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Tennessee lottery surplus has state officials scrambling

Dec 15, 2004, 9:33 am

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Tennessee LotteryTennessee Lottery: Tennessee lottery surplus has state officials scrambling

Pre-K, increased scholarship amounts, other school programs are possibilities

Tennesseans are playing the lottery, but not as many students as expected are taking advantage of college scholarships and state officials have not decided what to do with the surplus.

The scholarship program is projected to have $115 million in excess this year and another $79 million next budget year.

State Sen. Steve Cohen, who sponsored the lottery, wants the money to pay for pre-kindergarten classes and to increase scholarship amounts so students could get full rides at public universities.

Gov. Phil Bredesen, however, is taking a more conservative stance.

He wants the surplus to go into a reserve fund to prepare the lottery for a time when more scholarships are given out and for ''bad years.''

He too wants some of the money he doesn't know how much yet spent on pre-kindergarten for 4-year-olds, which he has made one of his top initiatives for next year.

He does not want the lottery to get over-extended to meet the pre-K need, he said. ''Let's take care of business first and fund scholarships,'' Bredesen said.

Tennessee voters limited how lottery proceeds can be spent to college scholarships, pre-kindergarten and after-school programs and K-12 classroom construction when they approved the lottery in a 2002 referendum. The money cannot be used to make up shortfalls in the general state budget.

State officials got their first look at lottery projections yesterday during a state Funding Board meeting.

The board approved lottery President Rebecca Paul's estimate that it will raise $210 million this budget year, which ends June 30, 2005. That's about $10 million higher than earlier projections.

The lottery also forecasts 4% growth in the 2006 budget to bring in $219 million for education.

In contrast, the scholarship program is projected to cost just $95 million this year and $140 million next, said Rich Rhoda, executive director of the Tennessee Higher Education Commission.'

Not as many graduating high school seniors are applying for scholarships, Rhoda said. Also, his office over-projected how many high school graduates there would be, he said.

About 36,000 students not the projected 65,000 won lottery scholarships this past fall.

Cohen, D-Memphis, argued that if lottery money isn't earmarked for pre-K, taxpayers could end up footing the bill for that program.

''That's what people understood the lottery would do,'' Cohen said.

He chalked up the poor participation rate to poor marketing by high school counselors. He also thinks more students would strive to meet the criteria to win them if the base award was a $4,000 scholarship. The base HOPE scholarship award is $3,000, although scholarships range from $1,250 to $4,000.

The surplus would have more than covered higher scholarship amounts, Cohen said.

Cohen does not plan to push that change next year. Instead, Cohen said he would ask lawmakers to tweak the program to allow Tennesseans attending out-of-state schools to apply for scholarships if they decide to transfer to a Tennessee school. He also wants the GPA requirement to weigh in extra points for grades made in honors and advanced placement classes.

Lotto burnout?

Tennessee lottery players still feel lucky when the Powerball jackpot hits the stratosphere, but they don't trust Lady Luck as much as they used to.

It's called ''jackpot fatigue,'' Tennessee lottery President Rebecca Paul said yesterday. Powerball sales continue to pick up every time the jackpot shoots past $100 million, but player enthusiasm diminishes each time, she said.

She expects jackpot fatigue to reverse the first time a Tennessean wins the big prize.

Giant jackpots include $215 million shortly after Tennessee joined Powerball in April; $212 million in May; and $171 million earlier this month.

To learn more

How to get information about lottery scholarships:

Call the Tennessee Student Assistance Corp. at 741-1346 or 1-800-342-1663, or go online to www.tnscholardollars.com.


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