ALC-Lottery Oversight Subcommittee

Members are there any questions on the rule changes. Okay without objection the rule is reviewed and approved let's move on to item d thank you item d is this is with regard to the asus entries in the contract I do have our chief physical offer jerry fetcher here as well as our treasure brandy racklet who have worked very very hard on this process this was an issue that that first came to my attention when I joined the lottery and august of twenty twenty and we were in the throws of the pandemic and everyone was just starting to come back into the office and I was joining new and just moved here from california and and walked in and and one of the first things it was brought to my tension was. We've got to go over to the loc and we have to expand we have to get authority to expand the amount of the book keeping entry and asus to reflect the contracts for our two major vendors intelligent scientific games asus is the state system for tracking contracts and it is set up for fixed contracts so asis is expecting the way it's formatted it expects you to have a begin day and end date and a contract value in on a fixed contract you would know exactly what that total value is and you could enter that in and then it would track you and it would begin to alert you if you were running out of money. In the lottery world are two major vendors are on variable rate contracts so they actually they they get bonuses they are incinevised for us to do good they do well. So when we estimated initially this was before I joined but even since then because we did estimate a second time right after I got here we forecasted what is lottery performing right now how many years are left in the contract let's extra polite that out will add a little bit just as a buffer and will call that the total value so we came before this group I believe in late twenty twenty and we asked the we be allowed to increase the amount in asus that shows the total value of those contracts again it's the state system for tracking total value of contracts. We're out of money again how did this happen we have had three. Top three years in a row and an as a result of that and that's net proceeds too so scholarships have grown but so has under compensation as vendor compensation has grown the amount in asis is not reflective of what they're do under the contract so we have asked for an increase in the amount of the contracts that would be reflective of exactly what we believe the total value of the contract says now here's the incredible thing you literally could go in the asus knowing that you have a variable right contract and you could enter a value total value of the contract of a billion dollars. It doesn't mean they're going to get paid a billion dollars it just means I wouldn't have to come back before this committee and say well we're doing so good we got to go in and increase the amount reflected in asis because this variable contract is going to produce additional compensation that no one thought would happen because nobody thought the lottery would perform at that level and so that's what this is all about now on the agenda it says a contract amendment this is not a contract note no amendment to the contract is being made the terms of the contractors are static in or exactly as they have always been this is simply an entry in asus there is a book keeping entry that will bring asus to reflect the actual amount that is reflected on lotteries books. And so it's just simply a book keeping the entry that's what we're asking to do. I'd i'd be more comfortable with you have questions i'm going to ask mister fetzer and in misrackled come up and answer those but that's the long and short of the asus situation. Members are there any questions on the amendment to the contracts. The. Saying none i'll entertain a motion to review. So moved. Second. All in favor say I opposed like sign. Motion carries. Okay then we will move on to carry over business we have two items that were batched together the first is the director's report regarding activities and operations of the office of arkansas lottery it is on page eleven of e one and also then the financial report on administration of the arkansas academic challenge scholarship program which is exemited to those two are related and I would recognize senator hickey. To speak on it. Thank you madame chair if we could do we have harry had come to the table on this. Yes thank you when you get to the table please identify yourself. The. Nick following the sister commissioner finance division part first of all madam chair if it's okay just to cannot bring the members up to date and actually you had to remind me of that there's two but since I remembered it all so what we did as we actually held these reports in the work and the reason that we held these reports as you can see all my exhibit e two if you look at physical nineteen twenty twenty one twenty two and twenty three you know we had four hundred and twenty seven thousand dollars five hundred thousand five thirty that was the amount that harried uh had taken. From the water is scholarship phone and then in twenty two and twenty three it jumped up to me and seven and then also a me and want and from our discussions last time I believe you know what you are stated is that. You all had a professional service contract in what you did with that back in twenty two of course was actually developing it or purchased the system. Is that I don't put words in your mouth is that yes or what we developed in coordination with our house at you with the department of education that's in those costs before and then in twenty three red here those were just additional calls calls for the to transfer to complete the the project carried over more than the one year that we had planned right and if I remember right you said that that that's over and we won't have any more of that next year you sir mark I guess do you are you required I guess I have this question i'm on a go down this road if that's okay madam chair so are you required like whenever you purchase that software or develop that website or whatever you've done I mean do you classified as a as an asset or capital outlay of any sort of tap or do you know yeah it was paid through professional services expenses so it is not an asset with it being at the a web based portal for the application process and of course we looked at that this was one of the questions is whether or not that that was truly an allowable experience and I believe mister haggler that if I remember correctly you know of course it was such a a large amount over and above what we normally seen course we look looked at everything and it is like administrative expenses you know I don't know there's nothing in there that says it professional service contracts are allowed but I didn't see anything in there that said they were disallowed so personally I think it was a stretch but. To go one step further for the future what I would like is is even if we want to go ahead and file these reports that's fine. But what I would like to do is uh if it's okay that myself in some of the others that we will work with our bureau and go ahead and develop legislation for the future that can out more clearly defines what this what you could use. And then also i'm kind of thinking that that we have something in place of course as you can see they had four twenty seven five hundred five thirty in nineteen twenty and twenty one in those fiscal years. That maybe we have that you know we thought the house in lows over the inception of the lottery. Try to figure an average that way because I definitely don't want this big numbering as an average and that if you all ever exceed something to that to that that you actually either had to come before this committee for approval or review water whatever we find to be most appropriate so and what i'd like to do is develop that legislation. Have this committee because I think that within our the stair tutor our rules that this committee can actually review that and do that and that can be part of the legislative package that will do with the uh our next regular session so with that again and i'll make a motion if we want to go ahead and foul the report but again now i'm I do want an additional thing that we work with the bureau that. The development to bring it back in here to for discussions I don't think we need to make a motion of other report I think we're just reviewing a report that's already been filed right I thought we held it over I thought that I didn't think that and and maybe we did I thought that we actually held these because we had a question we had a question in regards to whether or not that was even an appropriate use you know other members here might I think it is or not all right and do I have a second center I think is much the second hey others in favor say I post. Okay motion carries think you send her to and it w. Then moving on to item seven is there any other business for the committee. Yeah. Crap well then with that thank you very much members meeting adjourned.