Unintended consequences of state lotteries
As many opponents of state run lotteries warned, revenue for North Carolina's lottery that are supposed to fund education may end up being used to offset general operating costs and reduce taxes:
But even in states such as Tennessee and Georgia where the programs are structured to enhance education as opposed to replacing taxpayer funding of education, there are concerns regarding how the funds are distributed. A recent study in Tennessee showed that a disproportinate number of wealthier families were taking advantage of the scholarships, leaving many disadvantaged families behind. Some say this is a tax on the poor for the benefit of the wealthy, prompting conservative foes of public education and gambling and other sinful pursuits to call for replacing the scholarship program with a voucher program.
Regardless of such unanticipated problems, Tennessee's lottery scholarship program has sent thousands of kids to college who otherwise might not have gone. And that seems like a Good Thing. Every state should be careful, though, to make sure lottery funds aren't used to offset taxpayer funding of public education, and to make sure the distribution of funds is fair and equitable.
Mecklenburg taxpayers weren't supposed to win the lottery this way.There are similar issues in Florida. This was also a concern when Tennessee debated its lottery, but the laws are written and the program is structured to prevent it, so far. Proceeds from the Tennessee lottery provide scholarships only, and are not used for any other K-12 programs, although I believe there was talk of using lottery revenues to fund a new Pre-K program. Georgia's lottery program is similar.
But the three most powerful men in state politics said Wednesday that's what County Manager Harry Jones proposed when he suggested a property tax cut funded by gaming proceeds.
Gov. Mike Easley, House Speaker Jim Black and Senate President Pro Tem Marc Basnight, all Democrats, swiftly condemned the plan, even though it is legal under legislation they helped pass.
The lottery, supporters have said, was meant to create more dollars for education.
But Easley and others say Jones' plan fulfills the fears of skeptics who said lottery money would just replace dollars already devoted to schools. Before passing the lottery by whisker-thin margins in both the House and Senate last year, lottery proponents reassured opponents that such a diversion wouldn't happen.
Now, they say, Jones' plan could prompt them to take action. "We need to redistribute the funds going to Mecklenburg County. They have more than they need," Basnight said.
Jones proposed a 2006-07 county budget Tuesday that would use $9 million in expected lottery money to pay debt on school construction. Jones said that allowed him to free up county money for a tax cut.
Several other states have drawn criticism for spending lottery money on costs the public would have picked up anyway.
In Virginia, for instance, 60 percent of lottery profits are used to pay for routine operating costs of the state's public schools. In South Carolina, the legislature required lottery profits to support education and said lottery money couldn't replace existing spending. Most of the profits have gone to new programs. But at least some has been spent to assist existing classrooms and to purchase school buses.
But even in states such as Tennessee and Georgia where the programs are structured to enhance education as opposed to replacing taxpayer funding of education, there are concerns regarding how the funds are distributed. A recent study in Tennessee showed that a disproportinate number of wealthier families were taking advantage of the scholarships, leaving many disadvantaged families behind. Some say this is a tax on the poor for the benefit of the wealthy, prompting conservative foes of public education and gambling and other sinful pursuits to call for replacing the scholarship program with a voucher program.
Regardless of such unanticipated problems, Tennessee's lottery scholarship program has sent thousands of kids to college who otherwise might not have gone. And that seems like a Good Thing. Every state should be careful, though, to make sure lottery funds aren't used to offset taxpayer funding of public education, and to make sure the distribution of funds is fair and equitable.
5 Comments:
"Proceeds from the Tennessee lottery provide scholarships only, and are not used for any other K-12 programs, although I believe there was talk of using lottery revenues to fund a new Pre-K program."
I recall the Pre-K designation being in the works from the beginning. I remember it because many did a lot of explaining during heated discussions over local K-12 funding (property tax increase) that the lottery funds were for college scholarships and Pre-K, both.
Several bloggers (notably Bill Hobbs) have tried to suggest in the time since the lottery was implemented that the Pre-K allocation was an afterthought, with the apparent intent to fan "anti-additional spending" flames, but I think they're just blowing smoke.
Do correct me if I'm wrong about the Pre-K intent being there all along.
Joe, I believe you are correct. I was going from memory and didn't recall whether there was anything in the law about it, just that it was being discussed.
It appears that excess funds can be used for Pre-K. It also appears they can be used for capital outlay projects, which could setup the situation described in NC, except there is language specifically prohibiting use of lottery funds to "supplant" normal taxpayer funding.
Here's what the Tennessee Code Annotated says:
The legislature shall have no power to authorize lotteries for any purpose, and shall pass laws to prohibit the sale of lottery tickets in this state, except that the legislature may authorize a state lottery if the net proceeds of the lottery's revenues are allocated to provide financial assistance to citizens of this state to enable such citizens to attend post-secondary educational institutions located within this state. The excess after such allocations from such net proceeds from the lottery would be appropriated to:
(1) Capital outlay projects for K-12 educational facilities; and
(2) Early learning programs and after school programs.
Such appropriation of funds to support improvements and enhancements for educational programs and purposes and such net proceeds shall be used to supplement, not supplant, non-lottery educational resources for educational programs and purposes.
I don't think the lottery has helped us much. I have a kid in College and one who will go off (hopefully) to college next year. The amount of money a college bound student receives may seem significant but actually it has merely held tuition cost level. The average increase in tuition cost has exceeded inflation. It has been 12.7% per year at Clemson according to the entrance councilor. UT seems to have similar numbers so that in effect, the lottery simply covered the cost of tuition inflation.
I'm a Pat Summit fan, but I have to wonder about her raise when framed against the increase in cost for the average student. The lottery doesn't help them, btw.
Good points, Steve. Another concern is that tuition apparently doesn't cover a university's operating costs. So the more students you enroll, via lottery scholarships or whatever, the bigger the hole.
On Pat Summit, I don't think any college coach is "worth" that kind of money. But if any college coach is, she is.
Lottery "scholarships" all too often DO become the sneaky new funding method for public universities. When the state legislature doesn't fully fund the university system's budget, the university system hikes tuition & fees...so the "net" aid to students receiving lottery scholarships is negligible. Their lottery "scholarships" actually become the university's funding appropriation. The University of TN Bd of Trustees just approved the system's 2006-07 budget and did manage to "hold down" the tuition increase to a "mere" 4.6% - which surely is a relief to those of us who paid a 13% increase last year! Meanwhile, the state's lottery scholarships are proposed to increase from $3,300 to $3,800. But if you think that's a *true* increase of $500, think again. For students attending UT-Knoxville, that "mere" 4.6% increase translates to a tuition hike of $212 PLUS a hike of $120 in "services fees."
Bottom line: $500 - $332 = $168 actual net increase in the lottery scholarship.
For on-campus resident students, that $168 might help a little bit in offsetting the increases to dorm rent and meal plan rates.
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