Taking a Chance on Education

More states raise funds in lotteries, sparking a debate about the drawbacks

`SOME of our biggest winners have never even heard of the Lottery," states an advertisement from the Ohio Lottery Commission.

"Each year the Ohio Lottery donates 100% of its profits to Ohio primary and secondary schools," the ad boasts.

But state Rep. Marc Guthrie (D) wants the lottery to stop advertising its support for education. During the last two legislative sessions, Mr. Guthrie has introduced a budget amendment that would prohibit mentioning education in the state's paid lottery advertisements.

"They keep hammering away with all their ads reminding people what the lottery is doing for schools," Guthrie says. "It creates the perception in the eyes of the public that the lottery provides a lot more for education than it does."

Although the Ohio lottery contributed $646.8 million to education in the last fiscal year, that amounts to only about 7 percent of the $8 billion state education budget, Guthrie says.

"In my opinion, the lottery has been more harmful to the schools than it has been helpful," Guthrie says, "because it causes citizens to respond negatively to local efforts to raise revenue."

"What it does is it confuses the voters," he says, "especially prior to levies on the ballot in school districts."

Although Guthrie's budget amendment passed in the House this spring, it was taken out by the state Senate. "It's sad, frankly, that it's going to continue," Guthrie says. "I'm sure that the lottery commission will continue to sell lottery tickets on the backs of schoolchildren."

Ohio is not the only state in which this debate is taking place.

As lottery fever continues to spread across the United States, questions are being asked about the overall benefit to local schools or colleges, which are often designated as the beneficiaries of lottery profits.

"A lot of states are selling lotteries on the basis of education, but I think they'd really like to get away from it," says Paul Dworin, editor and publisher of Gaming and Wagering Business magazine. "It creates problems since lottery funding is not steady."

Of the 35 states that have lotteries, 13 earmark part or all of the revenues for public education. Other states give lottery proceeds to the general fund, which can indirectly aid education.

"Earmarking lottery funds for education makes it more politically palatable," says Charles Clotfelter, author of "Selling Hope: State Lotteries in America."

But studies show that education funding does not usually rise concomitantly with the influx of lottery revenues, Mr. Clotfelter says. "State legislatures simply adjust downward their appropriations in response to increased revenues for education."

As state budgets have grown tighter, lotteries have offered an attractive option for supplemental school capital-improvement funds. Regular state appropriations are expected to continue funding basic expenses such as teacher salaries, textbooks, and other supplies.

"Lottery money for education should just be bonus dollars from the sky," Mr. Dworin says. "The state budgetmaking process should not even take it into consideration."

But that has not been the case in most states. "It is a shell game," says gambling expert Durand Jacobs of Loma Linda University in Riverside, Calif. "The public is told that a certain percentage of the money will go for education. And it does. Except that the equivalent amount of money that had come from the general fund is now withdrawn, and it's a wash."

For example, California instituted a lottery in 1985 and earmarked the profits for education. "The law specified that this was to supplement and not replace education funds," says Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada in Reno, Nev. "But within three years the proportion of general-fund revenues that were allocated to education in California fell about the same amount that the lottery funds brought in."

The same scenario took place in Florida. Voters approved a lottery in 1986 on the basis that profits would provide supplemental funds for education. But the state contribution to schools has dropped steadily during the past five years.

"We've lost 5 percent of the revenue we were getting," says Wayne Blanton, executive director of the Florida School Boards Association in Tallahassee. "Lottery funds were supposed to supplement, not supplant, the education budget. Right now it's just going to pay the basic needs that we always had."

At the same time, Floridians are voting against increased local funding for education. "The public perception is that we're getting all the money we need now that we have the lottery," Mr. Blanton says. "During the 10 years prior to the lottery, we passed 21 of 22 local bond issues [for school construction]. After the lottery, we've only passed four of nine." Lottery income fluctuates

For the past several years, Florida Gov. Lawton Chiles (D) has introduced a "Lottery Justice" bill requiring the legislature to restore the pre-lottery commitment to education funding and to send lottery dollars directly to schools. But that proposal has been rejected by the legislature repeatedly.

While earmarking lottery revenues for education may make it easier for legislatures and voters to accept state-sponsored gambling, Mr. Eadington says, "it is very difficult for the state legislature to ignore the fact that these revenues are coming in and therefore not to change their priorities as to what areas need funding the most."

Despite the criticisms, many education officials says they are grateful for the lottery's contribution to education. "The lottery is the only thing that saved us during the recession," Blanton says.

But when lottery funds become the lifeblood of education, concerns about the long-term consequences begin to grow.

"The education establishment does not like to be dependent on sales of a commodity, which the lottery is, for a good portion of their funding," Eadington says. "The vagaries of the demand for that commodity would then affect the revenue coming into education. And lotteries have experienced quite a bit of fluctuation, particularly in the last three years."

The 1990s are ushering in a declining era for many state lotteries. In California, ticket sales dropped by one-third between the school years beginning in 1990 and 1991.

"There's a general backlash throughout the country against lotteries," Mr. Jacobs says. "That's part of the nature of the beast. After about five years, the public tires of the games and begins to be more aware of the rather high odds."

To help bolster revenues, many state lotteries have turned to keno, a faster lottery-type game, and video-lottery terminals, which are similar to slot machines.

"This has really changed the underlying nature of the lottery and introduced an entirely new level of controversy," Eadington says. "Play on both keno and video-lottery terminals is much more instantaneous, it's much closer to casino-style gambling, and it's much more active. Instead of being fairly minor gambling, it's rather major gambling."

South Dakota, Oregon, Louisiana, Rhode Island, and West Virginia have all introduced video-lottery terminals under their lottery commissions. The Missouri legislature has given preliminary approval to video-lottery machines that would fund full scholarships to state colleges and universities.

Some states, such as Illinois, are looking to riverboat gambling as the next savior for education. "Now what they're trying to do is justify riverboat gambling on the basis that Chicago's school system needs funds," says Henry Lesieur of Illinois State University in Normal, Ill. "The lottery didn't do it. Now they're going to expect riverboats to do it."

Even Southern states, which have a long tradition of opposition to state-sanctioned gambling, are getting into the lottery business in the name of education. Georgia began operating a lottery this summer despite strong opposition from religious groups. Thirty percent of the lottery's revenues are earmarked for education.

Georgia Gov. Zell Miller (D) was a strong supporter of the lottery and relied on the issue in his reelection campaign. "The educational motivation was certainly a factor in the passage of the lottery," says Gary Ashley, executive vice president of the Georgia School Boards Association.

In an effort to get around the pitfalls other states have fallen into, the Georgia legislation requires all lottery proceeds to go into three new education programs: preschool for four-year-olds, scholarships for higher education, and investments in technology.

But many Georgians are skeptical about the long-term benefits to education. "You have to understand that legislation can be changed," Mr. Ashley says.

"It's a big con and another part of the con game is that it's going to help the public schools," says the Rev. Emmett Henderson of the Georgia Council on Moral and Civic Concerns, an Atlanta-based organization that opposed the state lottery.

"It gets the people to rationalize when they lose $50 or $100: 'Well, you know, it's going to help public education.' It's just a rationalization for the politics of our governor. He's passing out scholarships and saying that without the lottery this wouldn't be possible," Mr. Henderson says. He expects that, in the short term, Georgia schools will benefit financially from the lottery. "But," Henderson says, "inevitably the General Assembly will reduce appropriations to the public schools by the amount t hat is coming from the lottery.... Give it three years and we'll be exactly where Florida and California are. We're not smarter than people in Florida - or more ethical or more moral. It's going to happen here, too. In the long term, it's going to be the poor people who are going to be the victims of this."

The regressive nature of lottery funding is another controversial issue. "People can make the case that you are in effect placing an excise tax on lower-educated people to pay for the education of higher-educated people," Eadington says.

The Rev. Joseph Lowery, president of the Southern Christian Leadership Conference in Atlanta, opposes the new state lottery because it "perpetuates the something-for-nothing, quick-fix, get-rich-quick psychology."

"It's a very negative message, and it is miseducating people about how you support worthy causes," Mr. Lowery says.

Meanwhile, Gov. David Walters (D) of Oklahoma is supporting a lottery to help fund his state's higher-education system. "There's a big move here toward the lottery," says John Cross, a professor at Oklahoma State University in Stillwater.

Last November, Mississippi residents voted to remove a constitutional provision prohibiting a lottery. The state has already instituted riverboat gambling, and a casino recently proposed a partnership with the Gulfport, Miss., schools. The parent-teacher association turned down the offer. Debate about lotteries continues

Much of the debate surrounding lotteries and education funding is difficult to document statistically.

"The question always is the unknown," says Bill Bergman, executive director of the North American Association of State and Provincial Lotteries in Washington. "If it wasn't for the lottery, would education continue to have the public funds that the legislature appropriates for it or would it be cut? That's an unanswerable question."

A 1992 report from the New York State School Boards Association says "critics should consider the possibility that their tax bills may have increased far more had lottery funds not been available for education."

Idaho state lottery director Wally Hedrick, who also serves on a local school board, says he has seen the difference lottery money can make.

"Over the course of a four-year period, our school district will have received about $1.2 million," Mr. Hedrick says. "We took the first two years' dividends and used them to add a new gymnasium and seven classrooms to one of our middle schools. We've seen the direct benefit of that."

In Idaho, all lottery advertisements carry the line: "Benefiting Idaho public schools and buildings."

"I hear from a lot of people who say, 'Well, I didn't win but at least the schools of Idaho won,' " says Hedrick. "People ought to know if they're playing the lottery, which is really a voluntary tax, where the funds are going."

But Marc Guthrie in Ohio disagrees. "People don't buy lottery tickets because they want to help schools," he says. "They buy lottery tickets because they want to play a game of chance."

For those lining up to buy lottery tickets, the controversy surrounding lottery revenues and education may mean little.

"I don't think the public cares one lick," says editor Dworin of Gaming and Wagering Business magazine. "You've got a state like Georgia, where you have lotteries all around [in other states], and they want a lottery too. They don't care whether it's for education or for garbage removal."

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