Last week’s rush to buy Powerball tickets provided a needed boost in revenue for Arkansas lottery scholarships, but it isn’t enough to solve underlying funding problems for the program.
State lawmakers will still need to re-examine the amounts awarded to students who qualify for the awards. The challenge for the Legislature is to make the money coming from sales of lottery tickets match the cost of the scholarship program.
There is good news in the revenue numbers, however, said Shane Broadway, interim director of the state Department of Higher Education.
Lottery off cials reported Arkansas sales in the Powerball run, which began Oct. 4 and lasted until two winning tickets hit Wednesday, at more than $10.5 million with $3.3 million being sold on Wednesday alone. That’s when the jackpot topped out at $587 million and sent people all over the country clambering to buy the $2 tickets.
The Arkansas scholarship program’s take during that extended run was $4.3 million, including $1.4 million on Wednesday.
Part of those sales would have happened anyway, but the run clearly increased lottery revenue. The otherside of that picture is, with the big prize gone, lottery ticket sales may drop oft substantially.
It’s all part of the challenge to estimate how much money will be available and to make the scholarship program match that sum.
By Broadway’s estimate, the new money will make up some of a projected revenue shortfall, likely bringing the year’s revenue up to about the same level as a year ago, which was still something like $1.5 million short of what was needed.
The surge in ticket sales for the record Powerball jackpot, he said, should keep the state from dipping into reserves.
The department has been looking at reserves to help pay for scholarships for the next semester.
Another potential benefi t, Broadway said, is lawmakers might avoid raising academic requirements for the scholarships.
Changing therequirements is a way to reduce the pool of applicants, which in turn can lower overall program costs. But the whole idea behind the lottery scholarships was to extend an opportunity to more, not fewer of the state’s high school graduates.
As for the amounts of future scholarships, Broadway expects changes will be necessary. Now, qualifying students attending four-year colleges and universities get $4,000 a year for four years while students at two-year institutions receive $2,250 each of the two years.
The new revenue may let lawmakers cut the amounts of awards less than was expected, but cuts will still be necessary.
As Broadway explained, the program needs steady, long-term lottery sales to sustain it. Over time, revenue to the program may level out, he said, making it more predictable; the state is working now with limited experience.
The statewide lottery began in September 2009, after all, and the state only has three years of data on scholarship applications and just two years’ data on the academic performance of participating students.
Plus, the number of qualifying students keeps increasing as students realize they can receivethe scholarships if they perform well in high school. There were 1,200 more traditional student applicants this year than last.
A lot of variables factor into projecting costs of the program: how may students earn scholarships, how many stay in school for the two- or four-year period for which they are eligible, the amounts of the scholarships promised them for the duration of their degree programs and, of course, the available revenue from these lottery sales.
Julie Baldridge, who has been part of the Arkansas Scholarship Lottery management since its inception, said she’s learned the only way to know how the lottery will do each year is to check at the end of the year.
This time a year ago, she had predicted $89 million based on sales to date, but the year ended with $97.5 million.
“Who knew?” she said.
Sales simply depend on many random factors, such as the recent Powerball run, which necessarily keep Broadway and others in state government guessing about revenue for the scholarship program.
BRENDA BLAGG IS A FREELANCE COLUMNIST AND LONGTIME JOURNALIST IN NORTHWEST ARKANSAS.
Opinion, Pages 10 on 12/02/2012