Sponsor Defends Bill to Limit Scholarships after Optimistic Lottery Report

Tennessee Lottery officials told state lawmakers today the lottery has had record sales since July. That kicked off questions about whether lottery scholarship awards need to be cut back.

Lottery officials told the Senate Education Committee they expect a ten million dollar increase in sales this year.

That committee, worried that revenues won’t meet future demands, is considering a measure to make it harder to earn the lottery scholarship, and to cut back the amount given to individual students.

But Senator Jim Kyle, a Memphis Democrat, says the lottery officials are sending “a clear message that they can sustain the scholarships.”

“I think those who would like to take scholarships away from folks, …or, because of the financial concern, need to recognize that financial storm has passed.”

Somerville Republican Dolores Gresham, the chair of the committee, is sponsoring a bill to reduce scholarship amounts. Increased revenue is good, she says, but…

“Nonetheless, we are spending more than we are taking in, and we cannot continue to do that.”

Gresham says she will pursue her bill to trim lottery payouts.

Despite the current optimistic outlook from lottery officials, those in favor cutting back scholarship amounts point to the last dip in sales – which occurred when summer gasoline went briefly to about $4 a gallon. At that time, lottery staff blamed the gas prices for using up money that ordinarily is spent on lottery tickets.

Proponents say they expect high gas prices this summer to depress the sales of tickets.

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Gresham’s cut-back bill came from the recommendations of a five-senator task force that met in late 2011. That task force argued that four years of reduced payments, starting in Fall 2015, would put the lottery income-payout in positive territory.

The “lottery stabilization task force” was composed of three Republican and two Democratic senators. Gresham says they came up with a conservative approach to get the scholarship fund back on solid ground.

“It was our job to come up with a policy that would make the lottery scholarship program viable, in the long term, for Tennessee students.”

Gresham says her bill (SB 2514 / HB 2649 Harry Brooks) would set up the scholarship fund to maintain a reserve – money in the bank – of $50 million to $100 million.

The task force also recommended diverting $10 million a year to the Tennessee Student Assistance Award program, earmarked for financially needy Tennesseans.

Kyle, the Senate Democratic leader, says the economic winds have shifted since the task force drafted its “cut-back” proposal.

“We learned today from the lottery corporation that their revenues were projected to be up ten million dollars this year, as well as the fact that they are one of the top ten lotteries in the country, being able to produce sufficient revenue to fund …our scholarship program.”

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