Top senator says Georgia Lottery could give more to education by cutting costs

He's not saying, he's just saying.

Credit: James Salzer

Credit: James Salzer

Senate Appropriations Chairman Jack Hill, R-Reidsville, puts out a "Notes from the Senate" newsletter every week, usually focusing on legislation or state spending. It's a must-read for state budget nerds.

The past few weeks, Hill has focused on where the Georgia Lottery ranks in a series of categories, including how much it spends on administration.

Hill is generally as mild-mannered and congenial as state lawmakers come, but he also plays a pretty big role in deciding how much agencies spend and which lawmakers get which local projects into the state budget. So he isn't somebody colleagues ignore.

Last week, he raised the possibility that lawmakers might look at new ways to squeeze  more money out of the Georgia Lottery for the education programs it funds - HOPE college scholarships and pre-kindergarten classes.

"In my opinion, after another look at the performance of the lottery, while it is certainly successful in some ways, and not the worst of any listing of lotteries in the country, Georgia's lottery is also certainly not at the top of the list in almost any category," Hill writes.

Hill says he doesn't plan to introduce or support legislation affecting the lottery during the upcoming General Assembly session. At least he doesn't plan to do so right now.

But he adds, "I think we should all call on the management to set improvement goals and work towards being the best-producing lottery in the U.S. or at least start a pathway to improvement."

Georgia's Lottery, which was approved by voters in 1992, has long been lauded for garnering record sales almost every year and providing $16 billion for college scholarships and pre-kindergarten classes. Last year, sales rose 3.1 percent, among the strongest upticks in the nation. Lottery officials say Georgia's games rank 4th in per capita profits in the country.

However, in the past decade of so, ticket sales have struggled to keep up with the cost of the programs, so scholarships have been cut back. Lawmakers have complained about the salaries and bonuses of top Georgia Lottery executives, and some legislators have argued that a bigger percentage of ticket revenue should go to HOPE and pre-K.

Hill, looking for ways to put more money into those programs, makes several suggestions in last week's "Notes from the Senate."

Among probably the least controversial - at least among legislators - is reducing administrative costs at the Georgia Lottery. Lawmakers love to talk about the need to cut overhead in government-run or -sponsored programs.

Hill notes that under the state's lottery law, as close as possible to 35 percent of ticket sales must be returned to state education programs (the lottery hasn't been close to that figure for many years). An additional 45 percent must go to prizes (far more typically does), leaving 20 percent for administration. Hill said about 16.49 percent of the lottery's ticket revenue goes for administration, so it's under the cap.

However, Hill says top-selling lottery systems in New York and California (note: not typically considered tightwad states) have administrative spending caps lower than Georgia's, allowing them to devote more money to state programs.

"Working toward a cap (on administration spending) of 15 percent of total sales would contribute approximately $60 million in additional dollars to education," Hill writes.

Administration, by the way, means more than salaries. It includes advertising expenses, retailer commissions, etc.

And Georgia Lottery officials say their administrative costs  - almost $400 million last year - are closer to 10 percent of ticket sales, not 16.49 percent. So they are not sure where they'd make further cuts.

In his report, Hill also suggests making some changes in retailer commissions, re-evaluating vendor contracts and limiting salary hikes.

Possibly the most controversial suggestion Hill makes is tying, in some way, HOPE scholarship money for private school tuition to improvements in graduation rates.

Private colleges are highly revered by state leaders, with several lawmakers sitting on private college boards or having close affiliations with private schools.  On the last day of the 2015 session, a senator who sits on a private college board slipped a special tax break for the school into a bill at the last minute.  The bill had some stiff opposition from conservative House members, but it passed both chambers.

Hill acknowledges his idea might not go over big in the General Assembly.

"There is an argument that could be made that schools with poor graduation rates should be influenced to improve in order to continue to receive HOPE funds," Hill writes. "Probably a 'sticky wicket' but an area that deserves attention."