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State lotteries leave education with less

State lotteries that promise more dollars for education actually shortchange residents. Proceeds from lotteries are used to replace, not supplement, education funding.

After examining educational funding in all 50 states, including 12 states where lottery proceeds were targeted to help pay for schools, we found that states are likely to decrease their rate of spending on education once the lottery is in operation.

Furthermore, the decrease in the rate of spending is a long-term function of lottery adoption that occurs regardless of revenues generated by the lottery.

We researched lotteries for education in California, Florida, Idaho, Illinois, Michigan, Missouri, Montana, New Jersey, New York, Ohio and West Virginia, comparing those states' spending on education with the spending of other states.

We examined the level of education spending per capita in all 50 states between 1966 and 1990. And using a method called pooled-time series analysis, we looked at the short-term and long-term impact of education lotteries.

Before adopting a lottery to help fund education, states generally increased their education spending by about $12 per capita annually.

In the first year of a lottery's operation, a state could be expected to raise education spending by about $50 per capita over the previous year's spending. So far, so good.

The long-term impact of a lottery, however, is not so positive. After a lottery is put into effect, the rate of change in educational spending drops by about $6 annually. In other words, spending now increases at only $6 per year per capita, compared with $12 annually before the lottery.

Regardless of the state, the educational spending rate declined once a state lottery went into operation.

The pattern of a declining rate of spending is not simply an artifact of state fiscal problems in the 1980s.

The analysis indicates that states without education-targeted lotteries maintained and increased their education spending more than states with these lotteries.

If states wish to use lottery proceeds for education, then they should follow Georgia's example. Georgia's 3-year-old lottery is the only one that earmarks all proceeds for specific educational programs.

The lottery does not supplement the state's general fund or education budget. Instead, it goes into a separate account that pays for two school programs created when the lottery began.

As a result, Georgia now pays for the college tuition, fees and books of every state resident who can maintain a B or better grade-point average. The program _ called Helping Outstanding Pupils Educationally _ is paid for by the lottery.

About $300-million in state money has been awarded to more than 238,000 Georgia college students since September 1993, when the program was launched. The lottery also pays for computers and security systems for public schools and pre-kindergarten programs.

Raising revenue through lotteries proves particularly attractive to state legislatures because lotteries are a voluntary form of taxation. That is, only those who choose to play the lottery pay the tax.

State policymakers have often made the lottery more palatable to voters by designating the funds it generates to a specified, popular purpose. And the most popular purpose for lottery funds has been education.

If state legislatures are using lottery dollars to raise revenues for education, then they should earmark the proceeds for particular programs. That way residents see how and where their lottery dollars are being spent.

The popularity of lotteries is based in part on the claim that they painlessly provide additional revenue. Lotteries that do not effectively fund specific programs have proven to be a false promise to education and to citizens believing those claims.

Donald Miller and Patrick Pierce are professors at Saint Mary's College in Notre Dame, Ind., Miller in mathematics and Pierce in political science.

Bridge News

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