of the Legislature’s lottery oversight committee, said the lottery raised nearly $7.2 million for college scholarships last month and that’s certainly better than July when it raised $4.7 million for scholarships.
“When that $4 million hit, it showed the lottery is subject to the whims of the economy and to consumers and we have to be constantly monitoring it” to ensure the state can fulfill its commitments to current Academic Challenge scholarship recipients and sustain the scholarship program over the long-run for future recipients, said Key, a Republican from Mountain Home.
The committee’s other cochairman, Rep. Mark Perry, a Democrat from Jacksonville, also noted that retail sales declined last month along with lottery ticket sales.
Lottery ticket sales “will pick back up,” he said, adding that Powerball and Mega Million jackpots are both exceeding $100 million.
The state Department of Higher Education projects that it has awarded 34,000 in largely lottery-financed Academic Challenge scholarships for this school year with the possibility of 400-600 more to be awarded before Oct. 15, said Shane Broadway, interim director of the department.
He said these 34,000 Academic Challenge scholarships are more than the department awarded during each of the past two years.
The department handed out $129 million in Academic Challenge scholarships in fiscal 2012 after giving out $122 million in fiscal 2011, according to Broadway. He has warned the scholarship program ultimately will have a $10 million- to $15 milliona-year shortfall between its revenue and its expenses. The program is financed through the lottery’s net proceeds and $20 million in state general revenue.
Key said he’ll provide information to the lottery oversight committee Tuesday about how restructuring the scholarship program so that it awards $2,000-a-year scholarships to first-year students, $3,000 a year to second-year students, $4,000 a year to third-year students and $5,000 a year to fourth-year students would change the program’s expenses.
Key, who has acknowledged that there may be “a skirmish” between the four-year universities and two-year colleges about this option, said this approach would reduce the incentive for students to go to fouryear universities and reduce the amount of funds lost from freshmen scholarship recipients who drop out.
The students who received scholarships for the first time in the 2010-11 school year, receive $5,000 a year at the fouryear universities and $2,500 a year at the two-year colleges. Those, who received them for the first time in the 2011-12 and 2012-13 school years, get $4,500 a year at the four-year universities and $2,250 a year at the two-year colleges.
The Legislature’s other options include cutting the scholarship amounts, Key said.
Perry said the $2,000-, $3,000-, $4,000- and $5,000-a-year tiered scholarship proposal “doesn’t sound too bad,” but he wonders about other options.
He said he worries that some good students won’t be able to afford to attend college if they receive only $2,000 Academic Challenge scholarships during their first years under the tiered scholarship proposal.
Front Section, Pages 1 on 09/12/2012