More staff payouts for Georgia Lottery

Georgia Lottery executives received big raises again last year, unlike the state’s employees and teachers who saw the same old stagnant pay.

Former lottery President Margaret DeFrancisco received $142,475 for “unused leave” when she retired in mid-November 2012, according to lottery records requested by The Atlanta Journal-Constitution. The money came on top of the $141,753 in salary she earned for the 4 1/2 months she worked that fiscal year before she retired.

Among other findings:

The payouts surprised some members of the General Assembly, which has raised questions about salaries and bonuses at the lottery at a time when legislators had to slash the state’s HOPE scholarship program, which is paid out of ticket sales. They have also had to deny state employees and teachers cost-of-living raises since the start of the Great Recession.

“We’ve cut back on paying for tuition, so kids and moms and dads are paying more, but we’re loading more into the pockets of people managing the fund,” said state Rep. Ben Harbin, R-Evans. “And then we have boards doing things like this, giving raises, giving huge payouts, it’s troubling. It’s troubling, to put it mildly.”

Lottery salaries and bonuses have been a sticky issue in recent years. While the lottery was created by the state, its budget and spending are approved by a board appointed by the governor, not the General Assembly.

It’s also the lottery — and not taxpayers — that pays salaries and other benefits to its employees. Its derives its income from ticket sales, not state taxes. What employees take home is tied to how well both they and the corporation perform.

The lottery, considered one of the best in the nation, funds the HOPE Scholarship and pre-kindergarten classes. Even booming ticket sales, however, have struggled to keep up with growth in those programs. When lawmakers approved legislation in 2011 to prevent the programs from going broke, part of the deal was a severe curtailing of lottery staff bonuses.

“Incentive pay,” as lottery officials call the bonuses, has declined dramatically since the law passed. The lottery used to hand out $2 million or more a year in bonuses — with top officials cashing huge checks. In fiscal 2012, that figure dropped to $520,520, with $75,000 going to DeFrancisco. Last year, the games handed out $237,315 in bonuses. Neither DeFrancisco nor the woman who replaced her as the lottery’s president, former state budget director Debbie Alford, received incentive pay last year, according to records.

Alford has made a point of keeping the lid on perceived excess at the lottery. While DeFrancisco oversaw years of booming success, Alford has taken a more restrained approach to the job. Her appointment, recommended by Gov. Nathan Deal, came a year after lawmakers approved the 2011 law that limited bonuses at the agency to no more than 1 percent of the net increase in lottery money going to education.

It was a key concession since the legislation also overhauled the HOPE Scholarship program. Thousands of students lost the scholarship as part of new eligibility requirements.

“Unlike state agencies focused on delivering services, the Georgia Lottery Corp. is a sales organization whose mission is to maximize dollars for HOPE and pre-K,” Alford said this week. She said the lottery since 2011 has increased funding for HOPE and pre-K by more than $81 million, or about 10 percent.

Yet some lawmakers are now calling for more legislative oversight of the organization, something the state’s governors have traditionally opposed. More than a half-dozen bills pending in the Legislature seek changes in how the lottery handles its payouts to the state, including demands that it supply more money more of its money go toward paying for the state’s signature education programs.

“It’s disheartening when you see state employees not get raises for a number of years,” said Senate Minority Leader Steve Henson, D-Tucker, one of a number of bipartisan signers of Senate Bill 373, which mandates that the lottery deposit into state coffers at least 35 percent of its ticket sales for education programs. Right now, the lottery sends about 26 percent. Lottery officials argue that giving bigger payouts to players draws more ticket sales. That, in turn, guarantees more money to funnel into HOPE and pre-K.

Alford has noted that profits going toward the state’s education programs have increased 18 out of 20 years, with 1998 and 2011 being the only exceptions. Lottery officials have also defended the incentive pay program as a way to keep top staffers working for the lottery, which was created as a relatively independent, business-like entity unlike typical state agencies. Such bonuses are more common in the business world than in state government.

Lottery officials said Friday their overall payroll — salaries and bonuses — has decreased nearly 4 percent since 2009, while ticket sales have continued to grow most years since then.

The last fiscal year ending June 30 saw a record-breaking $927 million in profits, surpassing the prior year’s record mark by more than $26 million. And the games produced $462 million for HOPE and pre-kindergarten programs during the first six months of fiscal 2014, which began July 1. That’s up about $11.6 million from the same period the previous year.

Lawmakers acknowledge the difference between the lottery and state agencies. But it still rankles some legislators that during the Great Recession and its aftermath, lottery staffers got raises while many of the state’s 200,000 teachers and state employees have gone without and been furloughed.

Harbin even suggested having lawmakers be the ones who consider pay raises for lottery officials, something Deal and the board wouldn’t go along with.

“At some point they ought to have to come to us to get their pay raises approved,” Harbin said. “We haven’t given pay raises to state employees for a long time, and the lottery board has continued to hand out pay raises and act like they don’t have to answer to us or the people.”