During the first 11 months of fiscal 2016, the Arkansas Scholarship Lottery's revenue and net proceeds for college scholarships have each exceeded totals for the previous fiscal year, the lottery reported Friday.
Revenue totaled $421.3 million in fiscal 2016 to date and net proceeds reached $74.1 million, the lottery said in a written report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight subcommittee. Fiscal 2016 started July 1 and ends June 30.
Fiscal 2016 will be the first since 2012 in which lottery revenue and net proceeds haven't dipped from the previous fiscal year. Revenue peaked in fiscal 2012 at $473 million and net proceeds at $97.5 million before dropping the next three fiscal years.
Lottery Director Bishop Woosley projected last year that revenue would be $411 million and net proceeds would be $79.5 million in fiscal 2016 -- up from $409.2 million in revenue and net proceeds of $72.4 million in fiscal 2015.
So far in fiscal 2016, scratch-off ticket revenue has increased by $25.1 million over the same period in fiscal 2015 to $331.7 million.
Draw-game revenue has increased by $20.6 million over the same period in fiscal 2015 to $88.8 million. Other revenue includes fees paid by lottery retailers.
Woosley, who has been director since February 2012, said the increased scratch-off revenue is "a credit to the hard work of our staff over the past year and a half.
"Obviously, the huge Powerball jackpot [in January] was a major reason we are up in draw games, but we are up in almost all of our draw games for the year, including Powerball, Natural State Jackpot, Cash 3 and Fastplay," Woosley said in a written statement.
"The fact that we are up in both instant tickets and draw game sales shows that the hard work and the strategies implemented by our staff are working," he said. Scratch-offs also are called instant tickets.
In addition to the $74.1 million in net proceeds, the lottery also reported an unclaimed-prize balance of $5.9 million as of May 31. Act 1180 of 2011 requires that unclaimed-prize money, minus $1 million, be transferred to the Department of Higher Education's scholarship account on the last day of each fiscal year.
In May, revenue increased by $2.8 million over May a year ago, to $38.4 million.
Scratch-off revenue increased by $1.3 million over May a year ago, to $30.7 million, while draw-game revenue increased by $1.5 million over the same month a year ago to $7.7 million.
For the month, lottery net proceeds increased by $1.2 million over the same month a year ago to $6.6 million.
"The increase in sales obviously helped to increase proceeds for the month and the increased draw game sales for our more profitable games Powerball and Natural State Jackpot helped as well, Woosley said. "Also, a reduction in expenses we have seen over the past 14 months help to increase the amounts we can put towards scholarships."
The lottery was folded into the state Department of Finance and Administration and the independent nine-member Lottery Commission abolished in February 2015, after the Republican-controlled Legislature and Republican Gov. Asa Hutchinson enacted legislation to overhaul administration of the lottery.
The lottery started selling tickets Sept. 28, 2009. It has helped fund more than 30,000 Arkansas Academic Challenge Scholarships during each of the past six fiscal years. The scholarships also are financed with $20 million a year in state general revenue and a $20 million lottery reserve account used to cover temporary scholarship funding shortfalls.
The Legislature has cut the size of the scholarships for future recipients three times over the past several years because proceeds fell short of initial projections and more students than initially projected received the awards.
The state Department of Higher Education has handed out about $96.5 million in lottery-financed scholarships in fiscal 2016, according to department Director Brett Powell. The department awarded $99.7 million of these scholarships in fiscal 2015 and more than $100 million during each fiscal year from 2011-2014, with scholarship awards peaking at $132.5 million in fiscal 2013.
In February, Powell told lawmakers that the department expects to hand out $84 million to $85 million in lottery-financed scholarships in the fiscal year starting July 1.
The projected decline in the scholarships in fiscal 2017 from fiscal 2016 is largely based on changes in the program's eligibility requirements and the sizes of the awards during future recipients' first year in college, Powell said. The changes were enacted by the 2015 Legislature.
In November, lottery officials signed a contract with consultant Camelot Global Services to develop a business plan and help implement the plan. The consultant firm has offices in London and Philadelphia.
Under the contract, Camelot will receive base compensation and expense reimbursements up to $750,000 a year, but also will be eligible for incentive compensation of at least 12.5 percent of the lottery's adjusted operating income above $72.28 million in a fiscal year.
The contract also calls for Camelot to help the lottery negotiate contracts with vendors; the savings would be used to help pay for Camelot's services. The contract will run through June 30, 2020, with options for a two-year expansion.
In March, the lottery signed off on the consultant's five-year business plan that calls for the agency to set out about 600 more terminals, hire five more employees and increase its marketing budget from $5 million to $7.9 million, among other things.
"We have not implemented any of the recommendations in the business plan," Woosley said. "A portion of those changes are slated to begin in the first quarter of the fiscal year [2017]."
A Section on 06/11/2016