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1 State of Arkansas As Engrossed: S2/25/25 S3/11/25 S3/18/25
2 95th General Assembly A Bill
3 Regular Session, 2025 SENATE BILL 232
4
5 By: Senator Hickey
6 By: Representative Cozart
7
8 For An Act To Be Entitled
9 AN ACT TO AMEND THE ARKANSAS SCHOLARSHIP LOTTERY ACT;
10 TO AMEND THE DEFINITION OF "LOTTERY PROCEEDS"; TO
11 AMEND THE DEFINITION OF "NET PROCEEDS"; TO AMEND THE
12 CONTENTS OF THE FINANCIAL REPORT; TO PROVIDE THAT THE
13 COSTS OF ADMINISTERING SCHOLARSHIP AWARDS ARE
14 EXPENSES OF THE DIVISION OF HIGHER EDUCATION THAT
15 WILL CONTINUE TO BE REIMBURSED BY THE OFFICE OF THE
16 ARKANSAS LOTTERY USING LOTTERY NET PROCEEDS; TO
17 ELIMINATE THE SCHOLARSHIP SHORTFALL RESERVE TRUST
18 ACCOUNT; TO DECLARE AN EMERGENCY; AND FOR OTHER
19 PURPOSES.
20
21
22 Subtitle
23 TO AMEND VARIOUS PROVISIONS OF THE
24 ARKANSAS SCHOLARSHIP LOTTERY ACT; AND TO
25 DECLARE AN EMERGENCY.
26
27 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
28
29 SECTION 1. Arkansas Code � 6-85-303(a), concerning funding for the
30 Arkansas Workforce Challenge Scholarship Program, is amended to read as
31 follows:
32 (a) For an academic year, the following shall be used to fund Arkansas
33 Workforce Challenge Scholarships under this subchapter:
34 (1) Excess funding returned to the Office of the Arkansas
35 Lottery under � 6-85-212(d)(2)(B)(i) from the previous academic year; and
36 (2) Net proceeds remaining from the previous academic year after
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1 the office:
2 (A) Transfers transfers the funds requested by the
3 Division of Higher Education under � 23-115-801(c)(2); and
4 (B) Deposits the amount necessary to maintain the
5 Scholarship Shortfall Reserve Trust Account under � 23-115-802 in an amount
6 equal to twenty million dollars ($20,000,000).
7
8 SECTION 2. Arkansas Code � 6-85-404(b)(1), concerning funding for the
9 Arkansas Concurrent Challenge Scholarship, is amended to read as follows:
10 (b)(1) A scholarship under this subchapter shall not be awarded for an
11 academic year if:
12 (A) Less less than two hundred fifty thousand dollars
13 ($250,000) is available under subsection (a) of this section; or
14 (B) The division received a loan from the Scholarship
15 Shortfall Reserve Trust Account under � 23-115-802 for the Arkansas Academic
16 Challenge Scholarship Program, � 6-85-201 et seq., for the previous academic
17 year.
18
19 SECTION 3. Arkansas Code � 6-85-603(b)(1), concerning funding for the
20 Arkansas Challenge Plus Scholarship, is amended to read as follows:
21 (b)(1) Arkansas Challenge Plus Scholarships under this subchapter
22 shall be funded by available net proceeds remaining from the previous
23 academic year after the Office of the Arkansas Lottery:
24 (A) Transfers transfers the funds requested by the
25 division under � 23-115-801(c)(2); and
26 (B) Deposits the amount necessary to maintain the
27 Scholarship Shortfall Reserve Trust Account under � 23-115-802 in an amount
28 equal to twenty million dollars ($20,000,000).
29
30 SECTION 4. Arkansas Code � 23-115-103(14), concerning the definition
31 of "lottery proceeds" under the Arkansas Scholarship Lottery Act, is amended
32 to read as follows:
33 (14) "Lottery proceeds" means all revenue derived from the sale
34 of tickets or shares and all other moneys derived from or in connection with
35 the operation of a lottery, including without limitation fees, offsets,
36 reimbursements, interest, insurance proceeds, damages, and liquidated damages
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1 collected or imposed by the office under this chapter;
2
3 SECTION 5. Arkansas Code � 23-115-103(21), concerning the definition of
4 "net proceeds" under the Arkansas Scholarship Lottery Act, is amended to read
5 as follows:
6 (21)(A) "Net proceeds" means lottery proceeds less:
7 (A)(i) Operating expenses;
8 (B)(ii) The amount of fidelity fund revenue under � 23-115-603
9 that exceeds is required to increase the fidelity fund to five hundred
10 thousand dollars ($500,000);
11 (C)(iii) The undepreciated amount of capital assets; and amount
12 of any adjustments required for Multi-State Lottery Association reserves to
13 meet the Multi-State Lottery Association reserve requirements; and
14 (iv) The amount of any accrual or other accounting
15 adjustment that will result in a debit or credit balance in the Office of the
16 Arkansas Lottery's Unrestricted Net Position account, except for any
17 restricted net position account.
18 (D) Accruals that will not result in a cash outflow;
19 (B) "Net proceeds" includes fidelity fund revenue that
20 exceeds a fidelity fund balance of five hundred thousand dollars ($500,000).
21 (C) "Net proceeds" shall be based on generally accepted
22 accounting principles in accordance with � 23-115-206(a)(6);
23
24 SECTION 6. Arkansas Code � 23-115-103(23)(I), concerning payments to
25 the Division of Higher Education as a cost under the definition of "operating
26 expenses" under the Arkansas Scholarship Lottery Act, is repealed.
27 (I) Payments to the Division of Higher Education to:
28 (i) Reimburse the division for the costs of
29 administering scholarship awards funded with net proceeds; and
30 (ii) Replenish nonlottery state educational
31 resources expended by the division on scholarship awards otherwise funded
32 with net proceeds;
33
34 SECTION 7. Arkansas Code � 23-115-206(a)(8)(D)(v), concerning the
35 statement of revenue, expenses, and changes in net assets portion of the
36 Office of the Arkansas Lottery's annual comprehensive financial report to the
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1 Governor and the Legislative Council, is amended to read as follows:
2 (v) A statement of revenue, expenses, and changes in
3 net assets for each fiscal year since inception for the last ten (10) fiscal
4 years of the Arkansas Scholarship Lottery;
5
6 SECTION 8. Arkansas Code � 23-115-206(a)(8)(D)(vii), concerning the
7 contents of the fiscal year-end report, is amended to read as follows:
8 (vii) A fiscal year-end report on any information
9 required to be reported by the office on a monthly basis, including without
10 limitation:
11 (a) Unclaimed lottery prize money under � 23-
12 115-403; and
13 (b) The Scholarship Shortfall Reserve Trust
14 Account under � 23-115-802; and
15 (c) Minority-owned business and female-owned
16 business participation under � 23-115-401;
17
18 SECTION 9. Arkansas Code � 23-115-302(b)(9), concerning contents of
19 the report by the Director of the Office of the Arkansas Lottery to the
20 Legislative Council, is amended to read as follows:
21 (9) Annually by November 15, report to the Legislative Council
22 the following:
23 (A) For the immediately preceding fiscal year:
24 (i) The the total amount of net proceeds from the
25 state lottery; and
26 (ii) The amounts deposited into and disbursed from
27 the Scholarship Shortfall Reserve Trust Account under � 23-115-802; and
28 (B) The office's projection for net proceeds from the
29 state lottery for the current fiscal year; and
30
31 SECTION 10. Arkansas Code � 23-115-801(b)(1)(B), concerning the
32 establishment of the Lottery Scholarship Trust Account, is amended to read as
33 follows:
34 (B)(i) The office shall establish the Lottery Scholarship
35 Trust Account as required under subdivision (b)(1)(A) of this section to fund
36 the Arkansas Academic Challenge Scholarship Program, � 6-85-201 et seq., the
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1 Arkansas Workforce Challenge Scholarship Program, � 6-85-301 et seq., the
2 Arkansas Concurrent Challenge Scholarship Program, � 6-85-401 et seq., and
3 any other scholarship funded with net proceeds from the state lottery in a
4 financial institution into which the office shall transfer:
5 (a) Excess funding returned to the office
6 under � 6-85-212(d)(2)(B)(i) from the previous academic year; and
7 (b) Net proceeds remaining in the Lottery
8 Scholarship Trust Account from the previous academic year after the office:
9 (1) Transfers transfers under
10 subdivision (c)(2) of this section the funds requested by the Division of
11 Higher Education; and
12 (2) Deposits the amount necessary into
13 the Scholarship Shortfall Reserve Trust Account under � 23-115-802 to
14 maintain an amount equal to twenty million dollars ($20,000,000).
15
16 SECTION 11. Arkansas Code � 23-115-801(d)(1), concerning findings of
17 the General Assembly related to lottery proceeds under the Arkansas
18 Scholarship Lottery Act, is amended to read as follows:
19 (d)(1) The General Assembly finds that:
20 (A) The administration of scholarships with proceeds from
21 the lottery are expenses of the office; and
22 (B) Because because the division has the expertise and
23 experienced staff needed to efficiently and appropriately administer the
24 scholarships, the office shall use the services of the division to administer
25 scholarships funded with net proceeds from the lottery.
26
27 SECTION 12. Arkansas Code � 23-115-801(d)(3)(C), concerning
28 reimbursement to the Division of Higher Education by the Office of the
29 Arkansas Lottery, is amended to add an additional subdivision to read as
30 follows:
31 (iii) Reimbursement under this subdivision (d)(3)(C)
32 shall be made from the Lottery Scholarship Trust Account.
33
34 SECTION 13. Arkansas Code � 23-115-802 is repealed.
35 23-115-802. Scholarship Shortfall Reserve Trust Account.
36 (a) The Office of the Arkansas Lottery shall maintain a Scholarship
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1 Shortfall Reserve Trust Account.
2 (b)(1) An amount equal to four percent (4%) of the total amount of net
3 proceeds disbursed during the preceding fiscal year in the form of
4 scholarships and grants for higher education shall be deposited from lottery
5 proceeds each year until the amount in the Scholarship Shortfall Reserve
6 Trust Account equals twenty million dollars ($20,000,000).
7 (2) Thereafter, only the amount necessary to maintain the
8 Scholarship Shortfall Reserve Trust Account in an amount equal to twenty
9 million dollars ($20,000,000) shall be deposited into the Scholarship
10 Shortfall Reserve Trust Account.
11 (3) Any amount in the Scholarship Shortfall Reserve Trust
12 Account exceeding twenty million dollars ($20,000,000) shall be considered
13 net proceeds and shall be deposited annually into one (1) or more trust
14 accounts at one (1) or more financial institutions by July 1 of each year.
15 (c)(1)(A) Except as provided in subdivision (c)(2) of this section, if
16 net proceeds in any year are not sufficient to meet the amount allocated for
17 scholarships under the Arkansas Academic Challenge Scholarship Program, � 6-
18 85-201 et seq., the Scholarship Shortfall Reserve Trust Account may be drawn
19 upon to meet the deficiency according to the procedural requirements
20 established under subdivision (c)(3)(B) of this section.
21 (B) In the event that the funding available in the
22 Scholarship Shortfall Reserve Trust Account is not sufficient to meet the
23 remaining amount allocated for scholarships funded with net proceeds from the
24 state lottery, up to the first twenty million dollars ($20,000,000) of funds
25 allocated in the Higher Education Grants Fund Account may be drawn upon to
26 meet the deficiency.
27 (2) Except as provided in subdivision (c)(3)(B) of this section,
28 the Scholarship Shortfall Reserve Trust Account shall not be drawn upon to
29 fund Arkansas Workforce Challenge Scholarships under the Arkansas Workforce
30 Challenge Scholarship Program, � 6-85-301 et seq., Arkansas Concurrent
31 Challenge Scholarships under the Arkansas Concurrent Challenge Scholarship
32 Program, � 6-85-401 et seq., or any other scholarship funded with net
33 proceeds from the state lottery.
34 (3)(A) Determining the maximum amount of loans from the
35 Scholarship Shortfall Reserve Trust Account to the Arkansas Academic
36 Challenge Scholarship Program, � 6-85-201 et seq., the Arkansas Workforce
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1 Challenge Scholarship Program, � 6-85-301 et seq., or the Arkansas Concurrent
2 Challenge Scholarship Program, � 6-85-401 et seq., is the prerogative of the
3 General Assembly. This is usually accomplished by the General Assembly's
4 delineating such funding allocations for the various scholarship programs,
5 with the approval of the Administrative Rules Subcommittee of the Legislative
6 Council and through oversight as required by law by the Lottery Oversight
7 Subcommittee of the Legislative Council. Further, the General Assembly
8 determines that the Division of Higher Education may operate more efficiently
9 with some flexibility, therefore it is both necessary and appropriate that
10 the General Assembly maintain oversight by requiring prior approval of the
11 Legislative Council or the Joint Budget Committee as provided by this
12 section.
13 (B) If the division determines it is necessary to borrow
14 from the Scholarship Shortfall Reserve Trust Account to fund scholarships
15 under the Arkansas Academic Challenge Scholarship Program, � 6-85-201 et
16 seq., the Arkansas Workforce Challenge Scholarship Program, � 6-85-301 et
17 seq., or the Arkansas Concurrent Challenge Scholarship Program, � 6-85-401 et
18 seq., the division shall first obtain review and approval from the
19 Legislative Council or, if the General Assembly is in session, the Joint
20 Budget Committee.
21
22 SECTION 14. DO NOT CODIFY. Transfer of funds.
23 (a) With the elimination of the Scholarship Shortfall Reserve Trust
24 Account, the twenty million dollars ($20,000,000) currently in the account
25 shall be first transferred and applied to the Office of the Arkansas
26 Lottery's Unrestricted Net Position account to reduce the deficit to zero
27 dollars ($0.00).
28 (b) Any funds remaining after the transfer under subsection (a) of
29 this section shall then be transferred to the Lottery Scholarship Trust
30 Account before December 31, 2025.
31 (c) The disbursement of funds under this section is a one-time
32 disbursement.
33
34 SECTION 15. EMERGENCY CLAUSE. It is found and determined by the
35 General Assembly of the State of Arkansas that modifications to accounting
36 procedures for certain funds of the Office of the Arkansas Lottery are needed
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1 to improve the function of the lottery; that improvements in efficiency for
2 the office are critical to ensure the success of the lottery in Arkansas; and
3 that this act should become effective at the beginning of the state's fiscal
4 year so that the office can implement these critical changes. Therefore, an
5 emergency is declared to exist, and this act being necessary for the
6 preservation of the public peace, health, and safety shall become effective
7 on July 1, 2025.
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9 /s/Hickey
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8 03-18-2025 14:03:49 CRH049Every fact on this page links to its source, starting with the official bill record.