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Senate committee approves bill to stabilize lottery-funded scholarships
Summary
Senate Bill 5 84, sponsored by Sen. Jim Hickey, was approved by the committee. The bill uses trust funds and a multi-year formula to align scholarship payouts with lottery proceeds and delays new or amended scholarships for at least one year to ensure funding.
Senator Jim Hickey (Arkansas Senate) presented Senate Bill 5 84 to the Senate Education Committee as a comprehensive approach to stabilize lottery-funded scholarships. Hickey described the bill as a multi-part fix: use existing trust funds to fully fund scholarships for the 12-month period between July 1, 2021, and June 30, 2022; park lottery operating revenue during that period to calculate a conservative baseline for future scholarship funding; and require that new or amended scholarships be introduced within the first 31 days of a regular session for joint review by the house and senate education committees. "What this bill does is it allows for those funds to be used to fully fund ... between July first of 2021 and June thirtieth of 2022," Hickey said.
Hickey told members the legislation relies on a formula (described on pages 33–35 of the bill) that takes the lottery's net proceeds over the previous four years, adds available funds (including a recurring $20,000,000 general revenue supplement), and computes a conservative baseline so scholarship commitments match likely available revenue. He said the trust account had been projected at "approximately a hundred million" in savings and that a shortfall reserve currently holds about $20,000,000.
The bill includes a funding priority if revenues prove insufficient: the academic challenge scholarship is funded first and other scholarships are funded pro rata. Hickey said the legislation also provides immediate notification to the appropriate budgetary bodies (ALC or joint budget) if shortfalls appear and allows for borrowing from the shortfall reserve as a contingency.
Committee members asked whether changes that amend eligibility (for example, altering a GPA threshold) would be treated like new scholarships and therefore be delayed under the bill's timing rules. Hickey answered that any action that creates a fiscal impact on the lottery would be reviewed under the new process and that such changes would be evaluated using historical data and the bill's formula so they would not take effect sooner than the schedule the bill requires.
Members thanked staff (including Taylor Lloyd, Courtney Salasford and Rhea Markham with the Department of Education and the Bureau of Legislative Research) and the lottery for assistance drafting the bill. After closing remarks and a voice vote, the committee passed SB 5 84.
The transcript records committee discussion and a voice vote to pass the bill but does not provide a roll-call tally.
