The Arkansas Scholarship Lottery in March raised more money for college scholarships than a year ago, even though the lottery's revenues slipped from the same month a year ago.
The lottery's net proceeds for college scholarships reached $8.2 million in March -- outdistancing the $7.4 million raised a year ago -- and its revenues in March totaled $54.2 million compared to $54.9 million a year ago, the lottery reported this week in its monthly report to Gov. Sarah Huckabee Sanders and the Legislative Council's lottery oversight committee.
Lottery Director Eric Hagler said the lottery raised more money for college scholarships in March over a year ago because "healthier margins are derived from the sale of draw games.
"Sales of higher margin products serves to enhance return on investment, and such is the case in this instance," he said Tuesday in a written statement.
The lottery has been selling tickets since 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.
The lottery's draw-game revenues increased by $1.6 million over a year ago to $9 million in March, while the lottery's scratch-off ticket revenues dropped by $2.2 million from a year ago to $45.1 million.
Gaming director Mike Smith said Tuesday the Mega Millions and LOTTO draw-games were the two main drivers for the draw-game revenue increase in March.
"The Mega Millions jackpot rolled throughout March and ended the month at $355 million," he said in a written statement. "Also, it is important to remember that LOTTO was not available in-market last year, thus there is an organic growth component factored into the results."
The lottery's Mega Million's revenues totaled $1.6 million in March compared to about $993,000 in the same month a year ago, and the lottery's LOTTO's revenues totaled $1 million, according to the lottery's reports.
The lottery's Powerball revenues totaled $1.7 million in March, compared to $1.8 million a year ago, and the lottery's Fast Play revenues totaled $1.6 million in March, compared to $1.9 million a year ago.
Hagler said the lottery started selling the LOTTO draw-game ticket in mid-September and the "top jackpot remains in play."
"When the top jackpot is won there will be a freshly minted 'millionaire' in Arkansas," he said. The LOTTO's jackpot is $2.1 million, according to the lottery's website.
Hagler noted that since the LOTTO draw-game was introduced in mid-September 2022, sales of LOTTO have exceeded $6.096 million from Sept. 17-March 31.
"To date, we have paid out over $1 million in prizes in the LOTTO game," he said.
Regarding the $2.2 million decline in scratch-off ticket revenues in March compared to a year ago, Smith said the lottery's scratch-off ticket performance in March 2022 and 2023 yielded very good revenue months.
"The primary difference was that the new games launched on March 1 in FY22, versus February 28 in FY23," he said in a written statement. "First day sales of new games are typically robust."
March is the ninth month of fiscal year 2023 that started July 1, 2022, and ends June 30.
During the first nine months of fiscal 2023, the lottery's revenues totaled $459.5 million -- up from $434.6 million in the same period in fiscal 2022.
So far in fiscal 2023, the lottery's draw-game revenues totaled $106 million -- up from $75.3 million in the same period in fiscal 2022 -- and scratch-off revenues totaled $352.9 million -- down from $358.7 million in the same period in fiscal 2022.
Jerry Fetzer, the state's chief fiscal officer, said the lottery's total revenues are $60 million higher than the lottery's budget through the end of March.
During the first nine months of fiscal 2023, the lottery raised $80.7 million for college scholarships, an increase from $69.3 million in the same period in fiscal 2022.
At the end of the fiscal year on 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 $8.1 million after collecting $104,796 in unclaimed prizes in March.
Fetzer said the amount raised for college scholarships is $18.2 million higher than the lottery's budget, and unclaimed prizes, which will become net proceeds June 30, are $1.7 million higher than the lottery's budget through the end of March.
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. They 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.
So far in fiscal 2023, the Division of Higher Education has handed out Arkansas Academic Challenge Scholarships totaling $74.3 million to 28,446 students, according to Nick Fuller, the division's assistant director of finance.
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.
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 $475,531 to 2,534 students, Fuller said.
In fiscal 2022, the division awarded these scholarships totaling $605,694 to 690 students.
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 $2.2 million to 11,819 students, Fuller said.
For the Concurrent Challenge program, the division awarded scholarships totaling $2.7 million to 16,432 students in fiscal 2022.
During the 94th General Assembly's regular session that recessed Friday, the Legislature approved a bill that would create the Arkansas Challenge Plus Scholarship program to provide additional funds for students based on their financial need.
Gov. Sarah Huckabee Sanders signed Senate Bill 248 by Sen. Jane English, R-North Little Rock, into law as Act 386.
Under Act 386, a student will be eligible for the new program for an academic semester or academic year if the student applies for and maintains eligibility for a scholarship under the Arkansas Academic Challenge Scholarship program and demonstrates financial need as determined by the Free Application for Federal Student Aid, which is known as FAFSA.
The scholarship will be awarded in increments of $1,000 for each eligible student in each academic year with a maximum of $4,000 for each eligible student in each academic year, as determined by the Division of Higher Education under Act 386. The scholarship amounts may vary each year depending on the amount of funding available under the law.
The sum of an Arkansas Challenge Plus Scholarship and Arkansas Academic Challenge Scholarship won't exceed $5,000 in total for each eligible student in an academic year under Act 386.
Act 386 will become effective on July 1, 2023.
Under Act 1105 of 2015, the scholarship size for Arkansas Academic Challenge Scholarship recipients is $1,000 for the freshman year at two- and four-year colleges. The scholarship size is $3,000 for recipients for the sophomore year at a two-year college, $4,000 for the sophomore and junior years at the four-year colleges, and $5,000 for the senior year at four-year colleges.
The Challenge Plus Scholarship is projected by the state to cost about $13.5 million a year, according to an estimate from the Division of Higher Education. The total amount of scholarships awarded under Act 386 shall not exceed $25 million for the 2023-2024 school year.
In the regular session, the Legislature also decided to refer to voters in the 2024 general election a proposed constitutional amendment that is intended to allow state lottery proceeds to fund or provide scholarships or grants to Arkansans enrolled in vocational-technical schools and technical institutes. The proposed constitutional amendment is in House Joint Resolution 1006 by Rep. Robin Lundstrum, R-Elm Springs.
Amendment 87 to the Arkansas Constitution, approved by voters in 2008, limits lottery funded scholarships and grants to citizens of the state enrolled in "public and private non-profit two-year and four-year colleges and universities located within the state that are certified according to criteria established by the General Assembly." Under HJR1006, the Arkansas Constitution would be changed to allow lottery funded scholarships and grants to citizens of this state enrolled in a public or private nonprofit two-year or four-year college or university, a public or private vocational-technical school, or a public or private technical institute.
The proposed constitutional amendment would become effective on Jan. 1, 2025, if voters approve the proposal during the November 2024 general election.
According to Lundstrum, the proposed constitutional amendment is needed to help students access training for vocations including licensed practical nursing, trucking, refrigeration, industrial maintenance and plumbing.