Lottery Bonuses: Another Look

By Dick Pettys
InsiderAdvantage Georgia

(12/11/07) News stories about bonuses paid to officials of the Georgia lottery are becoming almost an annual fixture, and the headlines often provoke expressions of surprise or outrage among some legislative critics.

But as is the case with many stories, there’s often another way to look at it and more details to be considered. And often there are people to be heard from who aren’t raising a hue and cry about the issue.

So, for want of a better term, here’s “the other side” of the story.

First, we talked to House Majority Leader Jerry Keen on Monday about the story that appeared about a week ago under the headline “Lotto Staffers Hit The Jackpot.”

The story recounted the fact that the Georgia Lottery Corp. had another record year for ticket sales this summer, meaning more funding for the important education programs it finances. Then the story said that the record take meant big bonuses for Lottery President Margaret DeFrancisco and her employees, who collected nearly $3 million extra for their work.

“That’s insane,” Rep. Bill Hembree, chairman of the House Education Committee, was quoted as saying. “Absolutely absurd,” was the word from Senate Majority Whip Mitch Seabaugh.

Three years ago, they were quoted similarly about the bonuses paid in 2004. Seabaugh called it “sad” and Hembree said it sent a poor message.

Keen told us Monday, “I read the newspaper like anybody else and see the numbers, but I think the key element here is this is a private corporation. It is not a government agency. This is not taxpayer money in any way being expended ... These are private dollars that people voluntarily pay into the system.”

He went on, “I’m sure, as a private corporation, they have to compete just like other private corporations in Georgia for the top talent. They’re managing a very, very large corporation.”

Indeed, that is the very argument that Lottery Corp. officials make. And they point out that with reserves of more than $879 million, there’s no way the staff incentives - less than one-tenth of one percent of lottery spending - could have denied anyone a HOPE scholarship or a pre-k slot.

We decided to take a look at DeFrancisco’s compensation package compared to that of her predecessor, Rebecca Paul.

With her base salary of $286,000 and bonus of $236,500, DeFrancisco now, in her fourth year, is making just 4.5 percent more than Paul made in her final year, a significantly smaller increase than the inflation rate between those years.

But lottery ticket sales are up 32 percent - $3.4 billion vs. $2.6 billion - and transfers from the lottery to educational programs are up 14 percent - $854 million vs. $752 million.

Here is the chart:

When it was created by former Gov. Zell Miller, the agency was designed as an entity apart from state government so that it would have the flexibility to make business decisions and be free of political control.

Keen pointed to that in his remarks Monday, saying that, so far, the concept has worked.

“It has been able to provide pre-k education and higher education learning for thousands of Georgia citizens that otherwise probably wouldn’t have been able to access that. So it’s been a successful program and I think the last thing we need to do now is get the General Assembly and politics involved in running the day to do operations of the lottery.”

He added, “It’s a program that’s really become the model for other states around the country ... I don’t want us to mess up a good thing by tinkering with the details.”