Objections notwithstanding, committees move lottery bill.

Despite hearing concerns from key players about parts of the lottery bill — see it in its Senate version here — both the House Rules Committee and the Senate State Agencies Committee approved the long-in-the-works legislation today.

The primary objector, at least to some provisions, was Lt. Gov. Bill Halter, who ran the campaign to create the lottery last year. Among improvements he called for at the Senate State Agencies meeting were to:

-Ensure that every possible dollar goes to new scholarships. The bill as written now allows lottery money to be used for administrative and other costs.

-Set an appropriate salary level for the executive director of the lottery. Currently the director’s minimum salary would be $141,000. The government-appointed lottery commission could also approve a bonus of up to $354,000. A similar situation would apply for the lottery inspector general, who is scheduled to make the same as the executive director, and the lottery chief operating officer.

“I think the public is outraged by the prospect of someone earning $500,000 to run the lottery,” Lt. Gov. Halter said. He said Georgia pays its executive director $286,000, the second-highest figure in the nation.

-Tighten rules for a trust fund account that will hold lottery earnings and say explicitly how the interest will be spent. As it is now, the lottery commission will decide how to spend the interest.

-Improve ethics regulations. Expand a ban on future lobbying to legislators and not just members of the lottery commission. All legislators should be barred from receiving gifts from lottery vendors, not just those legislators who serve on the Lottery Commission Legislative Oversight Committee.

-Simplify the eligibility requirements for scholarships. The current legislation lists at least seven different ways a student can receive a scholarship.

-Rethink how some scholarship money is to be used. Under current plans, there will be an excess of money set aside for nontraditional students, Lt. Gov. Halter said. That money can be used to pay for higher scholarship awards for traditional students.

A statement Lt. Gov. Halter presented to the committee this afternoon can be read here. Read below for further objections.

Are the lottery scholarship requirements too low?

Among the numerous figures and statistics discussed at Wednesday’s lottery-scholarship meeting, one stood out because it is actual rather than speculative: of all students who have an Academic Challenge Scholarship, which requires recipients to maintain a 2.75 GPA, only 61 percent graduate college. Granted, that’s better than the forty-odd percent of non-scholarship students who graduate. But I would submit that it’s still an abysmal number. (According the Department of Higher Education Director Jim Purcell, Academic Challenge students are tracked after they enter their freshman year.)

Thus the great paradox of the lottery scholarships: They should be as inclusive as possible, but they serve little purpose if recipients fail to graduate.

Will the state be throwing 40 percent of the lottery money away? Should it not award higher grants to students who show greater potential to graduate? Under the current formula, recipients are required to have a GPA, 2.5, that is just on the threshold between a C+ and a B-. Should we not be demanding more than mediocrity from our students?

If only it were so easy to correct the problem by demanding a better GPA. To do so would undoubtedly leave out poor and minority students, whose meager resources make it difficult to achieve at the same level as the well-to-do.

What changes, then, could be made to the bill to optimize the use of state dollars?

One has to do with income cutoffs, anathema to this point: Take income into account, but don’t create an upper limit. Instead, establish a GPA scale pegged to wealth. If a student’s family is in the top 10 percent of earners, for example, then the student would have to maintain a 3.0 GPA to get a scholarship. The 2.5 threshold could continue to apply to students from poorer families. Exceptions could be made for those with learning and developmental disabilities. The numbers could be changed, of course, but the idea is to weed out underachievers among the group of students in a better economic position to succeed.

A second suggestion is political poison and would never be adopted, but I have to throw it out there anyway: give money to go to college out of state on the condition that recipients return for a certain period of employment after graduation. When the graduation rate at Arkansas universities is 61 percent even among the best high-school performers, it suggests to me that those universities are not doing what they should be doing. You could also take a hard look at improving education standards at Arkansas universities, but that’s another issue entirely.

Opposition to lottery bill found in the details.

By this point, plans for lottery-funded scholarships, which were unveiled at a three-hour working session Wednesday evening, have been pretty well publicized. There will be a formula that makes the scholarship award amount contingent on lottery proceeds (see Under the Dome for a chart); with a few exceptions, anyone who has a 2.5 GPA or scores a 19 on the ACT will be eligible, regardless of family income; 11,700 freshmen are expected to earn a scholarship each year (Under the Dome again for a powerpoint with more projections); a current $20 million annual appropriation for the Academic Challenge Scholarship will be pooled with the new lottery cash; and in general the legislature can continue to tinker with award amounts and eligibility requirements until it hits on an optimal formula.

At the Wednesday session, many agreed that the draft legislation, which is subject to revision, had done a good job of being inclusive. But in a bill this large, there are sure to be unhappy customers. And while no one has expressed strong opposition to the bill, not everyone is getting what they want.

Start with Lt. Gov. Bill Halter, the lottery creator. For the most part he has received the draft legislation warmly. But he raised some questions at the meeting yesterday. Halter’s prognostication for the lottery’s success has been exceedingly optimistic, as he has predicted revenues twice above those forecast by the Department of Finance and Administration. In keeping with that attitude — at least from a fiscal standpoint — he said yesterday that legislators would be making a mistake to assume that all people eligible for scholarships will take advantage. (Current projections assume 100% participation  among eligible students.) If the legislature over-predicts the number of participants, then money that could be going to higher awards will end up languishing in a trust fund.

Halter brought up other fiscal concerns. He did not like that some lottery money is to pay administrative costs. He also asked the legislature to increase the $20 million Academic Challenge Appropriation, which is currently funded at the same level every year; if expanding costs bring Academic Challenge expenditures beyond $20 million then the lottery scholarship money would fill the gap. That would violate the constitutional stipulation that the lottery supplement, not supplant, current scholarship dollars.

(Read on after the jump: some have problems with academic provisions, and one issue in particular could cause a battle.)

Legislature debuts lottery bill.

In a two-hour meeting this afternoon, a conference of legislators introduced long-awaited draft legislation detailing how the new state lottery will work.

Several of the provisions have been in circulation already. The lottery will be implemented and administered by a nine-member commission appointed by the governor, speaker of the house and senate president pro tem.  The commission is essentially an independent state agency. In theory at least, neither legislators nor the governor will have any control over which companies get the big business of running the lottery beyond appointments to the commission.

Commissioners will be unpaid. The only paid employees of the commission are expected to be a director and a procurement official that advises female- and minority-owned firms about acquiring lottery business. The commission will appoint both employees.

Less expected were the tough ethics standards in the bill, which Speaker of the House Rep. Robbie Wills said will make the Arkansas lottery the most ethically stringent in the country.  Members or employees who leave the lottery commission will be banned from lobbying the commission on behalf of a lottery vendor or retailer for two years. Lottery vendors will not be able to give any gifts whatsoever to members of the lottery commission, and they will be prohibited from making political contributions to public officials. They will be barred from so much as buying a lottery ticket.

The bill explicitly opens the lottery to scrutiny under the Freedom of Information Act. It includes a exemption for certain information given to the U.S. Government or law enforcement agencies under special agreement.

Government oversight of the lottery is expected to be comprehensive as well. Besides an annual review by the Division of Legislative Audit, the bill establishes a special lottery oversight committee that will consist of five senators and five House members.

Lieutenant Governor Bill Halter, who ran the lottery amendment campaign last fall, said he was pleased to see that so many of his ethics recommendations made it into the draft legislation. In fact, he said legislators may have tried to make requirements too strict in one regard. A provision of the bill would ban any vendor from operating in the state if an elected official or constitutional officer owns even one share of the vendor’s stock. Halter envisioned a situation in which a legislator against a particular lottery company buys a share of its stock so as to eliminate it from state consideration.

The draft bill, which is fifty pages, does not yet contain information about how the lottery will fund college scholarships. That section of the legislation is not to be revealed until next week.

For now the bill has plenty of provisions for statehouse watchers to digest. Read after the jump for more details.

Halter comments on draft legislation, polls Arkansans on lottery.

Lieutenant Governor Bill Halter told reporters this morning that he is happy with some of the progress that has been made on implementing a state lottery and scholarship program, but that work is needed on other aspects of draft legislation in circulation.

Halter made his comments during a press conference to present new public opinion polling on lottery-funded scholarships.

The press conference follows the general release yesterday of a memo summarizing the forthcoming lottery bill. Among the initial lottery proposals, which are subject to change, is a provision for a new state grant called the Opportunity Scholarship. The scholarship would be available to any high-school student who maintains a 2.5 GPA or scores a 19 on the ACT. It would provide a minimum of $1,500 per year at a four-year college and $750 annually at a two-year school.

Rep. Steve Harrelson has provided a breakdown of other provisions in the memo.

“Many parts of the proposal I’m gratified by,” Halter said. He added that he was happy that the summary of the legislation shared provisions, such as a self-supporting lottery commission, that he recommended in a statement of general principles for lottery implementation several months ago.

Halter was more specific, however, when describing what he saw as shortcomings in the lottery-legislation summary. He encouraged the legislature to create scholarships of $5,000 annually at four-year schools and $2,500 annually at two year schools. He also expressed dismay that proposed ethics rules are not stricter. He said he would like to see a total ban on lobbying by lottery vendors, and he recommended that state lottery commissioners be barred from lobbying on lottery issues for two years after they leave the commission.

Halter also stressed that there is plenty of time to secure changes to the current proposal. “The folks who put the summary out stated very clearly that it’s a draft for comment,” he said.

(Read on for more Halter commentary and results from his poll.)