Tuesday, February 19, 2013

Lottery math: Halter says the money is meeting projections, not demand

Posted By on Tue, Feb 19, 2013 at 10:22 AM

GOOD PROBLEM: Demand, not supply, is the lottery problem, Halter says.
  • GOOD PROBLEM: Demand, not supply, is the lottery 'problem,' Halter says.
A small point on the article in the Democrat-Gazette this morning on the monthly Arkansas lottery revenue report. The gross is down from last year, but money available for scholarships is close to the same.

Bill Halter, the gubernatorial candidate who drove creation of the lottery, takes exception to legislators who are pushing the line that lottery revenue is eroding. Halter cites arithmetic.

The simple numbers: In the first two years and nine months of the lottery, it produced $274 million for scholarships. Divide that by 2.75 years and you get just a hair under $100 million a year, which was the amount projected to be produced. Gross sales are off this year against last year by about 9 percent, but the net available for scholarships is down only about 1 percent because of a shift in lottery ticket purchases from scratchoff to more profitable draw games and other expense reductions.

Halter's point is that the legislature is now adjusting scholarship amounts downward not because of a shortfall in revenue but because more students have applied for the scholarships than expected. Also, more sought four-year rather than two-year college educations, which meant bigger scholarship grants. Thus, the legislature is "addressing the wrong problem," he says. His metaphor: If flu vaccines work, you don't make them more expensive, you produce more flu vaccine. If college scholarships encourage more kids to go to college — and encourage more student to go to four-year schools which have a better record at retention — you don't address the "problem" by cutting scholarships. You find additional resources to keep the program equally strong.

Well, you might do that in a world where budget-slashing Republicans are not in the legislative majority, anyway.

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