Lottery changes head to governor

In frosh year, bill pares scholarship

The Arkansas Senate on Monday sent Gov. Asa Hutchinson legislation trimming the size of lottery-financed scholarships for future recipients in their first year of college and changing the eligibility requirements.

In a 27-2 vote, the Senate approved the House-amended version of Senate Bill 5 by Sen. Jimmy Hickey, R-Texarkana.

The House changed the bill to delay the start of the scholarship changes from the 2015-16 school year to the 2016-17 school year.

The bill also specifies any loan from the General Improvement Fund to keep the scholarship program solvent before the changes go into effect should not exceed $1.5 million.

Hickey, the Senate's chairman of the Legislature's lottery oversight committee, said Monday that he hopes the $1.5 million will cover any funding shortfall to pay scholarships before the scholarship changes in his SB5 become effective.

Rep. Chris Richey, D-Helena-West Helena, the House chairman of the lottery oversight committee, told representatives last week that the one-year delay in the changes to the scholarship program also gives lawmakers the rest of this year to explore alternatives to SB5 to possibly consider in the 2016 fiscal session.

The Arkansas Academic Challenge Scholarship is financed through the lottery's net proceeds and $20 million a year in state general revenue. There's also a $20 million lottery reserve fund that is used to fix temporary cash-flow shortfalls.

More than 30,000 students have received these scholarships each year over the past five fiscal years.

Lawmakers have cut the size of the scholarships for future recipients twice, partly because the lottery's net proceeds for college scholarships fell short of projections.

Under SB5, starting in the 2016-17 academic year, the scholarship would be reduced from $2,000 to $1,000 for the freshman year at two and four-year colleges. The scholarships would increase from $3,000 to $4,000 for the sophomore year at four-year colleges, and from $2,000 to $3,000 for the sophomore year at two-year colleges.

Scholarship recipients would receive $4,000 as juniors and $5,000 as seniors at four-year universities.

SB5 also would change the scholarship's eligibility requirements. Future high school graduates would 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 the equivalent.

A month ago, Hutchinson signed Act 218 to abolish the nine-member Arkansas Lottery Commission and placed his administration in control of the Arkansas Scholarship Lottery. The Office of the Arkansas Lottery is now under the state Department of Finance and Administration's Management Services Division.

SB5 wasn't the only lottery scholarship bill on the Senate agenda Monday.

In a 27-1 vote, the Senate also sent to the governor HB1279 by Richey, which would change the bonding system for lottery retailers.

Instead of requiring a new lottery retailer to pay an initial bonding fee, the vendor would pay a smaller amount that would go into an insurance pool to cover retailer losses.

The lottery has about 1,900 retailers who sell lottery tickets.

After the Senate vote, lottery Director Bishop Woosley said the bill is aimed at increasing the Arkansas lottery's number of lottery retailers selling tickets and reducing the expense to the lottery's retailers for bond costs.

Metro on 03/31/2015

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