Metro Pulse/Insights/State Lottery

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by Joe Sullivan

Now that the voters have decided that Tennessee should have a lottery, the big question facing the state Legislature is how to allocate a projected $300 million a year in lottery proceeds.

Under the terms of the ballot proposition approved Nov. 5, the choices are limited to, firstly, college scholarships and, secondarily, pre-school programs and construction of K-12 facilities. But there are tough decisions to be made within these categories that will determine whether the lottery meets important public needs or mainly benefits private interests.

In opposing the lottery in this column prior to the referendum, I did so based on a belief that prevalent political pressures would push legislators to adopt a college scholarship program modeled after Georgia's popular HOPE scholarships. In Georgia, all high school graduates with a B average or better get tuition paid at any state university as long as they maintain a B average in college. Such a program in Tennessee would consume just about all of the lottery's proceeds without doing anything for students based on financial need or to meet the pressing needs of disadvantaged preschoolers.

If the Legislature can rise to the challenge of rejecting anything resembling Georgia's program and concentrate on providing need-based college scholarships and pre-school programs, then the lottery can strengthen the fabric of the state in two areas in which it's been woefully deficient.

The $45 million in grants to needy students provided this year by the Tennessee Student Assistance Corp. is only about a third of the national average (as measured in terms of aid per full-time equivalent student in the state's higher education system). Eligibility for these grants is determined by the same household income standards that govern federal Pell Grants, which are a mainstay of college financial aid. For a household of two, the income ceiling is about $23,000, and it rises by about $5,000 for each additional person in the household. But the $4,000 maximum Pell Grant hasn't kept pace with the escalating cost of college, which now averages about $12,000 at four-year public universities when room and board are taken into account in addition to tuition and fees. Supplemental state aid equal to a Pell Grant is common, but in Tennessee the maximum grant is only $1,700, and most are scaled down from that.

About $90 million in additional funding would be needed to lift Tennessee to the national norm, and those funds should be available to all high school graduates or GED holders who gain higher education admission regardless of their grades. In a state where only 29 percent of the 18 to 24 year-old population is enrolled in higher education, bolstering that percentage should be a paramount objective.

Community colleges for less-well qualified students loom large in that equation. Indeed, in the view of Bryan Fitzgerald, director of the Washington-based Advisory Council on Student Financial Assistance, "The returns on remediation are the highest of all, taking people who wouldn't otherwise succeed in college."

In Georgia, by contrast, there isn't any state financial assistance for anyone other than the B-or-better students, a lot of whom come from well-to-do families and would be attending college anyway. "The Georgia system is the worst of all possible worlds," Fitzgerald asserts. The executive director of the North Carolina Education Assistance Authority, Steven Brooks, puts it less provocatively when he observes that, "a very wise man once said to me, 'There's nothing wrong with merit scholarships. As soon as we meet every student's need, let's talk about it.'"

With lottery proceeds, the Legislature should be able to do more than talk about scholarships for the truly meritorious. A point of departure would be expansion of the McWherter Scholarship Program for which the top five percent of the state's high school graduates are eligible (based on a 3.5 GPA and an ACT score of at least 29). At present only 50 of these $6,000-a-year scholarships to in-state institutions are awarded each year out of an eligible pool of about 2,500 high school graduates. If the program could cover all of them, and all of them could be induced to go to college in Tennessee, the total cost of the program for 10,000 students would be $60 million.

Such a program could help the University of Tennessee achieve its goal of raising the quality of its student body as an important contributor to raising the quality of the university as a whole. President John Shumaker recently set a goal of raising the average ACT score of entering freshmen in Knoxville from 24 to 26.

If lottery proceeds could replace the $45 million now coming from the state's general fund for student assistance, that money could be freed up to go for higher faculty salaries and other pressing needs that would make an even greater contribution to UT's well being. The trouble is that there's no way to guarantee that this money would go for higher education rather than get diverted to some other use.

Whatever is done by way of scholarship commitments, the Legislature should take great care to conserve some of the lottery proceeds for early childhood education. Gov. Don Sundquist's reading initiative program that the Legislature unanimously endorsed but repeatedly failed to fund at a cost of $35 million targets about 7,000 four-year-olds deemed most at risk. But this was intended to be the first phase of a five-year program for reaching all 37,000 four-year-olds in the state who aren't presently enrolled in a pre-school program.

If lottery proceeds are primarily aimed at getting and keeping disadvantaged young people on a path toward proficiency in a knowledge-based economy, then these worthy ends will justify the dubious means of raising the money.