Metro Pulse/Insights/Lottery

Comment
on this story

by Joe Sullivan

If you can get past the fact that a lottery is a rip-off that mainly exploits poor people, then you can get to the question of whether lottery revenues can benefit the state sufficiently for the end to justify the means.

The lottery, as it would be set up by the constitutional amendment on which voters will decide Nov. 5, is projected to yield about $300 million a year. That's enough to cover most of the revenue deficiencies that have plagued this state in recent years. Higher education, in particular, has been egregiously shortchanged, and Gov. Don Sundquist's very worthy preschool reading initiative plan has also gone unfunded.

The trouble is that, under the terms of the proposition that's on the ballot, none of the lottery proceeds could go toward strengthening the state's universities and community colleges. While pre-school programs would have a secondary claim on lottery funds, the likelihood is that virtually all of the proceeds would get spent on the primary purpose to which they would be dedicated: namely, funding college scholarships.

It would be up to the legislature to decide who's eligible for these scholarships and in what amount. While there's some sentiment for making some of them need-based, the prevalent pressure would appear to be for replicating Georgia's heralded HOPE scholarship program. In Georgia, every high school graduate with a B average or better is entitled to a full tuition scholarship to any state school (or $3,000 to attend a private school) for as long as a B average is maintained in college.

The cost to the state this past year was $323 million. Although Georgia typically has about 50 percent more high school graduates than Tennessee, the cost of tuition in Tennessee has gone up so much that it is now than 40 percent higher than tuition in Georgia. So the two variables in the cost equation just about offset, leaving the $300 million in projected Tennessee lottery proceeds fully spoken for.

Since its inception in 1993, the HOPE program has clearly had some benefits that should inure to Tennessee. For one, the prospect of a college scholarship has stimulated high school performances, as evidenced by the fact that 60 percent of Georgia's high school graduates are now eligible for the HOPE scholarship compared to 47 percent in 1993 (though grade inflation may be a factor here). In addition, Georgia's higher education enrollment growth of eight percent between 1993 and 1999 compared to three percent in Tennessee suggests that the program has succeeded in keeping more of the state's better students in state for college. This, in turn, contributes to a better-educated work force down the line. Beyond that, retaining better students has helped in raising admission standards at the University of Georgia to the point where SAT scores of enrollees now average 1210, up from 1161 in 1993. And improving the quality of its student body contributes to improving the quality of a university.

But increasing the demand for higher education is only as good as a state's capacity to provide it. In Georgia, under the leadership of former Gov. Zell Miller, HOPE was accompanied by a huge commitment to strengthening the "supply side" of the state's university system both quantitatively and qualitatively. New facilities, additional faculty and augmented faculty salaries all went hand-in-glove with HOPE. State appropriations per student at four-year universities went from $6,427 in 1994-95 to $7,652 in 1999-2000, according to data compiled by the Southern Regional Education Board.

In Tennessee, just the opposite has been the case. Neglect of higher education has driven inflation-adjusted state appropriations per student down from $6,633 in 1994-95 to $5,330 in 1999-2000. This year's sales tax increase, regressive as it was, prevented the situation from getting even worse, but there is little basis for believing it's going to get any better anytime soon. Finance Commissioner Warren Neel projects that the state's present tax structure will leave little room for a growth in discretionary expenditures. Unfortunately, Tennessee is stuck with its present tax structure for the foreseeable future, and higher education falls into this discretionary category. Gubernatorial candidates can talk about changing spending priorities, but veteran legislators scoff at their ability to divert funds from existing programs that have entrenched constituencies.

A leading lottery proponent, Sen. Steve Cohen, suggests that any pinch resulting from heightened demand for higher ed can be dealt with by making enrollment more selective. But this is an unacceptable answer. Some form of higher ed should be accessible to anyone who is prepared for it. While UT would welcome making its student body more select, and other four-year universities might follow its lead in capping their enrollments, that only pushes the added demand down into the community colleges (where poorer qualified students probably belong).

Yet under the Tennessee Higher Education Commission's enrollment-driven formula for allocating funds among the various institutions, growth at the community college level could come at the expense of any additional funding for a strapped UT.

All of which leads a senior academic administrator who has held high posts in both Georgia and Tennessee to conclude that, "Adopting a HOPE scholarship program in Tennessee would be like putting a Rolls Royce front end on a Volkswagen."

One possible way in which a lottery-funded scholarship program could benefit UT is by freeing up privately donated funds that now go into scholarships for other uses. Officials of the University System of Georgia believe a certain amount of redirection of donated funds has occurred there. In UT's case, the university has very little discretion over the use of donated funds that are mostly dedicated to uses of the donor's choice. But prospective donors could be encouraged to think in terms of uses other than scholarships.

For the most part, though, the proposed state lottery looks to me like a way to get mostly poor people to pay for the college education's of families that are mostly better off. Voters should reject such an insidious income transfer system.