June 1st / 3rd, 2007
"Gambling With Our Schools"
Earlier this month, lawmakers determined that poker should be illegal
because it is a game of chance. Ironically, these same politicians approved the
State Lottery, which is the biggest game of chance ever invented.
In fact, according to the Mises Institute, your chances of winning a six
figure state lottery are one in fourteen million. So what’s the real reason
poker is illegal and the lottery is not? It’s simple. The State can’t tax or
control the funds from poker.
And so, Governor Easley sold lawmakers on the lottery as a cash cow, while
he sold voters on the benefits for schools – 438 million dollars worth of
benefits to be exact. But last week, state Lottery officials reported that the
games will only generate $341 million in education funds for the next fiscal
year. That’s a $107 million dollar shortfall. And that follows the Lottery’s first year which also missed projections by 100 million dollars.
So what’s the big deal? Isn’t the Governor entitled to make a mistake?
Actually, in this case he’s not. That’s because two years ago he ignored
credible data which warned of shortfalls, and even worse consequences.
In March of 2005, the North Carolina Justice Center released a report that
Easley should have heeded. Among their findings:
- The gap in spending for public education between lottery states and
non lottery states has remained virtually unchanged since 1960. The
conclusion, which was supported by the Stennis Institute of Government, is that
earmarking lottery proceeds does not result in greater resources for public
schools.
- The rate of growth in per pupil spending on education declines
significantly after a one-time boost when a lottery is adopted. The State and
Local Government Review found that in the twenty-three states which earmark
lottery proceeds for education that, prior to enacting a lottery, states
typically increased per pupil spending by 12%. After enactment, school funding
received a one-time boost of $52 per pupil. But long term, the funding level
growth rate averaged just 6%.
- A lottery has the potential to have negative impact on public
support for local efforts to raise additional revenues. The NCJC cited a case
study in Florida where prior to passing a lottery, voters had approved 21 of 22
bond issues. After enacting the lottery, only three of the next fifteen bond
issues were approved. 80% of respondents told the St Petersburg Times
that they rejected subsequent bonds because they thought the lottery was paying
for schools.
No one knows for sure why Governor Easley ignored this and other research
which warned of serious consequences of enacting a lottery and counting on its
proceeds to fund education. We do know that Easley, just like several other
Governors, used the prospect of a lottery to get elected, (and then
re-elected). After all, voters love the lottery. But Easley’s pandering is now
starting to negatively impact our schools, and the future isn’t looking any
brighter in that regard.
So what can we do to avoid the same mistakes that have befallen other
states? Mainly, we need to stop projecting lottery revenues, and we need to stop
depending on those revenues to keep our schools operational. Then, if and when
proceeds roll in, the legislature can allocate them as a bonus for schools.
Local school systems would know not to expect anything, and lawmakers would
know not to reduce standard line item funding from annual tax coffers. And,
with a little bit of promotion and awareness, voters would come to realize
that the lottery does not pay for education. Any further delay in implementing
this course correction could result in irreparable harm to the fiscal health
of our schools.
Despite what our Governor thinks, the lottery IS a game of chance, and while
I’m not opposed to gambling in any form, I am against politicians gambling
with the long term needs of our children.It’s time to change the House rules,
and give our schools better odds.
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