Education Funding

Tennessee Eyes Next Step Toward Lottery

By Joetta L. Sack — November 20, 2002 4 min read
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A first-ever state lottery in Tennessee would likely send more students to college, but many questions remain about what—if any—benefits K-12 schools might see.

On Nov. 5, voters easily passed a referendum that amends the state constitution to give the legislature the go-ahead to create a state lottery. Many educators are hopeful such a move will help improve funding for schools, after years of taking budget cuts as part of the state’s overall fiscal crisis. (“Tenn. Budget Crisis Is Lawmakers’ Pet Project,” June 19, 2002.)

Some conservatives and religious groups fervently opposed the referendum and still hope to sink any pro-lottery bill.

If a lottery is approved by the legislature, the $300 million or so in expected annual net proceeds would pay for college scholarships to needy students, as called for in the ballot measure. Any money left over could help support preschool and K-12 programs.

Mixed Expectations

“We don’t want to give the message that the legislature has solved our problems,” said Jerry Winters, the government-relations director for the Tennessee Education Association, the state’s main teachers’ union.

“No doubt this is going to increase scholarship opportunities, but it certainly is not going to adequately address the terrible underfunding of higher education in this state,” he added. “And it’s yet to be seen how much money is going to be left over to go to K-12 education.”

Lotteries usually do not produce a lot of money for education, relative to overall state education budgets, but they can provide crucial dollars for specific programs, said Michael P. Griffith, a policy analyst with the Denver-based Education Commission of the States.

In fact, one of Tennessee’s neighbors, Georgia, has one of the nation’s most lucrative lotteries, and the money from it has been targeted to specific education programs, such as the highly popular HOPE Scholarships for college students.

In Tennessee, supporters estimate that the lottery would bring in about $1 billion a year. About half of that would be given back to winners, and 15 percent would be used for administrative costs.

The legislature will decide how the scholarships would be given—through a formula based on merit, need, or a combination of both. Any revenue left over is slated to go to K-12 capital expenses, including school construction, computers, furniture, and buses. Funds could also be allotted for preschool and after-school programs.

Tennessee’s lottery supporters are confident that the legislature will approve a plan in the coming months, said William F. Ford, a professor of economics and finance at Middle Tennessee State University, in Murfreesboro.

Legislators will be pressured to establish a lottery soon because a majority of voters in every legislative district approved the referendum, said Mr. Ford, who is a member of a state commission formed last week to study how a lottery might be set up. “We will have a lottery,” he predicted, “it’s just a question of how soon.”

Religious Concerns

The path to creating a lottery in the increasingly conservative Volunteer State has been years in the making. While Georgia, Kentucky, Missouri, and Virginia— all of which border the state—have approved lotteries, Tennesseans bucked the trend.

But recent years have seen a rise in pro-lottery sentiment, fueled by desires for more education dollars and the knowledge that the state was losing out as residents crossed state lines to buy lottery tickets or visit casinos and racetracks. Mr. Ford’s research put Tennessee’s losses at $1 billion a year.

But the Gambling Free Tennessee Alliance, a grassroots group formed to oppose the lottery, says voters were duped. They called the measure “a recipe for rampant corruption” that would hurt the poor and addict thousands of teenagers to gambling.

The campaign was about much more than economics, though. Tennessee, often dubbed the “buckle of the Bible Belt,” is the home to the Southern Baptist Convention and hundreds of other churches that used religious messages to fight the move. Some held prayer vigils to voice their opposition.

Sen. Stephen I. Cohen, a Democrat from Memphis and the legislature’s longtime lottery proponent, has repeatedly argued against the religious groups’ assertion that God would not approve of the lottery.

“I can say that God exists in Georgia and 37 other states with lotteries,” Mr. Cohen said in a speech last year. If the lottery passed, he added, “God might even thank you.”

But the opposition doesn’t see the lottery as a free lunch for school supporters.

New Taxes?

Barrett Duke, the vice president of research for the Southern Baptist Convention, said in a written statement that those who “believe that lotteries will provide much-needed funding for college education will be very disappointed in about five years, when they discover that their taxes will have to be raised to pay for the additional costs brought on by burgeoning college enrollments.”

Mr. Ford agreed that college enrollments would likely increase, particularly at state schools, but said having a more educated population would also help the state’s tax base.

At Middle Tennessee State, Mr. Ford added, 85 percent of the 20,000 students hold jobs to help pay their bills. “We hope it will increase college enrollment—that’s what we’re trying to do,” he said of a lottery. “It will help students who maintain good grades to borrow less and work less, study more and graduate sooner.”

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A version of this article appeared in the November 20, 2002 edition of Education Week as Tennessee Eyes Next Step Toward Lottery

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