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N.C. Lottery grows despite recession

North Carolina LotteryNorth Carolina Lottery: N.C. Lottery grows despite recession

RALEIGH, N.C. — The North Carolina Education Lottery hit the jackpot with its budget this year, significantly increasing funding for salaries and benefits despite uncertain economic times that have stalled similar line items at many private-sector firms and government agencies.

The lottery's new budget, which was approved by the Lottery Commission in mid-June, calls for $17.7 million in salaries, wages and benefits in the coming fiscal year, almost 14 percent higher than what lottery officials spent in the latest fiscal year that ended in June.

Lottery officials are quick to point out that budget-to-budget, salaries, wages and benefits are going up only 5 percent from year-to-year.

But the current salaries and wages line item is running substantially lower than the budgeted amount approved last year. Through the first 11 months of the fiscal year, salaries, wages and benefits totaled $13.9 million. Lottery spokesman Van Denton says that once the accounting for last year is complete, the lottery expects to have spent a total of $15.5 million on that line item. The budget was $16.8 million.

Lottery officials cite several reasons for the increase in the next 12 months. The lottery has about 230 employees, but also has 15 vacancies. The new budget calls for those vacancies to be filled, as well as the addition of four new positions. The new positions include three sales representatives and an additional investigator.

Why add employees in such uncertain economic times? Executive Director Thomas Shaheen says he hopes to add 300 retailers to the 6,267 that currently sell lottery tickets, necessitating some of those new positions.

"If we take on 300 stores, we're going to have to service them," he says.

The lottery currently has 55 sales representatives — or about 114 stores per salesperson. Shaheen says the industry standard is one sales rep per 100 retailers.

Shaheen says he worries that revenue will be affected if the organization continues to operate understaffed as he says it's done for the past couple years.

Denton cites increases in health care costs, retirement benefits and Social Security taxes as other reasons for the budget line item hike.

The budget also projected a salary increase, but Denton says that won't happen now because the General Assembly declined to give state employees raises. While the lottery doesn't receive state funds, the legislature in 2008 enacted a budget provision that prevents lottery employees from receiving more in raises than state employees receive.

Because there will be no raises, Denton says, "We don't expect to spend $17.7 million (in salaries, wages and benefits) now." The budget has not been revised to show the change, however.

"Whatever is not spent goes into the bottom line — which supports education," Denton says.

Top lottery officials are well paid. Shaheen's annual salary is $246,750. Four deputy executive directors make about $145,000 each and a fifth takes home almost $138,000 a year.

The budget projects total operating expenses of just over $1 billion, an 8.5 percent increase over the $944 million in the FY2010 budget.

Revenue also is on the rise, thanks in part to the expected new retail locations and a full year of the Mega Millions game, which was added to the lottery's offerings in the middle of the past fiscal year. The lottery expects to generate $1.47 billion in revenue in FY2011, an 8 percent increase over the $1.36 billion it had budgeted the previous fiscal year.

"The biggest issue we're faced with is the state of the economy," says Shaheen. A down economy is most likely to impact the sale of instant tickets, which make up 58 percent of the lottery's sales, because instant tickets are the most impulsive buy.

The lottery has contributed $1.56 billion to education — including $419.5 million in the past fiscal year — since it was launched in March 2006. The money has been used to fund the reduction of class sizes, the More-at-Four pre-kindergarten programs, school construction and college scholarships.

"A lot of good things came out of that (the lottery money) for public schools across the state," says Paul LeSieur, the director of school business services at the N.C. Department of Public Instruction. Still, the lottery money is a small percentage of the $7.3 billion that's poured into the state's public school system each year.

The bulk of the lottery revenue — 58 percent — will be used as prizes in FY2011, while 30 percent will be directed to education. Retailers also receive a 7 percent commission.

Triangle Business Journal

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1 comment. Last comment 6 years ago by rdgrnr.
Page 1 of 1
rdgrnr's avatar - walt
Way back up in them dadgum hills, son!
United States
Member #73904
April 28, 2009
14903 Posts
Posted: July 20, 2010, 12:00 pm - IP Logged

It's funny how one state will say that sales are up because of the bad economy and another (like NC) will fear slumping sales due to the bad economy.







"The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                            --Edmund Burke