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One year in, Keno revenue well short of projections

  • A drink, keno tickets and cash at Uncle Eddie’s tavern in Salisbury Beach in Massachusetts. GEOFF FORESTER

Monitor staff
Published: 2/11/2019 6:29:14 PM

When Gov. Chris Sununu unveils his budget proposal Thursday, one program might get singled out for praise: “keno-garten.”

The initiative, passed in 2017, authorized the tabletop game Keno to be approved by towns and cities; the revenue would provide funding for school districts with full-day kindergarten programs.

But five months away from New Hampshire’s second year of “keno-garten” funding, revenues from the game are falling below expectations.

The game pulled in $8.3 million in sales in its first few months – Fiscal Year 2018 – and is projected to garner just under $15 million in Fiscal Year 2019, which ends in June, according to figures provided by the Lottery Commission on Monday.

But after expenses and prize payouts, those numbers diminish to $1.5 million of net profits in its first year, and $2.3 million in its second, according to the commission. That’s the money that ultimately makes it into the state coffers for kindergarten.

Those profits – exacerbated by several rejections of Keno in major cities and towns – are far below the estimated $11 million needed to provide the minimum additional adequacy under the Keno bill. The shortfalls mean the state will be picking up the tab for the rest, and that school districts are unlikely to get more than the minimum.

In an email last Friday to school superintendents, the Department of Education instructed school districts to budget for the minimum additional amount provided by the law – $1,100 per full-day kindergarten student.

“Given current projected Keno revenue, it is exceedingly unlikely that there will be any additional monies above $1,100 per (average daily membership) for FY2019-2020,” wrote Director of the Division of Education Analytics and Resources Caitlin Davis in an email reviewed by the Monitor.

The revenue estimates come as the New Hampshire Lottery Commission continues its push to win over towns on approving the bingo-like game for restaurants and taverns. Currently, the game is on display in 160 locations across 66 towns in the state, according to Maura McCann, director of marketing at the Commission. An additional 26 towns will put Keno up to a vote at town meeting next month, McCann said.

But the effort has also suffered high-profile defeats in cities opposed to the roll-out of the game. The Portsmouth City Council nixed the proposal in late 2017; Concord voters defeated it a month later. Last month, Exeter’s select board denied the proposal from appearing on the town warrant, and Lebanon’s city council voted it down last week.

It’s a complicated picture for supporters of the original bill. Passed with bipartisan support and the strong backing of Sununu, Senate Bill 191 provided a compromise between those wanting state funding for full-day kindergarten and those wanting no funding at all.

The law established new grants for full-day kindergarteners, who were previously were funded by the state at the same rate as half-day kindergarten: around $1800 a day. Bringing up the full-day students to the same level of state funding as their peers in first and second grade would have required additional $1800 per student.

Instead, SB 191 carved out a middle ground, establishing a guaranteed additional rate of $1,100 per full-day kindergarten student – just around 80 percent of the near-$3,600 amount. The catch: The state would use Keno revenues to help pay for that additional $1,100 – and even higher if possible.

So far, it’s those revenues that have come up short.

This year, Senate Democrats are pushing for a radical fix: extracting Keno from kindergarten entirely. Senate Bill, up for a hearing Tuesday, would fund full-day kindergarten grants entirely from the Education Trust Fund, and divert Keno revenues to school building aid.

Prime sponsor Sen. David Watters, of Dover, said the bill would create certainty and stability. But a spokesman for the governor, Ben Vihstadt, argued the Keno law, with its guaranteed $1,100 per pupil minimum, should be given a chance to grow.

“...Keno implementation remains in its infancy,” Vihstadt said. As Keno is expanded to more communities throughout the state, revenues will rise and school districts will receive more state funding.”

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