Arkansas Lottery Funds Record Number of College Scholarships

E-newsletter Issue #54 | September 1, 2010

Some may think it’s a gamble, but so far it’s paid off. The new Arkansas Scholarship Lottery is funding college scholarships by the thousands, more than the state was ever able to afford without it. As the recession continues, record numbers of students just out of high school and nontraditional, adult students took the state up on its offer of free tuition and fees. The state received 53,000 applications this year for the college scholarships, compared to 7,000 in 2009.

That’s according to Arkansas Department of Higher Education Director Jim Purcell. As states face tight budgets, Purcell knows well that higher education is one area that’s been hit. “All the states are going to have to find unique ways to provide opportunities for students,” Purcell said.

Arkansas isn’t the only state facing fiscal constraints when it comes to funding higher education, which illustrates the need for the lottery-funded scholarships.

“Higher education has just been sloughed off as a secondary responsibility or a responsibility not as important as say, public safety or health care or transportation or some of the other priorities in state government,” Virginia Lt. Gov. Bill Bolling told The Council of State Governments’ Capitol Ideas magazine in the upcoming September/October issue.

In Arkansas, providing more opportunities for students to go to college in a down economy is made possible through scratch off tickets and other lottery tickets—the Arkansas Scholarship Lottery funds 80 percent of the state’s Academic Challenge scholarships. Those scholarships pay for tuition and fees at public or private universities in the state for students who meet certain criteria.

It was important to fund college scholarships because Arkansas is near the very bottom of the pile when it comes to adults with bachelor’s degrees. Without additional funding to tap from the legislature, the state needed some extra money to increase the number of college graduates. Arkansas is second to last of all the states—ahead of West Virginia—for adults with bachelor’s degrees, according to Purcell.

That’s something the public wanted to change, too. In November 2009, the lottery to fund college scholarships went on the ballot “and the people voted overwhelmingly in favor of it,” Purcell said.

The lottery now pumps $110 million into the fund for college scholarship and the state kicks in $20 million, according to Purcell.

Although the state isn’t the first to use lottery revenue to fund college scholarships, some states such as Georgia and Oklahoma only partially fund scholarship programs with lottery money. The Arkansas program gets the majority of its funding from the lottery.

State officials learned quick how an electronic transcript system may be the ticket to handling the extra influx of applications from scholarship-hungry students.

Because the lottery made more money available, the state was able to fund not only the traditional students right out of high school, but also adult students and other nontraditional students looking for tuition help to graduate college.

All totaled, the state awarded the lottery funded scholarships to: 12,451 traditional students out of high school, 4,987 full time students currently in college and 4,986 adult learners, according to Purcell.

Logistically, it was business as usual with the traditional students—all transcripts were electronic and that meant an easier reviewing process. But for the nontraditional students, the transcripts weren’t electronic.

“So we basically had transcripts that were paper and we actually had to calculate by hand those applications,” Purcell said. Although it wasn’t a windfall for the department and it was able to review the applications, it did provide the impetus for an electronic transcript system in the state.

But that kind of system will have to wait until better budget times when funding is available, Purcell said.

Although the lottery has been good news for a state looking to fund more college scholarships, other states have had mixed results with such lottery funded programs, according to Some studies suggest that Georgia’s lottery funded HOPE scholarship, for example, led state colleges and universities to raise room and board fees, reports, citing a 2003 Harvard University study.

Critics also think the influx in state-funded scholarships will make it easier for already squeezed legislatures to cut general-fund support for higher education, reports.

And, what happens if the lottery doesn’t rake in the same amount of money every year? What if sales decline? To that, Purcell said, “I’m very comfortable thinking we should be able to fund the kids right out of high school,” but should there be a decline in lottery sales, the nontraditional student funding and adult funding may be squeezed, he said.

With more students attending college armed with the scholarships, Purcell said it may also stress support services at colleges and universities such as academic counseling and tutoring. That burden will become greater.

Still, Purcell maintains that more opportunities for students to attend and graduate college equal good policy. His department is neither for nor against the lottery, he said.

“There’s certainly a lot of energy and a lot of excitement,” Purcell said. “For us, it’s helping people with the American dream when they need help the most. Today, it has to be about having education skills, so that you can be marketable in a different world.”

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