Despite a small drop in Arkansas lottery revenue, the amount of money generated for lottery scholarships actually increased last month over a year ago.
The Arkansas lottery's revenue dipped in August by about $306,000 over a year ago to $31.2 million, but the proceeds raised for college scholarships increased by about $194,000 to $5.4 million.
The lottery's scratch-off ticket revenue slipped by about $45,000 over a year ago to $26 million, while draw game ticket revenue declined by about $250,000 to $5.1 million, the lottery reported late Thursday in its monthly report to the Arkansas Legislature's lottery oversight committee.
Revenue was higher a year ago primarily because of a $180 million Mega Millions jackpot in August 2014, said Jake Bleed, a spokesman for the state Department of Finance and Administration, the agency where Gov. Asa Hutchinson and the Legislature moved the lottery in February.
That jackpot increased ticket sales in August 2014 and accounted for about $450,000 in additional revenue last year, Bleed said.
The lottery's net proceeds for college scholarships increased from $5.29 million in August 2014 to $5.49 million last month, the lottery reported.
"There isn't a single factor that can be credited for the increase in net proceeds other than a general decrease in expenses across operations and generally improved performance," Bleed said Friday.
August is the second month of fiscal 2016.
During the first two months of the fiscal year, lottery revenue is $62.9 million compared with $62.4 million during the same period in fiscal 2015, the lottery reported. So far, the lottery's net proceeds are $11.27 million compared witho $11.22 million during the same period a year ago.
The lottery has helped finance more than 30,000 Arkansas Academic Challenge Scholarships during each of the past five fiscal years. The Legislature has cut the size of the scholarships for students awarded them in the future three times in recent years as a result of the lottery's proceeds falling short of projections.
The lottery started selling tickets Sept. 28, 2009.
The lottery revenue and net proceeds peaked at $473 million and $97.5 million, respectively, in fiscal 2012.
They have dropped in fiscal 2013, 2014 and 2015.
Lottery Director Bishop Woosley is projecting that lottery revenue will be $411 million and net proceeds for college scholarships will be $79.5 million in fiscal 2016 -- up from revenue of $409.2 million and net proceeds of $72.4 million in fiscal 2015.
Last month, Woosley told lawmakers that the lottery wants to hire Camelot Global Services as a consultant to develop a business plan and to help it increase ticket revenue and net proceeds for college scholarships. Camelot has offices in Philadelphia and London. But lawmakers asked for more details.
A year ago the Legislative Council hired Camelot to conduct a separate study of the lottery without seeking any bids. Camelot was paid $169,500 by the Bureau of Legislative Research.
That study concluded that the lottery has too many scratch-off and draw games, lags behind its peers in per capita sales and profits, pays more than its peers do to its vendors, and isn't perceived as trusted.
Bleed said Friday that the finance department's contract negotiations with Camelot to help develop a business plan "are ongoing."
The Arkansas Academic Challenge Scholarships are financed through the lottery's net proceeds and $20 million a year in state general revenue. In addition, a $20 million reserve fund is available for the state Department of Higher Education to cover scholarship obligations when cash runs temporarily short.
The state Department of Higher Education has projected the program will pay $97.6 million in scholarships in fiscal 2016.
The program paid $122.7 million in scholarships in fiscal 2011, $129 million in 2012, $133.1 million in 2013, $112.8 million in 2014 and then $99.2 million in 2015, the higher education department reported last month.
Earlier this year, Hutchinson signed Act 1105 which, starting in the 2016-17 school year, will reduce the amount of scholarships for first-year students and change the eligibility requirements.
Under Act 1105, the scholarship will be reduced from $2,000 to $1,000 for freshmen at two- and four-year colleges. The scholarships will increase from $3,000 to $4,000 for sophomores at four-year colleges, and from $2,000 to $3,000 for sophomores at two-year colleges.
Scholarship recipients will receive $4,000 as juniors and $5,000 as seniors at four-year universities.
Act 1105 also will change the scholarship's eligibility requirements. Future high school graduates will be required to have ACT scores of at least 19, or the equivalent on comparable college entrance exams.
Under current state law, high school graduates are required to have successfully completed the Smart Core curriculum and achieved either a high school grade point average of at least 2.5 or a minimum score of 19 on the ACT or its equivalent.
The state Department of Higher Education has projected the scholarship program won't exhaust its $20 million reserve fund if the lottery raises at least $72 million a year for scholarships and continues to receive $20 million per year in tax revenues as long as Act 1105 goes into effect.
The department has forecast that the scholarship program will pay $87.8 million in fiscal 2017, $96.1 million in fiscal 2018 and $96.4 million in fiscal 2019, Harold Criswell, senior associate director for the department, said Friday.
Metro on 09/12/2015