State lawmakers are talking about making the Tennessee Education Lottery give a bigger chunk of its profits over to scholarships. Lottery officials counter that the less strict plan they’re on now actually means more education dollars.
State law says the Lottery Corporation should give 35 percent of profits to education, or the amount that maximizes proceeds.*
State officials have no real way to enforce that 35 percent rate, and the lottery has been handing over a smaller share – around 26 percent. Lottery CEO Rebecca Hargrove defends the lower rate, which is like a smaller part of a much bigger pie:
“Each year as we’ve continued to raise prize payout, raw dollars have gone up, even though the percentage has gone down.”
Lottery officials say last year they outperformed other states. They attribute their success to a delicate balance that uses bigger payouts to sell more tickets.
Still, a state task force said last week (pdf) Tennessee officials ought to have more say over how much lottery money goes to education. They also want to give the State Funding Board more say over bonuses for lottery executives.
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* An earlier version of this story failed to mention the alternative to the 35 percent requirement: “an amount that maximizes net lottery proceeds.”
Tenn. Code Ann. § 4-51-111 (2011)
As nearly as practical, for each fiscal year, net lottery proceeds shall equal at least thirty-five percent (35%) of the lottery proceeds or an amount that maximizes net lottery proceeds; provided, however, that for the first two (2) full fiscal years and any partial first fiscal year of the corporation, net lottery proceeds need only equal, as nearly as practical, thirty percent (30%) of the lottery proceeds. If, after the second full fiscal year, the corporation determines that an amount that maximizes net lottery proceeds is less than thirty-five percent (35%) of the lottery proceeds, then, immediately upon making such determination, the corporation shall file with the state funding board a statement of reasons supporting such determination and a projection of such amount.
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