Projection: Low lottery funds shrinking HOPE payouts

ATLANTA -- Rising tuition and stagnant lottery sales mean the HOPE Scholarship will be paying less than half the tuition of its recipients by 2016, according to official projections given to lawmakers Monday.

A reform of the HOPE Scholarship enacted by the General Assembly last year reduced the scholarship payout to 90 percent of the tuition at the time and ended the practice of raising the payout to meet rising tuition. Officials with the Georgia Student Finance Commission estimated continued growth in tuition over the coming years as well as modest income rises from the Georgia Lottery to reveal a spreading payout gap.
The commission is already relying on its reserves to cover part of the payout, but it with have drawn down those reserves to the legal minimum by 2014. As tuition continues to climb at the current rate, the result is that the lottery will only produce enough funds to cover less than half the tuition of all the students expected to qualify for it, said Tim Connell, the commission's president.
That funding shortage could result in many of the state's brightest students leaving college, he warned.
"The cost of attending college is the biggest reason now why people drop out," he said.
At the same meeting, Margaret DeFrancisco, president of the Georgia Lottery Corporation, told the legislators that sales growth has been hurt by the recent recession but also that the Lottery is running out of ways to boost them.
Rep. Ron Stephens, R-Savannah, asked about tapping into the state's tourist and convention market as a new revenue source by installing instant-win video terminals in private hospitality developments. The Lottery already has legal authority to use such terminals without legislation, a referendum or changing the constitution, but the commission has declined to do it, she said.
"When you walk in, it looks like a casino," she said. "For that reason, that is a public-policy decision. We would not step out on our own on that. We really need a public discussion about that."
Stephens organized Monday's meeting as a way to convince his colleagues to support a resolution urging the Lottery to start using the terminals. He said a resolution could pass quickly in order to begin the three years needed to develop the casinos.
"It's almost a no-brainer for me," he said.
Conventioneers and tourists aren't likely to buy lottery tickets in gas stations and convenience stores but they would see the electronic, instant games as entertainment in a casino-type setting, he said.
He quoted a study done for the Lottery last fall that concluded that the state could support three such casinos, and that one in Savannah alone would produce sufficient revenue to restore the HOPE Scholarship.

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