Committee: Ways and Means EducationSponsor: Marsh
Analyst: Jessica PerezDate: 05/04/2021


Senate Bill 309 as substituted, amended and reported by the committee on Ways and Means Education would implement the provisions of the constitutional amendment proposed by Senate Bill 319 of the 2021 Regular Session, which creates the Alabama Education Lottery Act. This bill further establishes the Alabama Lottery Corporation as an instrumentality of the state, governed by a seven-member board of directors, with powers and duties to include the authority to conduct and administer lottery games; adopt rules; enter into contracts for major procurements; administer grants; receive reimbursement for travel and reasonable expenses; and employ, and set the compensation of, an executive director. This bill also provides for the duties of the executive director, which includes employment of additional personnel and general administration of the corporation. This bill further provides that all monies received by the corporation, including lottery proceeds, would be deposited into a corporate operating account established in a bank domiciled in the state to be used for the purpose of paying prizes and operating expenses, and the remaining proceeds would be distributed into the Alabama Education Lottery Trust Fund in the State Treasury.

The amount of net revenue generated from the operation of the lottery to be deposited into the Alabama Education Lottery Trust Fund, is estimated to be between $194 million to $279 million annually, after the payment of:

(1) all prizes, which must be at least 50% of the total gross lottery revenues;

(2) operating expenses of the corporation, including costs associated with administration, regulation, and promotion of the lottery, up to 15% of total gross lottery revenues; and

(3) retailer commissions of 7% of the retailerís gross lottery ticket sales.

This bill also prohibits State General Fund monies from being used or obligated to pay lottery prizes.

Further, this bill establishes the following Alabama Graduate Retention and Development (GRADs) scholarship and graduate retention stipend programs to be administered by the Alabama Commission on Higher Education (ACHE) as listed below. These programs would be funded annually through an independent supplemental appropriation bill from the net proceeds of the Alabama Education Lottery, using the apportionments shown below. This bill further provides that the benefit provided through each program shall be equal to the total amount appropriated for each program by the Legislature, less ACHEís administrative fee, divided by the total number of eligible recipients for each program.

(1) for the Two-year College Scholarship Program:

a. up to 20% of the net annual lottery proceeds

b. provides legislative intent that an eligible recipient receives the lesser of $2,500 or the cost of tuition and mandatory fees at the eligible institution less all other gift aid, with gift aid credited first, not to exceed 80% of the cost of tuition and mandatory fees

c. requires ACHE to ensure Pell Grant recipients receive first priority funding

(2) for the Four-year College Scholarship Program:

a. up to 10% of the net annual lottery proceeds

b. eligible recipients shall be either the recipient of the maximum federal Pell Grant award; or a first-generation college attendee

(3) for the Four-year College Graduate Retention Stipend Program:

a. not less than 70% of the net annual lottery proceeds

b. provides legislative intent that the stipend amount be $2,500 annually for four years

This bill provides that the benefit amounts shown above may be adjusted based upon the availability of funds; and no appropriation from the Education Trust Fund (ETF) or revenues to the ETF may be used or diverted to support the programs without unanimous consent of the Finance Director, the Chair of the House Ways and Means-Education Committee, and the Chair of the Senate Finance and Taxation-Education Committee and subsequently appropriated by an act of the Legislature.

In addition, this bill would increase the administrative obligations of ACHE by requiring ACHE to: (1) administer the programs created by this bill; and (2) provide an annual report to the Governor, the Lieutenant Governor, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, and the chairs of the education budget and policy committees. These obligations would be offset, wholly or in part, by the administrative fees retained by ACHE, not to exceed two percent of the amount appropriated, for each program.

Finally, this bill would establish criminal penalties for certain unlawful lottery activities which could increase receipts to the State General Fund and municipal general funds from fines; increase receipts to the State General Fund, county general funds, municipal general funds, and other funds to which court costs are deposited; and could increase the obligations of the State General Fund, local jails, the district attorneys, the Department of Corrections, the Bureau of Pardons and Paroles, and community corrections programs by an undetermined amount dependent upon the number of persons charged with and convicted of the offenses provided by this bill and the penalties imposed.

Bill Poole, Chair
Ways and Means Education