OKLAHOMA CITY — The state’s lottery may have had record-breaking profits last year, but there’s bipartisan agreement that it’s too soon to bet on that winning ticket going forward.

State Rep. Kyle Hilbert, R-Bristow, said lawmakers will need a couple more years of data to determine if the Oklahoma’s lottery system’s $80.2 million in profits in budget year 2021 is sustainable or a COVID-19 related fluke.

The two budget years prior, the lottery generated $64.4 million and $67.5 million in profits, according to state records.

“We shouldn’t just bank on $80 million a year coming in, and I would say that regardless of COVID,” Hilbert said. “If you’ve had any fund that jumped from $64 million to $80 million in one year without some sort of law change in the prior year, I would want to wait at least another year or two after that to make sure that trend is sustainable and not just a one-time thing.”

Hilbert, who until recently served as vice chair of the House’s appropriation and budget committee, said buying habits and the whole economy changed with COVID-19, so lawmakers will need a couple years of data to make decisions about any revenue sources that saw major spikes or dips in 2020 and 2021.

With federal stimulus funds, people had more expendable cash in their bank accounts and made purchases they wouldn’t have otherwise made, including lottery tickets, he said.

“That’s a big piece of why I would caution against just assuming every year forward is going to hit that $80 million mark,” Hilbert said. “That’s a lot of revenue for the state, but I would say we should caution against banking on that high-water mark becoming the new norm.”

The lottery system’s stability and long-term odds of profitability likely will come under a microscope this session.

Lawmakers currently are looking to capitalize off the unexpected windfall to permanently fund one of Gov. Kevin Stitt’s key legislative proposals — boosting the best Oklahoma educators’ salaries to $100,000.

The highest paid teachers in Oklahoma, with nearly three decades of experience, typically make about $60,000 a year; the average teacher makes in the $40,000s.

Under current law, 45% of those lottery profits already go to K-12 schools, 45% goes to higher education, 5% to teacher retirements and 5% to school consolidations.

The bill to fund the salary boosts would require the first $60 million be split using that formula, but then appropriate what’s left into Stitt’s new program. Local districts would be able to access the funds — if they come up with matching dollars.

Hilbert said a conversation about the stability of the lottery profits needs to happen. He said lawmakers may need to fund the teacher pay program using other funding or perhaps simultaneously increase the funding formula to account for any potential disruptions if the lottery doesn’t continue to have the same level of proceeds.

Hilbert also said the lottery has not yet performed up to voters’ expectations. He said of the total public schools budget for $3.2 billion, the lottery is only a small percentage.

“And while it has provided some funding, there’s a lot of Oklahomans that thought between the lottery and other measures that we would have had a well-funded education system,” Hilbert said. “When I’m back home, that’s not the result that they feel they’re seeing.”

The lottery was once heralded as the savior of education amid over-inflated promises from lawmakers that it could bring in as much as $300 million to $500 million a year for schools. It has never generated near what was predicted.

In 2017, lawmakers overhauled the system that at the time had one of the worst prizes and lowest odds of winning. They agreed to a new framework that allowed much more lucrative prizes. At the time, state budget officials estimated the changes would increase the lottery’s contributions to education by $110 million in the next five years due to increased play.

Jay Finks, executive director of Oklahoma Lottery Commission, acknowledges the lottery system had a “really, really good year” and generated $25 million more than conservatively expected.

He also said that with between 23 and 24 cents going back to education, the system has provided $1.1 billion to public education since it launched in 2005. But he said Oklahomans don’t see the impact or feel it because it’s difficult to see where the money goes.

And despite the usual “lottery deterrents” of record inflation and high gas prices, the lotto is on track to net close to $80 million in profits again this year, Finks said.

While acknowledging that COVID-19 may have strengthened the Oklahoma lottery’s position, he said recently that he doesn’t think the $80 million in profits is an outlier because of increased prizes, growing instant sales revenue, an “explosion” of self-service machines at convenience stores and increased interest and participation from businesses.

“Our business is growing and going forward,” Finks said. “(But) really our mindset isn’t $80 (million), it’s how do we get to $100 (million).”

He said that could include offering i-lottery games that allow consumers to play on their phones or internet. States like Iowa and Pennsylvania have already introduced digital lottery games with success.

State Rep. Andy Fugate, D-Oklahoma City, said Oklahomans should wait a year to see if last year’s profits were “a fluke.”

He said the sudden spike from $64 million to $80 million is likely partly pandemic-related because people didn’t have the traditional outlets for recreation like going out to eat, shop or see movies, which resulted in increased lottery usage. Also, federal stimulus dollars have flowed to families, boosting working class Oklahomans’ finances.

“It wouldn’t surprise me if we saw additional activity from folks who didn’t have the traditional outlets for spending money for recreation, and so they chose to put some more of that into the lottery,” he said.

But in any case, he said Oklahomans passed the lottery because they believed it was going to fund education.

“The reality is it’s a drop in the bucket any way you measure it because we can’t convince people to play enough lottery, pull tabs or whatever it might be to fund education,” Fugate said.

https://www.normantranscript.com/oklahoma/lawmakers-wary-of-using-new-lottery-profits-to-fund-higher-teacher-pay/article_90ea759d-7b62-5938-a718-59bcdaed493c.html#:~:text=Lawmakers%20wary%20of%20using%20new%20lottery%20profits%20to%20fund%20higher%20teacher%20pay,-By%20Janelle%20Stecklein&text=OKLAHOMA%20CITY%20%E2%80%94%20The%20state's%20lottery,State%20Rep.