Newspaper Disputes Education Subsidy
Rebecca Paul was hired to start Tennessee's lottery and is paid more than her peers because of her success running Georgia's games.
But some of Paul's accomplishments during her time in Georgia are overstated, according to a review by The Tennessean newspaper.
For example, Paul said last month that Georgia lottery sales had grown an average of 13 percent a year during her tenure.
While lottery ticket sales in Georgia climbed to $2.6 billion last year from $1.12 billion in 1994 -- an increase of about 132 percent -- the amount that went to education grew at a much more modest rate, the newspaper reported.
Once the booming sales of the lottery's initial year are discounted and the figures are adjusted for population changes, the amount going to education grew about 3 percent a year, the review showed.
Paul was hired away from the Georgia Lottery on Sept. 8 and named director of the Tennessee Education Lottery Corp. She is paid a base salary of $350,000 with incentives that could push her yearly compensation to $752,500, making her the nation's highest-paid lottery director.
She earned about $500,000 a year in Georgia.
During Paul's decade in Georgia, that state's lottery generated more than $6 billion for education. She led the nation by one measure used to assess lottery performance: Ticket sales increased faster in Georgia during the last decade than in any other lottery state that did not have video lotteries.
"I think you can look at any jurisdiction in the first 10 years and you won't find many that went from $1.1 to $2.6 billion in 10 years," Paul said.
In defending Paul's compensation package, members of the Tennessee Education Lottery Corp. also tout Georgia's double-digit sales growth.
"I think we've got a real winner here," said Tennessee lottery Chairman Denny Bottorff.
But that growth in ticket sales was not sustained in Georgia. Sales declined 5.2 percent in 2001.
Ticket sales are just one indicator of a lottery's performance. The more important measure for students, many say, is the amount of money left over after prizes and administrative expenses have been paid. Those are the net proceeds that are then available for scholarships and other education programs.
Proceeds did not rise as fast as ticket sales in Georgia, because lottery officials were paying out a greater share on prizes to entice people to spend more money on tickets. Proceeds rose about 107 percent from 1994 to 2003, less than 12 percent a year.
That figure also overstates Georgia's achievements because the state's population was exploding, the newspaper said. This means there were many more people in Georgia to buy lottery tickets last year than in 1994.
To account for population differences, lottery experts typically report financial results on a per-person basis, or per capita. The amount of money the Georgia lottery was generating in proceeds when viewed on a per capita basis grew 68.8 percent between 1994 and 2003, less than 8 percent a year.
But that figure also can be misleading. A large share of that 68.8 percent growth occurred between the first and second year the lottery was in operation. Lotteries often get off to a rousing start and then level out.
When viewing Georgia's per capita lottery proceeds since 1995 instead of 1994, they grew a much more modest 25.5 percent -- a little over 3 percent a year.