The Arkansas Lottery Commission voted Wednesday to have its director Bishop Woosley find lawmakers to sponsor legislation to allow the use of debit cards to purchase lottery tickets and change the bonding system for retailers that sell tickets.
The commission also voted to formalize a flexible work schedule for Woosley and ask for an attorney general's opinion on mileage reimbursement. It took no action on a request from a legislator that the commission transfer funds from a vendor into the scholarship fund.
The lottery's ticket sales and the amount raised for Arkansas Academic Challenge Scholarships have declined each of the past two fiscal years. Legislators have cut the sizes of the scholarships for future recipients twice partly because lottery proceeds fell short of projections.
Woosley said he had earlier received notice from the Lottery Legislative Oversight Committee that it would not recommend any lottery changes during this legislative session. The committee had set a December deadline for approving any lottery-change recommendations, but because both of its chairmen -- term-limited Rep. Mark Perry, D-Jacksonville, and Sen. Robert Thompson, D-Paragould, who lost his bid for re-election -- left the Legislature in January, the committee did not take up any recommendations at its December meeting.
"This year, there is no Lottery Oversight Committee bill, so it's a little different," Woosley said. "The co-chairs who served last year, they left. We're in a bit of a transitional phase, and I don't know if they didn't want to take up the issues and usurp the new [Legislative Oversight Committee]. It may just be the new normal that we have to go out and find individual sponsors."
Last year, the commission voted to seek legislative approval to allow retailers to accept debit cards from people buying lottery tickets. Debit cards draw directly from customers' bank accounts. The proposal would not allow people to use credit cards to purchase tickets.
The commission also voted to move forward with a proposal to change the system for bonding retailers that sell lottery tickets. The proposal would move from requiring a new vendor to pay an initial bonding fee and instead have the vendor pay a smaller amount that would go into an insurance pool to cover theft or other losses.
But with its Lottery Oversight Committee members not pushing any lottery legislation, the commission will need to line up its own legislative sponsor or sponsors for the proposals.
"It's going to depend on the individual. They may like one of the bills and not the other. So we may have to find two sponsors," Woosley said.
The decrease in lottery revenue has led several legislators to question the lottery's operations. Sen. Jimmy Hickey, R-Texarkana, a co-chairman of the oversight committee, has proposed legislation that would dissolve the independent lottery commission and put it under the state Department of Finance and Administration.
Early during Wednesday's meeting, the commissioners wondered whether to vote on several measures or whether Hickey's bill -- if it is successful -- would render their actions moot.
"Should we move forward and change this, if we're not going to be here in six months?" Commissioner Alex Streett asked.
Hickey had also asked the commission to shift $125,000 from marketing and charitable funds to lottery scholarships. The money for marketing and charitable donations comes from the Greece-based lottery vendor Intralot and was part of a recent three-year contract extension. Woosley has estimated that contract, which is based on a percentage of lottery sales, at worth about $10 million annually.
In making the request, Hickey said he was concerned that the lottery wouldn't have enough money to fund college scholarships after February 2016 if its current financial projections are correct.
It was written in the contract that the vendor spend a one-time $100,000 allowance on marketing and make an annual $25,000 charitable contribution to Upward Bound, a college preparation program.
"I was just hoping that they would use reason and see that this was the most prudent thing for them to do because we're deficit-spending so badly," he said Wednesday. He said it makes sense to use that vendor money for scholarships if the vendor would agree to it. "The lottery has its own marketing department, so why do we need to require the vendor to spend $100,000 on marketing as well?"
Commissioners Julie Baldridge and Dianne Lamberth said they would be uncomfortable shifting funds in a way that contradicts the contract.
"I would be worried that it would open us up to lawsuits because that contract has already been executed," Lamberth said.
The Lottery Commission also addressed two issues flagged in an Arkansas Legislative Audit report released in late December.
The audit noted that Woosley had no in-writing work schedule, which went against Governor's Policy Directive 5 that requires an established or approved work schedule.
Also, auditors recommended that the agency seek an attorney general's opinion on whether it is exempt from following the mileage reimbursement rate set by the state's chief fiscal officer. Last January, the commission voted to increase the reimbursement rate to 56 cents per mile, instead of using the state's 42 cents per mile.
On Wednesday, commissioners passed a written policy that allows employees, with commission approval, to have flexible work schedules.
It also asked Woosley to seek an attorney general's opinion on whether the commission had the power to increase the employee mileage rate. That motion also indicated that the difference between the 42-cent and 56-cent reimbursement rates be held in an escrow account until the attorney general weighs in on the matter.
Commissioners on Wednesday also heard a financial update from Woosley, showing that ticket sales for draw games, such as Powerball and Mega Millions, have lagged over the past six months while sales of scratch-off tickets have increased.
Woosley had presented the numbers to the Lottery Oversight Committee earlier this month. During the first six months of fiscal 2015, overall lottery revenue fell by $8.2 million from the same period in fiscal 2014 to $191.2 million. Woosley said Wednesday that the agency is behind on scholarship proceeds by about $1.85 million compared with what was budgeted.
Woosley had projected earlier this fiscal year that fiscal 2015 scholarship proceeds will be the lowest of any year since the lottery started selling tickets on Sept. 28, 2009.
The commission also voted to stop offering the Arkansas 50-50 game, a monthly raffle game with $5 tickets that is exclusive to Arkansas. Lottery staff members said the game takes in about $6,000 a month in ticket sales and has been lagging in popularity. The last draw for the game will be March 3.
Metro on 01/22/2015