With college costs rising and lottery ticket sales for HOPE scholarships hard-pressed to keep up, state lawmakers are trying to find ways to squeeze more out of the games for education programs.
Longtime Senate Appropriations Chairman Jack Hill, R-Reidsville, said in a recent newsletter that one way is for the Georgia Lottery Corp. to cut spending and divert some of the savings to the HOPE and pre-kindergartin programs.
As chairman of the Senate budget committee, Hill helps decide how the state spends its $22 billion budget and which lawmakers get money for local projects each year. So his suggestions generally have some weight at the Capitol.
“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 wrote in his weekly “Notes from the Senate.”
Hill said he doesn’t plan to introduce or support legislation affecting the lottery during the upcoming General Assembly session. At least as of right now.
But he added, “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 increases in the nation. Lottery officials pointed out last week that the 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 share of ticket revenue should go to HOPE and pre-K.
Hill, looking for ways to put more money into those programs, makes several suggestions.
One is to reduce administrative costs at the Georgia Lottery. Lawmakers frequently talk about the need to cut overhead in government-run or -sponsored programs.
Hill noted that under the state’s lottery law, about 35 percent of ticket sales must be returned to state education programs. The lottery hasn’t come 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 said top-selling lottery systems in New York and California spend even less on administrative costs than Georgia, 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 wrote.
Administration includes advertising, staff salaries and retailer commissions.
Georgia Lottery officials dispute Hill’s figures. They say their administrative costs - almost $400 million last year - are closer to 10 percent of ticket sales, not 16.49 percent. So they say they are not sure where they’d make further cuts.
In his report, Hill also suggested making changing retailer commissions, re-evaluating vendor contracts and limiting salary hikes for executives.
Possibly the most controversial suggestion Hill made is tying HOPE scholarship money for private school tuition to improvements in graduation rates. Private school students are expected to receive about $48 million in HOPE scholarships this year.
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. Almost all of his General Assembly colleagues shrugged it off like it was no big deal.
Hill acknowledged 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 wrote. “Probably a ‘sticky wicket’ but an area that deserves attention.”
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