Details of the Corbett administration’s plans to privatize Pennsylvania Lottery management became clearer at a public hearing convened Monday by the Senate Finance Committee. As the administration seeks to finalize a 20-year, $34-billion dollar deal with Camelot Global Services, Revenue Secretary Dan Meuser did his best to put many of the lingering questions to rest. “Under the Private Management Agreement, the Commonwealth will maintain ownership and all control of all aspects of Lottery operations, at all times,” he stressed to the panel.
Pennsylvania’s aging population is the driving force behind the effort to put a private sector company in charge of the Lottery’s day-to-day operations. With PA’s senior citizen population skyrocketing, Meuser says Lottery funding could fall short of demand as early as 2015. The numbers have led the Corbett administration to explore private management as a way to guarantee steady growth in the Lottery Fund.
11-months of work resulted in one bidder, but chief negotiator Pete Tartline says two other companies dropped out of the process, in part, because the Commonwealth was asking for too much in return. “Yes, this is a sweetheart deal. It’s a sweetheart deal for Pennsylvania’s seniors,” Tartline said as he explained that Camelot did not know it was the only bidder in the end.
The public hearing was held three days after the Corbett administration issued a “notice of award,” which officially ended the procurement process. While there’s no binding contract in place yet, Camelot Global Services also appeared in Harrisburg to answer lawmakers’ questions. “Millions of people playing, spending relatively small sums of money, is what we believe has been the key to our success in the UK,” says Camelot Global Services CEO Diane Thompson. Camelot has run the United Kingdom’s Lottery since its inception 18-years ago, however they plan to locate their Pennsylvania operations in the Keystone State and pay the applicable Pennsylvania taxes.
When the contract is signed, which could be soon, officials say the Attorney General will have 30-days to review it. Final exeuction of the contract will be followed by a six month transition period.
The state worker union, which represents about 175 Lottery employees, is filing suit to block the deal. “None of us have seen Camelot’s proposal. None of us understand the rush to sell our most successful operation without a vetting process, and none of us want profits skimmed off senior programs to pad the pockets of foreign CEOs,” AFSME Council 13 Executive Director David Fillman told the committee. Given the same opportunity to expand Lottery options, Fillman believes the current structure can beat Camelot’s profit estimates by 10 – 30%.
The Corbett administration is investigating whether privatizing lottery management will improve its ability to support programs for older Pennsylvanians. The state’s senior citizen population is projected to grow by 20% over the next decade, and Revenue Secretary Dan Meuser says they want lottery revenues to do the same.
“Keep in mind, the state of Pennsylvania maintains all full control of this lottery,” Meuser tells Radio PA. “We are not talking about at all selling the lottery. We are bringing on a private consultant to help us meet the growth demands of the lottery.”
There’s no rush. Requests for Qualifications went out in the spring, and Meuser says they are now in their “due diligence” phase of exploration. “We’re not there yet,” Meuser explains. “We’re not sure if a firm out there believes they can in fact do that, or if that firm can be acceptable to us.”
Private firms have expressed interest. Meuser, however, cannot say which ones or even how many. He tells us that could affect the competitiveness of the procurement process. If they decide to proceed, invitations for bid could go out in the fall.
The trail for such private management agreements has already been blazed by the state of Illinois. The Prairie State has just wrapped up its first fiscal year under private lottery management, and Illinois Lottery Superintendent Michael Jones believes it can work. “I absolutely believe that the amount of money they promised the state is realizable,” Jones explains. “With good marketing and good games and good prizes this will be a big success.”
Northstar Lottery Group promised Illinois $851-million dollars in profits during year one, and $951-million dollars in profits in year two. Under the contract, Jones says, Northstar will receive significant bonuses if they hit those targets, and will have to pay the state penalties if they fall short. Preliminary revenue numbers for Illinois’ first fiscal year under private lottery management are expected to be released in the near future.
Supporters call it a great way to generate new revenue without raising taxes. “[Illinois] wouldn’t have done it if they weren’t going to get a billion dollars in extra revenue over the next five years,” says Reason Foundation director of government reform Leonard Gilroy. “It wouldn’t have happened.” Like Pennsylvania, Gilroy says states like Indiana and New Jersey are also seriously considering privatizing their lottery management.
Some members of the state House Democratic caucus are already speaking out against the issue in Pennsylvania, however. “Why would we pay a company millions of dollars to do the same thing we could do ourselves – especially when those millions of dollars are badly needed for programs that help older Pennsylvanians?” asks Minority Leader Frank Dermody (D-Allegheny).
Secretary Meuser says the private entities’ proposals will help them make that call. It’s something he says they’re taking very seriously. “The lottery funds will continue and only to go to benefit older Pennsylvanians and we are working now to secure that is the case, without question, today and ten years from now.”
It’s so hot, you could almost fry an egg on the sidewalk. From magenta to tangerine, National Weather Service maps are lit up with colors straight out of a box of Crayola crayons. While it’s a pleasant sight for those of us sitting in the air conditioning, these brilliant hues stand for the Excessive Heat Warnings and Heat Advisories that are issued for most of Pennsylvania. Temperatures range from the mid-90s to near 100-degrees. Heat indexes are climbing even higher.
Curious (well-hydrated and wearing light colored clothing), Radio PA’s Brad Christman and Matt Paul headed outside in an attempt to “literally” fry an egg on the sidewalk. Around 3:30pm on Thursday, with the air temperature in Harrisburg near 99-degrees… the project was unsuccessful (note the picture above).
On a serious note, an Excessive Heat Warning means that a prolonged period of dangerously hot temperatures will occur. According to the National Weather Service, the combination of hot temperatures and high humidity combine to create a dangerous situation.
These conditions make everybody vulnerable to heat-related illnesses, like heat stroke. “When this happens, body temperatures can rise to excessive levels, 107, 108, 109-degrees. When that happens it essentially causes a breakdown of critical functions of the body,” says Dr. John Skiendzielewski, director of emergency medicine at Geisinger Medical Center.
Dr. Skiendzielewski cautions that senior citizens are especially susceptible. “Because of problems with their circulation… and prior strokes, they just can’t handle that as well as younger individuals can.” He urges everyone to check on elderly loved ones or neighbors in these conditions. “The elderly, unfortunately during these economic times, also try to conserve money. So, they won’t turn on their air conditioners even if they have it,” Dr. Skiendzielewski cautions. If seniors are having problems, take them some place cooler.
Senior citizens are having to stretch their dollars more after two years without a Social Security Cost of Living Adjustment according to an advocacy group. The Seniors Citizens League says older Americans have lost 32% of their buying power since 2000.
The group’s 2011 survey of senior costs report shows housing, utilities, transportation, health care and food costs are among those that have risen the most.
Mary Johnson, Social Security and Medicare Policy Analyst, says health care costs are not fully reflected in the COLA seniors receive and she says that has a lot to do with why it’s not keeping up with the costs. For example, Johnson says Medicare Part B premiums have risen 154% since 2000.
Johnson says we need to start with a more fair and reliable COLA. She says the League supports legislation that would more accurately reflect senior costs. She adds they also support a guaranteed minimum COLA.
Johnson says seniors are making difficult choices as a result of the loss of buying power. Some are delaying necessary visits to the doctor and filling prescriptions. Johnson says some seniors have younger relatives who are unemployed living with them and some older Americans are returning to the job market to supplement their income.
The Senior Citizens League is an advocacy group that was first established as a special project of The Retired Enlisted Association. The full report is available at their website.
Welcome to PAMatters.com, a new source for news and commentary from Pennsylvania’s capital. In addition to video, audio and pictures from the stories and events that affect YOU, you’ll also get some behind-the-scenes analysis via blogs from our award-winning staff of journalists.