STATE SEEKING FINANCIAL ADVISOR TO ASSIST WITH CREATION OF HIGHER EDUCATION ENDOWMENT

The Division of the Budget today issued a Request-for-Proposal (RFP) seeking a financial advisor to assist in analyzing options for maximizing the value of the New York State Lottery in order to create a Higher Education Endowment.

“We must make the investments in New York’s colleges and universities that will allow our students to compete in the innovation economy,” said Governor Spitzer. “A Higher Education Endowment is a critical component of this effort, and will help enhance access and quality at SUNY and CUNY, while spurring growth and creating jobs throughout our state.”

The financial advisor that is selected through this RFP process will be expected to review the current business operations of the New York State Lottery and research options for maximizing its value. They may also be asked to assist with the development of a bidding and negotiation process for the potential lease of that entity.

In the Executive Budget, Governor Spitzer proposed creating an endowment of at least $4 billion, which will serve as a permanent funding source for New York’s colleges and universities. To finance this effort, he has recommended unlocking some of the value of the New York State Lottery by partnering with a private investor.

The endowment is expected to produce over $200 million in operating support annually. This funding will help the state achieve many of the goals set forth by the Commission on Higher Education convened last year by Governor Spitzer. These include the hiring of 2,000 additional full-time faculty members for SUNY and CUNY, and the creation of an Innovation Fund that would finance the research that will help create technology of tomorrow and attract growing businesses.

Governor Spitzer has put forward several goals that he believes should guide any potential transaction related to maximizing the value of the New York State Lottery. These include:

• Maintaining the current level of K-12 education funding ($2.1 billion per year) support
  provided by Lottery revenues plus an annual growth factor;
• Continuing to subject the Lottery to appropriate state oversight;
• Not expanding the Lottery’s operations in such a way that promotes an increase in problem or compulsive gambling;
• Providing employment protections for Lottery staff members.

Additionally, Video Lottery Terminals revenues will not be part of any such agreement.

All proposals in response to this RFP are due to the Division of the Budget by February 25, 2008 and services are expected to commence on March 17, 2008. The firm selected to advise the state will be prohibited from bidding on any subsequent financial transaction related to maximizing the value of the New York State Lottery, given its advisory role in potential negotiations.