ALC-Lottery Oversight Subcommittee

Thank miss chairman i'll recognize you if you would state your name for the record please thanks for a cable executive director offs of the arkansas lottery appreciate your time today we're we're excited to be over to report on our fiscal year and fiscal twenty three numbers we did complete physical twenty three with six hundred and eight million point two million dollars in total sales that is better than the previous historic record actually that's number two behind fiscal twenty one second best total operating revenues since inception of the lottery. That the real number that I think you'll find out of meaning is the historic record of that proceeds that were delivered in FY twenty three hundred and fourteen point seven million dollars that went toward scholarships that is a historic record and that did beat the previous historic record that we achieved in FY twenty one is a result of that I asked my entire executive team if they would come to this meeting today I thought you might like to put some faces to the performance um we work very hard to last physical year to achieve our goals we we we believe we achieve the the substantive goals there's always room for improvement and we're striving for that and FY twenty four. Let me make stay with that hundred and fourteen million dollars figured on page five if they won't look short yes go in thank you turning to the report at hand we do have the powerpoint presentation as we typically do if you look at the first slide this is the comparative income statement from july twenty three versus july twenty twenty two we improve two point four percent on total revenues obviously our expenditures increased along with that net proceeds increased one point six percent you'll note there total revenues for july twenty twenty three were fifty three million four hundred and twenty seven thousand three hundred and thirty two dollars in july of twenty twenty two total revenues were fifty two million one hundred and seventy six thousand three hundred and ninety two dollars so we are training better with regard to the net proceeds july twenty twenty three twelve me and six six six five o three versus in july twenty two twelve me in four sixty five nine seventy nine that was an up ticket one point six percent. Turning to july twenty twenty three actual versus budget. You can see that our budget number for total revenues was forty six million and change our actual performance was fifty three million and change the actual members are reflected in your power point and that was a fifteen point one variance so we were very pleased with that obviously total operating expenses increased as well we were a negative eleven point four we're trying right now over four percent slightly over four percent of our budget that's after one month so we do believe the trend lines are continuing and we're we're pretty happy with the way lottery is performing one month into fiscal twenty four. With regard to the adhe transfer analysis you'll note that twenty twenty four net proceeds were twelve me in six hundred and sixty six thousand five hundred and three dollars. The twenty twenty four unclaimed prizes were three hundred ninety thousand one hundred and seventy four dollars for a total transfer of thirteen million fifty six thousand six hundred and seventy seven dollars our twenty twenty twenty four budget for july twenty twenty three eight eight million two hundred and seven six hundred so you'll see that again lottery is performing exactly where we anticipated that would have thirty days into the year we've got a lot of row left a home but we like the direction that we're trending. Comparative income statements this is physical year into june thirtieth twenty twenty three compared to june thirtieth twenty twenty two you'll note that are our total revenues were six hundred and eight million and change the actual and fiscal twenty two was five hundred and eighty million change. The important part again is dropping to the bottom line total net proceeds hundred and fourteen million versus ninety nine million and FY twenty two II think in my last appearance before the subcommittee I explained that in years where we see large outside jack pots in our multi state games you you're going to see a higher percentage of net proceeds compared to sales just it it's a virtue of margin in instant tickets produced less margin than draw games in the multi state games provide a very healthy margin force so you will see in years where we have hijack pots in the muscle games sales should follow and that proceeds should. Turning to the lottery scholarship trust account you'll note that our current balance is two hundred and sixty one million four thousand fifty five dollars. So we do have a a surplus we're sitting in good shape. Unclaimed prizes as a july thirty first twenty twenty three the reserve balance is one million three hundred ninety thousand one hundred seventy four dollars this includes the reserve balances of july first twenty twenty three unclaimed lottery press money expenditures from unclaimed lottery press money which was zero in the instance and the reserve for future prizes promotions are reserves. And that's pretty much similar year over year so that that doesn't change much. Retailer lost debt set off and income tax. Retailer losses were zero our credit department in our our treasury department to a wonderful job of of working with our retailers to make sure that their balance sheets are healthy in ours remains healthy as well total debt set off for july twenty three was twenty four thousand eight hundred and four dollars in seventy four cents that included eighteen thousand and department of financial administration set off in six thousand and change for the office of child's poor enforcement. Income taxes withheld in july twenty three well federal and state told four hundred and sixty five thousand six hundred and eighty five warner sixty five thousand six hundred and eighty five dollars yeah I think if you look at it and I don't highlighted a whole lot but if you look over at the total since inception which is the call i'm just to the right I think that's really where you can see the value in the screen what we call the scrub the debt set off script you know months to month it seems like a small number but when you look at it from inception. It accumulates so we believe that they were were a good safety net for. For a capturing. Request receive from eighty eight july first through july thirty first twenty twenty three. We received a letter from eighty eight dated august first and it was a request for reimbursement and our thought was as even though these reports typically run month from the first of the month at the end of the month we felt like it was a little bit unfair to the subcommittee and perhaps on fair to eighty eight do not put this in front of you today so we have done that today so their request for a reimbursement for administrative expenses of one million one hundred and forty three thousand six hundred and eighty nine dollars in sixty six cents. Is a component of our report and I know that. You'll be hearing from eighty eight at that the conclusion of my testimony. We've included in the packet the letter that we actually received from eighty eight was just sets out the attachments as well. Which is their breakdown of the actual expenses. Turning the retail sales back county. This is an interesting metric we look at this a lot and and you'll probably find an interesting too because I can well imagine that your eyes would be drawn down to your counties that you represent for the month of july twenty twenty three sales back county the total remember our total operating revenues were fifty six may in a hundred and thirty seven thousand five hundred and forty five dollars the top five counties producing that revenue for july twenty three were palaski county coming in at number one with eleven million eight hundred ninety one thousand eight hundred ninety one dollars that represented twenty one percent of the sales washington county came in number two two million six hundred and forty eight thousand three hundred and twenty dollars that was four point seven percent of total sales bent in county number three two million four hundred and eighty five thousand two hundred and forty seven dollars that was four point four percent of total sales for july craig head county two million two hundred thousand five hundred and eighty dollars that was three point nine percent of total sales and rounding out in number five was jefferson county one million nine hundred and eighty six thousand two hundred and fifty nine dollars for three point five percent of total sales for the month of july twenty three so what you total up is is that thirty seven point five percent of revenue came from the top five counts in july twenty twenty three so it's an interesting metric for us you may find it i'm interesting as well. Total number of retailers. Total number of retailers. Two thousand and five so total number of licensed retailers the tart terminal account by type is two thousand three hundred and two I think I explained last time but I may not have sold them so today the difference between the two is some of our retailers have more than one machine if it's a if it's a retailer of volume then i'll be sleep it benefits us to give them two machines in the in a course as such they have that typically you'll see one but if you do see too you know that they they see excellent sell through. We did have one term contract for goods and services that were entered in the month of july twenty twenty three it's with arkansas state university in the amount of thirteen thousand dollars it's a one year contract from july twenty twenty three through june thirty at twenty twenty four and this is specifically a contract with red wolves sports properties that this is a continuation of a promotional activity that we have done with our console state university in the past they are a large recipient of our scholarship funds they also represent a significant part of the county where we see sales and we feel like that uh uh it's a good partnership for us it gets us exposure and it also allows us to have a little better penetration within that territory where we see excellent sales and sell through. There were no auto reports issued during july twenty twenty three. The. It was that being said i'll i'll entertain any questions good committee and only have question moiley jumped up real quick. Representative evans. Thank you mister chair erms taggler over on page five on the comparative income statements you explain there's column their transfer of bond fees. And what differentiated twenty two versus twenty three. May I see for the budget for twenty three was a hundred thousand came in at eighty four six. The previous year at thirteen thousand what what drives that number but bond fees are under the lottery rules retailers we operate our own bond system we don't require retailers to go out in obtain their own bond it's a self binding program that the lottery operates a haste and add if we have problems with a retailer or if they have insufficient funds over a period of time obviously we do have the ability under our rules to either require them to obtain an outside bond or even to pay for the tickets up front so we do have some flexibility there i've got my chief fiscal officer jury fetzer here with me he's prepared to address your question with regard to that speci. For these binds of a renewed annually so my annually every every year they have to renew their bar and pay the fee to the lottery for holding that bond in place that's correct okay yes. Sir if you would please turn your michael and introduce yourself for the record. And you will be recognized gerald transfer I am the chief as coopser of the office of the arkansas law. Okay so if you could just. What was the in the actual number of of buying fees was thirteen thousand and twenty two they jumped to eighty four six and twenty three obviously you budgeted for a hundred so was edges well and and it is a painted number of renewal we collect varying amounts of bond fees and I hate to tell my music correct but director hangler did not we do not actually have bonds we are self-bonding for the retailers we have a bond phone okay okay and the retailers pay in to the bond fan with when we do their draws every week a portion of that is for their bone fee. And that accumulates during the year okay. An under our rules any bond fees in access of a hundred thousand dollars at the end of the physical year get transferred in the proceeds so the difference is last year we call acted more bond fees than we did in the previous. Be a because in the previous year we did have some net ride offs against the bond for those fees based on traditional volume of sales within that game yet well they're based that they are the same fee per retailer so it's not by count okay great thank you very much. Senator hickey yes sir all right mister hagger you do and appreciate appreciate the report and mines probably going to be two fold for u n department of education. So and we do this every year and I remember last year of course and I see that the department of area that they have the sheet and we always stayed somewhere around five hundred thousand we seen a large up to last year was our discussion last time that they said that was for a new system where do you remember what that was that was for a new system for fy twenty that's correct that's my understanding okay and then it looks like to me that here the letter that you are received from the that the large portion of it's going to be as in professional fees did your you'll haven't questioned they are more anything in regards to that because. Is it the legislation of the constitutional amendment that says that they're allowed to request what they're actual expenses are from you i'm not i'm not certain whether that was in the original constitutional amendment or whether that was statutory senator but we don't have any legal authority to question what they submit it simply a pass through I think that's for this this body yes sir and I knew that I knew the answer to that I want to make sure that the members knew that because again i'm all ask them specifics on that whenever it gets there so let me ask you this you all receive the letter have you actually made the transfer to them yet for that me and one forty three no sir last year we assured this committee that we would not remit payment until this committee had an opportunity to review that expense okay whenever they get up here mister chair i'll have some questions. Representative rate thank you mister chairman director haggler i've read this really lengthy article in the democrat is that last month about the jack pocket out and so I have some questions about that for you if that's okay true so I was a little bit confused right in the article about hours as well about why this doesn't constitute a digital lottery can you explain from your vantage point what does the app for can you help me understand one what does the app functionally do and why is it not considered digital happy to do so so what jack pocket does is they have a traditional terminal just as any other retailer would have they don't sell instant tickets through their app they only sell instant tickets across the counter of their physical location which is here in little rock so they only sell draw tickets multi state draw tickets power ball megamen's lucky for life the the state draw games natural state jack pot in arkansas. With their system does he has his they they are a traditional retail what they do is is when they receive an order for a ticket they literally produce a physical ticket no different than if that customer were standing across the counter. A digital photocopy of that ticket is then sent to the purchase that the customer the hard ticket is then placed in a safe that they maintain. And and we we ought at these folks we go down and check on we we do secret shopping we do all of these things to make sure that everybody's playing as they should and in so the difference is as there is a physical hard ticket if that ticket is a winning ticket jack pocket will either send that ticket to them via mail they can come in and pick that ticket up and they have to bring it down to the lottery claim center if it's over five hundred dollars the difference between that in a lottery as a lottery creates a ticket it's there's nothing there and so there is no physical hard ticket everything has to be reconstructed virtually and digitally with jack pocket there is a hard copy ticket that will always prove up the purchase in the assignment to the player that's that's the difference I mean that's a high level explorer so I just want to make sure I understand through the app our customers just. And then they simply pick up the ticket if it's a winning ticket above five hundred dollars if it's a winning ticket below five hundred dollars it's applied to their wallet they have a jack pocket wallet we don't operate the wallet and that's an agreement between the consumer and jack pocket that is away from the water so if they win and the winnings are below five hundred dollars then the transaction is completely digital think you have the right to go in and and claim your ticket regardless they don't prohibit transactions over the counter at anybody it can be the camping okay. So. I just i'd never heard of this before reading the article is there something in the code that authorizes these sorts of digital at selling the lottery tickets the digital apps I don't think that there's anything in the code per se have to understand this was in place when I write i'm i'm so april of twenty twenty was when jack pocket received its first license I don't know exactly whether this body was involved in that discussion my understanding was that it was presented here I can't tell you how that was done I wasn't here but it's done in other states it's not considered I lottery within the lottery industry because it's not a ticket that's being created on online it's it's simply a physical ticket and the only online transaction is the ordering no different than if you order your groceries at kroger and you drop down and pick those up so some of the terminologies a little confusing to me is there a difference between the tar I hear the term digital lottery and here the term is are those different things or they just different monitors for the digitals become a fancy word for our lottery. So it just seems to me like this is getting real close to. Operating a digital lottery if you can place the order on your phone. Pay for the order on your phone have the winnings transferred to you digitally without you ever having to go to a counter and i'm not necessarily saying that i'm opposed to that but I am for you know. Truth in advertising in words having actually meaning I mean when I read the description of this it says that players can join lottery pools set up automatic orders. Place their ticket order seamlessly using venmo or apple pay jack pot on its website describes itself as a digital lottery courier so. How are are we operating a digital lottery in arkansas I don't believe so. The. Okay and I would agree with you that it it walks to the line of our lottery yeah but again I would make the distinction the distinction between in the industry and states are free to have their own definition but within the industry. I lottery there is no physical ticket in the financial courier model there is there always so the distinction is that they prant a physical ticket would do the eye and I lottery what is that stand for I assume it was stood for internet I could be wrong but that's that's the terminology that was already in play when I went and you would need internet to place an order through app or website internet or data. Yeah. I've got just a couple more here. How many other lottery couriers do we have operating in the state one there so there's two total there are two and use can you outlet you said they have to register with the state that there you guys tell me tell me about the process of oversight process so in the lottery industry you have multiple approaches to lottery financial couriers some are like the state of texas and it's the wild west they don't require a registration they don't require financial courier stop rate as retailers it's just come on down and deliver tickets we we thought that was reckless we believe that that did not provide for sufficient internal controls we began to look to other states with longer histories dealing with financial couriers and we settled in on new jersey in new york these were the original two states that the launched financial couriers in the lottery industry they took two very different approaches new york with a lottery staff of almost four hundred people took a very hands on approach and and in they they they began licensing and vetting in doing all the things and they have multiple financial couriers they also have had some legal issues around that. The state of new jersey took a conservative approach in the state of new jersey said luck here's the deal we're not going to regulate financial couriers from stem to stern but what we are going to do is we're going to require them to register and we're going to require that they provide certain financial information and that the principles of those organizations made a background check we we decided that we did not have the staff we have sixty eight people at the lottery we don't have a staff who can can can can supervise two entities in the state full time so what we did is as we required them to be lottery retailers we required them to come into the state of arkansas rent a physical space from an arkansas landlord and employer candidates at the counter that's what I don't they they will tell you they will walk in here and sit down and tell you they weren't very happy about that that added to their cost and reduced their margins but we felt like that was the only thing that could adequately control the risk that they bring to the table and you can never take risk to zero and in the lottery world we live in a we live in a risk based world worry live in a statistical world so everything becomes cost benefit with an ad towards conservative ship of a public trust and in that's why what we did is as we said look you're going to come in here and be a financial courier in arkansas you're going to have a brick and mortar facility that we can see you're going to employ people in arkansas that we can go look at and you're going to have a financially responsible person who is obligated for the bills that you guys run up in the state of arkansas you're going to operate no differently than the brick and mortar guys if you want to run your app that's fine within reason and we build some some constraints around that but recognize even our current brick and mortar retailers are developing apps in another states their selling lottery on their apps they have inquired as to whether they could do so in arkansas we're taking a very cautious approach to this you know. Where the lottery was in twenty fourteen and where the lottery is today as night and day different and we're sitting on something that can can fundamentally change education in arkansas right now it's not about making vendors rich it's not about making lobbyists rich or anybody else rich about educating these children and what we felt like is as we had to take a step towards advancement in in the lottery industry but we don't have to go all the way we don't have to be florida we don't have to be california texts as we can take measured steps and learn from their mistakes but the one thing we wanted to make sure we had as we got brick and mortar and got a financially responsible person in arkansas I know the words i've got somebody I can send the policy after and that's that's what we're doing that we've heard increased from other financial couriers one did not meet the background check and we pushed them off in in short order ultimately the SEC filed an action against them and their senior their senior executives were all indigent federally and it became quite a mess we were glad that we were very cautious and going down this part i've had another financial courier contact me and we told him that right now we thought two was plenty and that we were undergoing a revision of our rules and in light of the fact that we had reverted back to our original rules we we didn't feel like we were authorized to add any at this time they were welcome to reapply down the road. And we were accused of engaging an obstruction as behavior that we were building a wall around arkansas and I took exception that made my point clear on that phone call. This isn't about you the vendor this is about the state of arkansas and this is about the kids getting educated here and we'll do what we think is best for the program and not what's best for out of state if if I could I get I got a couple other ship things that the differentiation you talked about between digital lottery and lottery being that there's a physical printed ticket. Is that differentiation is that. Is that an industry distinction or is that in statute anywhere no that's an industry distinction must must states don't have very clear statutes with regard to this is all this developed very quickly that that's my understanding well just by way of example if I make the financial courier thing became big during the pandemic so prior to the pandemic you had the bigger states like new york in new jersey that we're doing financial courtesy their big metro areas. But the pandemic was what drove more and more states towards the the the the process that arkansas has which is we we didn't want to go four lottery for a lot of reasons and in my case I didn't feel like ahead the legislative authority to do now that's just my personal opinion. And this body or dfa or any number of people can disagree with reasonably disagree but that that was you know that that was that was our position on them the last question I had for you the article seemed to indicate that the presence of the drag part app at specific store I think it said it doubled there previous proceeds that they generated d do you have a an estimate of how much your proceeds have increased as a result of the use of digital couriers and do you have an estimate of how much your proceeds would increase if arkansas did have a as you put it full blown digital lottery no I don't have anything in my hip pocket I mean those are numbers that you know we loosely talk about that in concept and we look at other states and what other states have done I will say that jack pocket is is by sales our largest retailer we have looked to see whether or not there has been any cannibalisation of sales and our other retailers we don't seen on the total number but it would be impossible to say without knowing more so you know sales are going up and you see this this mobile app that that is generating outside sales as well and you can draw the correlation by the same token. A rising tide seems to be lifting all boats so I don't know exactly what the effect is I can't tell you whether or not there's been any cannibalization or whether that's a hundred percent organic growth will take it because obviously it's driving big numbers by the same token I think over time you'll find that flattening out I think people who join the app and they enjoy buying through the app they'll continue to do that and others will drop off and return to counter alright thank you for entertaining my questions thanks sir. As gone gets four g I try to get in right decade anymore since they change over is and just looking at either income which it shows here it shows it goes in the total. Of course interested is. Substantial more now than it was even a year ago is there any discretion that dfa or anybody else has. It may be a carry over from back when the commission did on the interest being used or does it all legitimately go into the part in the percentage to be used for education. It it does go in to the part but i'd be remissed with my chief fiscal officer sitting here if I didn't deferred him and ask him if he had a deeper explanation than it since he's there is there any other funds that there's any carry over that the allows somebody to make a decision on it does not go in the. The part for them education now buy statute we are required that all of our phones. Basically follow the finance requirements of the state treasury of arkansas therefore all of the inners that we have is. In a financial institution that is we have full collateralization of some none of it is at risk it is at or close to market interest rates but now we did we do not have widely divested or invested funds we basically have them in a commercial arkansas state bank chartered bank and they are fully collateralized so that I think I heard two hundred and sixty six million reserve you're collecting a rate on the. Monthly ballots. You don't you know yes keep in two hundred million and the rest of it. Float you you're going on holiday every penny that we have in funds is in our sterning very good I mean interest is major day I appreciate it get to see the increase only thank you. The representative of john ira thank you thank you mister chairman sir have a couple of questions red wools sports properties lc does that have a direct affiliation with arks of state university number one and if it does what percentage of the money that's derived goes to the college. The. Doctor actually make not is our advertising director if you would please turn your michael and introduce yourself for the record you recognize I am actually make that and the marketing advertising director yes so the redel sports property is managed through ing college but all of the funds go directly to the arkansas date university. And it's part of our sponsorship we have them throughout the year with the different issues thank you very much. Represent a crawford thank you mr chair how do you present under age children from excessing the not online but internet lottery it is just so happens that director magnate is also the coordinator of our responsible gambling program while she said the table i'll deferred her so all of our advertising has a responsible gambling message on it but as far as engaging online you know when they're going to go purchase the ticket that you have to scan their ids before they do that before they're allowed to play to prove that they're old enough okay thank you any other questions. We will move to item too proceed. Look which I totally might back home please turn your mike back home exhibit sea was pulled down from the agenda were resubmitting that in september just use how long second hand where we're not going to review this report are we at this time if if so if i'd rather us wait till after hearing from how it is because i'm of a lot of questions in regards to this transfer they did and II really don't want to review that until we kind of hash that out maybe maybe everything's going to be appropriate. This is caused me to start thinking from what happened last year and then also what i'm seeing this year so okay exhibit c was specifically the asus entry of the two term contracts they're there was there was some documentation confusion we'd rather this is not an urgent matter we'd rather pull exhibit seat down and recently ambig told you may have a outdated agenda I probably do yes if you hold back. The. The. Okay we take a look at we have a game plan we want to take it we're not going to review this report just yet to hear from area and so we may come back today to review that and we may put it off till friday so that's kind of where we are but again we we do won't hear from harry and hear their explanations if you've used yourself just well just either how many you got home area come up. Okay sure if you would turn your michael and introduce yourself with figure you might also get a background in regions they are for certain nick following the assistant commissioner for finance for the division of her education I will add that item d to on the agenda is the same reimbursement request that we're presenting so it is the same amount. The. The room that was presented on item be. The. Yeah I mean go ahead with the other exhibits first would you admit to start with items seeing a recognized agenda item sea won is the presentation of the you search of the academy challenge scholarship for fiscal twenty three you see in the letter that is the current statuses of the students that applied for in received these colorship for fiscal twenty three we will not have a final report on this until probably the november december meeting depending when it happens we can students do have to october first to submit when they're on probation for lack of hours are great point every they have doctor first to submit summer transcripts to to get their scholarship back and get standing so we'll have a follow up report on this it as you can see on their report on the first chart we ordered twenty six thousand one hundred and nine students for fiscal twenty three and that was for seventy four million three hundred and eighteen thousand dollars leave that is around two hundred students less than we did in fiscal twenty two on the second chart this is the first time students students entering the for the first time in twenty twenty three we ordered ten thousand forty eight students at a total of twelve may important twenty two thousand dollars this was actually an increase of about eight hundred students on the first time quite away but taking any questions on the questions. Okay yes own current michael matman will be as it relates to the sheet that they passed out on their expenses which is gonna be deleted d two second. Great all right item see two is the the same report on these manner students but this is for the work force challenge scholarship this is the the eight hundred dollar one time award for for classes that since may take and see we awarded seven hundred and one students for fiscal twenty three and a total of five hundred and twenty one thousand dollars that is compared to six hundred and ninety students the year before now take any questions on that report. Yeah. General representative. Thank you so a question I just just happened to be looking at the see what pages siwan and the. The ten thousand forty eight students either in and their high school gpa's three point six. And. And then average college gpa. Is one point eight and these are most of these are first time entering students so they won't have a gpa so some of them that are are showing up that have a taking classes before or they might be on probation for not meeting the great point average for that first year so when you know that like that that first level of the pinning renewals has an average of one point two five thousand and we students that are on probation already that would likely not have their scholarship renewed okay thank you thank you mister chairman. Anyone else. Convicted. If if you would continue is act and the next report is only one this is going to be report of all of the scholarships that the division and ministers. List of all of the twenty twenty three expenditures for scholarships and comparison of their fiscal twenty twenty fourth budget. The largest one II will point out if you see the national guard tuition assistance program had caught out large spin compared to to the normal budget in fiscal twenty three instead of the military dependent scholarship. The military dependence is all I was due to adding the private schools to be eligible to receive that scholarship and the national guard was just an uptaken in usage from those national card members me we're doing have questionable do you show me they want. Signal question the two is that reimbursement request for the administration of watering from our office. It is for one point one million if you see on that the five year history chart you'd see that prior to twenty two we did average about the the five hundred five hundred and thirty thousand dollars gradual increase the one point seven was the initial development of our new scholarship application portal and then for the the second year at this one point one is lower obviously but it is that the second year of the continued creation we did open that up beginning october first of this year is when it was launched and so we we had to cape for the new portal the finishing the development of that and then we continued to hold up the old universal scholarship portal for twenty three. That will no longer be as of july first that contract is over we will not have that payment you more so that is a portion of what the additional expense in twenty three years the professional fee is all the the payment for the finishing development of the new portal and that that will go away and transfer into the operating expenses we are maintaining that portal ourselves in house they're the department of education victor you recognize right and again this is what of course every year that we've been in there for the last ten twelve years that happened down here we've always known that these have been about a half million dollars user last year of course whenever this coming and we questioned it and it was my understanding that at that point that that was just a one time fee. And I don't think there was any discussion and of course we get it live strain when go back in I don't believe there was any discussion that we were going to have any continual call store and he added calls to the FY twenty twenty three would you agree with that I mean that they discussion did not take place I believe it at the time we did expect it to only be a one year cost they are expected but do we discuss that in this committee while you did that it was just it was just at the time of the discussion last year I do believe we expected it to be here so how how did we structure this I mean was it a time and things so that we paid an additional me and won in one year and now we're up to another six hundred thousand all round number so basically we've we've spent an extra million seven right here understand that it will be expanded the system but how did we get ourselves into that I mean it seems like the me that they there was said this way somebody contradicts me that there was some poor planning. But cause why did we not structure this transfer into this new system. In this physical year make sure everything got down. So that we wouldn't have to maintain the other system into the next basically so the airline is as of me and seven they could go straight to scholarships and it comes straight off there and then i'm a well a little bit in the weeds right here to just in thinking this through and it's never really crossed my mind until from what i've seen last year and we discussed it and then the day. Now just as stay off and we need to research it some more I didn't know what this was included in as a statute or if the constitutional amendment to allow the water well it looks like to me this the statue so is what actually allows all of this. And I don't know if this really the way that we need to be doing it anyway I don't even know if it's constitutional because as far as the legislative the legislature whenever we pass these budgets we do in by three quarter vote and worse posters specifically and it has to be specific. To appropriate that money for these salaries is extra help captain outlay and especially these professional fees either so we we wouldn't even have known whenever we pass this that these professional fees we're going to be coming in. The. For for another five hundred and twenty five thousand or whatever zone they're five hundred and twenty five thousand dollars we wouldn't have known that those were company and we had to wait till you get this so do your house specific the already I guess you have appropriation already it is a specific appropriation solely for the administration of water either okay and it was four or how much for the the past year it was for I have to look that up but we we did yet the approval during the regular session for I think it was around one point one inappropriation for the year but we are budgeting less than that for twenty four we are and where they specific for salaries extra hill professional professional yes sir okay how much of it was probational fees was at the five twenty five or more to look that appropriate i'm sorry. Apologize for the delay no i'm getting you off god so there's no no problem. The. I apologize for for fiscal twenty four we do not we have thirty thousand for professional fees we have adjusted the back to five hundred thousand and operating expenses to account for the just the maintaining of the new system through the in house labor but would you have for twenty three twenty three when the actual expenditure happened yesterday so that's that I guess that's what and it needs to be specific for the lottery sir. The. Yeah. This. Okay for in the act with and would not have that president it was it was two hundred and fifty thousand and operating instance and I believe we came to peer for additional appropriations to pay for that did it say it was specific for the lottery at that time yesterday when we brought that the pure request it was when was there alpha now to apologize for. That should have. The. Yeah. So i'm sorry. In october. Either on october the october seventeenth pure meeting it was for five hundred thousand dollars and professional fees probationed allowed to support the annual scholarship application management system. Funded from the the lorry reimbursement appropriation account so that was october of twenty two twenty two is wherever you actually came in. Yes sir okay we had a session that was in had you already expended the funds at that point no sir okay so you've expended the fines between october until now are they fully expended on the developments of the asir we do do have some new products new scotch trying to add but that'll be part of our inhouse maintenance with the staff so I think all of these whenever they come in or excuse me I just as i'm going somewhere else under other business if you don't line to and make a request at this committee so I believe in looking and again at I asked mister haggler a minute ago when I didn't know when I asked a staff so we just quickly looked at it so have all of these expenditures the regular salaries extra hill have they all have had the actual checks been written they've all been expended yes they all actually written the check for the me and one forty whatever it is yes okay and everything there was directly looked related to the water they're what any indirect thing of any sort of tap yet there is all is either of the salaries of the financial aid staff that are oversee the program or for payments of the app scholarship system itself right mr chair whenever we get an other business might be the thing I would like it during the other business is there make a request for this committee to vote on that we study legislation which will require us to examine a review before these expenditures are made because we see that there was a me and seven here for some you know additional portal or whatever it was and then we ran into the next year maybe it's a good span maybe it wasn't a good spin I don't know I just know that the legislature did not review it and has never reviewed these so I think that there's something that the legislature needs to review especially with the lottery so that uh cause you know three years from now it could be three and a half million dollars that you all just decide. And not saying it would but they seem all decided you want to spend you would have spent it in the legislature would not have been involved at all with the expenditure of those so that'll be my request probably under other business mister trouble back to you thank you any other questions. Being known. We'll move to item deep. But we are we've already done that we we did see indeed the same time or should we know the business thank you mister chier and as I as I said if the committee would and i'd like for us to voted I think that's appropriate in here is that we have staff to research. Before these phones are expenditure way that this should properly come before this committee that we should either approve our reviewed power that should be done before these expenditures happen in a course that'll be with the with the lottery with harry it and with the legislature involved so that we all know prior to what these costs are going to be dead in the former bomo. The. Is there a circuit. I have circuit all in favor of all of. It'll be done your. The. Any other questions through much haggler. Okay so for.