Amount raised for college scholarships sees $1.2M increase
The Arkansas Scholarship Lottery's total revenue increased in May by $2.2 million over the same month a year ago to $50.3 million and the amount raised for college scholarships for the month increased by $1.2 million to $9.1 million, the lottery reported Monday.
In addition, lottery Director Eric Hagler said Monday he expects the lottery to raise more money for college scholarships in fiscal year 2023 that ends June 30 than it has ever raised in any previous fiscal year.
The largest amount that the lottery has raised for college scholarships in a fiscal year is the $106.6 million raised in fiscal year 2021.
The lottery started selling tickets Sept. 28, 2009, and has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 college students during 11 of the past 12 fiscal years.
In May, the lottery's scratch-off revenue increased by $2.2 million to $42.6 million while the lottery's draw game revenue remained essentially flat at $7.57 million, the lottery reported Monday in its monthly report to Gov. Sarah Huckabee Sanders and the Legislative Council's lottery oversight subcommittee.
The lottery's draw games include Powerball, Mega Millions, Fast Play, LOTTO, Lucky for Life, Natural State Jackpot, Cash 3 and Cash 4. The lottery's scratch-off tickets also are called instant tickets.
A year ago lottery players and others faced rising gas prices, which ate into the amount they had to spend on lottery tickets. About 70% of the lottery's retailers are gas stations.
But the current average price of regular unleaded gas in Arkansas is $3.12 a gallon, the AAA reported Monday, compared with a year ago when the average price of regular unleaded gas in Arkansas was $4.53 a gallon.
Hagler said the lottery's scratch-off ticket revenue increased in May over a year ago because the lottery's "instant game offerings for May proved to be a strong driver of sales.
"Those games are still in market, and we expect to see excellent sell-through as those games season in market," he said in a written statement.
Hagler said the lottery's draw-game revenue was flat in May compared with a year ago because draw-game revenue is directly correlated with jackpot size.
"Both Mega Millions and Powerball paid out significant jackpots in April, and we typically see a taper in sales when the jackpots reset," he said. "We anticipate a lift as we move deeper into the jackpot cycle."
The Powerball jackpot was estimated at $324 million with drawings on Monday night, Wednesday night and Saturday night, and the Mega Millions jackpot was estimated at $260 million with drawings on Tuesday night and Friday night, according to the lottery's website Monday afternoon.
Jerry Fetzer, the lottery's chief fiscal officer, said Monday in a written statement the amount raised for college scholarships increased by $1.2 million in May over a year ago to $9.1 million because "sales revenue increased by $2 million plus, and unclaimed prizes were $300K higher, which resulted in $900K in higher net income."
"Also, interest income improved $100K plus over May [ in fiscal year 2022]," he said.
May is the 11th month of fiscal year 2023 that started July 1, 2022, and ends June 30.
During the first 11 months of fiscal 2023, the lottery's revenue totaled $561.1 million -- up from $534.6 million in the same period in fiscal 2022.
So far in fiscal 2023, the lottery's draw-game revenue totaled $123.1 million -- up from $91 million in the same period in fiscal 2022 -- and scratch-off revenue totaled $437.3 million -- a slight decline from $442.9 million in the same period in fiscal 2022.
During the first 10 months of fiscal 2023, the lottery raised $97.8 million for college scholarships, an increase from $85.3 million in the same period in fiscal 2022.
Fetzer said "total revenues are $67.9 million better than budget with total net proceeds at $22.5 million better than budget" during the first 11 months of fiscal 2023.
At the end of the fiscal year June 30, the lottery's unclaimed prize reserve fund balance minus $1 million is transferred to college scholarships under state law.
The lottery reported an unclaimed prize reserve fund balance totaling $9.8 million after collecting $461,052 in unclaimed prizes in April.
For fiscal 2023, the lottery projected revenue of $535.9 million and raising $91.4 million for college scholarships.
In fiscal 2022, the lottery collected revenue of $580.2 million and raised $99.7 million for college scholarships. Those were the second-largest amounts the lottery has reported in any fiscal year, trailing only fiscal 2021 when the lottery collected revenue of $632.5 million and raised $106.6 million for college scholarships.
Lottery officials attributed the records set in fiscal 2021 in part to factors brought on by the covid-19 pandemic, such as people spending more time at home.
Asked whether the lottery in fiscal year 2023 expects to exceed the record of $106.6 million for net proceeds in fiscal year 2021, Hagler replied in a written statement, "Yes. We anticipate booking a new high-water mark for net proceeds in FY23, surpassing the record amount booked in FY21."
For fiscal 2024 that starts July 1, 2023, and ends June 30, 2024, the lottery has projected total revenue of $567.9 million and raising $100.7 million for college scholarships.
SCHOLARSHIPS
So far in fiscal 2023, the Division of Higher Education has handed out Arkansas Academic Challenge Scholarships totaling $74.3 million to 28,639 students, according to Alisha Lewis, a spokeswoman for the Division of Higher Education.
In fiscal 2022, which ended June 30, the division awarded a total of $75.1 million in Arkansas Academic Challenge Scholarships to 28,716 students.
Fiscal 2022 was the first fiscal year in the past 12 fiscal years that Arkansas Academic Challenge Scholarships were awarded to fewer than 30,000 students. Fuller has said that is because of the continued trend of overall enrollment decline in higher education and the total number of high school students continuing to get smaller, leading to a smaller pool from which scholarships are awarded.
The amount handed out for the Academic Challenge Scholarships peaked at $132.9 million in fiscal 2013, with awards going to 33,353 students. Scholarship totals have dropped largely because the Legislature cut the amount of initial scholarships several times.
The Arkansas Academic Challenge scholarships are financed with lottery proceeds, plus $20 million a year in state general revenue.
In fiscal 2024, the Division of Higher Education projects it will award 27,000 students Academic Challenge Scholarships totaling $75 million, Lewis said.
The 2017 Legislature created the Workforce Challenge Scholarship to use excess proceeds to provide up to $800 per year for students enrolled in programs that lead to qualifications in high-demand occupations.
So far in fiscal 2023, the Division of Higher Education has handed out Workforce Challenge Scholarships totaling $539,318 to 2,640 students, Lewis said.
In fiscal 2022, the division awarded these scholarships totaling $605,694 to 690 students.
In fiscal 2024, the division is projecting awarding Workforce Challenge Scholarships totaling $750,000 to 2,000 students, Lewis said.
The 2019 Legislature created the Concurrent Challenge program that allows high school juniors and seniors to receive the scholarships for a semester or an academic year in which they are enrolled in an endorsed concurrent course or certain programs.
So far in fiscal 2023, the division has handed out Concurrent Challenge Scholarships totaling $2.6 million to 13,982 students, Lewis said.
For the Concurrent Challenge program, the division awarded scholarships totaling $2.7 million to 16,432 students in fiscal 2022.
In fiscal 2024, the division projects it will award Concurrent Challenge Scholarships totaling $3 million to 17,000 students, Lewis said.
"Next fall, legislation has allowed us to begin accepting 10th grade for Concurrent Challenge," Lewis said in a written statement. "That is the reason for the increase."
https://www.arkansasonline.com/news/2023/jun/13/arkansas-scholarship-lotterys-may-revenue-503m-up/