Sunday, April 3, 2011

Georgia Lottery and HOPE Scholarships

KNOW THE FACTS The HOPE Scholarship originally was aimed at children from low-to-moderate income families, earning $66,000 per year or less. The Georgia Lottery devotes only 25% of its revenue to education. 75% goes to winnings, salaries and bonuses, advertising, overhead and reserve. Only 2.7% of black students who take the SAT score 1200 or better. If we enacted a family income cap of $140,000 per year, 95% of HOPE recipients could receive the full tuition grant. In order to qualify for the HOPE Scholarship under the new rules, high school students must take four additional upper-level courses in math, science and language. Under the new rules, a student who loses HOPE will have only one chance to regain it during his college career. Counties with large shares of African Americans receive relatively fewer scholarships to state institutions, which by far is the largest category of HOPE recipients.[1] The southern states relied on lotteries after the Civil War (1861-1865) to finance Reconstruction (1865-1877). “The tax that is built into the lottery is the most regressive tax we know.” The NGISC expresses serious concern about the heavy reliance of lotteries on less-educated, lower-income people. It also mentions that an unusually large number of lottery outlets are concentrated in poor neighborhoods.[2] The Carl Vinson Institute at the University of Georgia reports that lottery play was inversely related to education level. In other words, people with fewer years of education played the lottery more often than those with more years of education. It also finds that lottery spending per person was highest in counties where African-Americans made up a larger percentage of the population. McCrary and Pavlak report that African-Americans and less-educated people are more likely to be active lottery players than whites and more-educated people. Proceeds from the Georgia lottery fund only education programs. If these programs provide more benefits to the poor than to the wealthy, it could be argued that this compensates for the regressive nature of the state lottery. Studies criticize Georgia's lottery for providing more benefits to white households than to minority households. Cornwell and Mustard claim that counties with the highest incomes and white populations receive significantly more HOPE scholarships.[3] McCrary and Pavlak cite a common belief among lower-income people that playing the lottery is their only chance to escape poverty.[4] Haisley, Mostafa, and Loewenstein back up these studies, finding that people who perceive themselves as poor are more likely to buy lottery tickets than other people. Poor people see the lottery as a way to improve their financial situation. The researchers determine that poor people spending money on the lottery is a factor in their inability to improve their relative finances. Black scholarship recipients and those from lower income families (in Tennessee) retain their scholarship in lower numbers than whites and higher income families.[5] 55 percent of students from families with income less than $36,000 failed to maintain a sufficient GPA to retain their scholarships, while only 42 percent of those from families with income of more than $75,000 failed to retain their scholarships.[6] Upper-income families benefit more from the scholarship program than families in lower income brackets: In Hamilton County (TN), for example, the average student with a lottery scholarship comes from a family that makes $71,980 a year, compared to the $38,930 median household income the U.S. Census Bureau reports for the county. Average lottery sales per capita in Chicago’s mostly African-American zip codes were 29% to 33% higher than in mostly white or Hispanic zip code areas. The zip code with the highest lottery sales in the state, 60619, coincided with predominantly African-American and Latino low-income communities on the city's south side. Residents of that zip code spent nearly $23 million on lottery tickets during FY 2002.[7] In New Jersey, as in Georgia and elsewhere, study results clearly show that those who lived in poorer areas bought far more lottery tickets than those living in wealthy ones. People who resided in zip codes where the average income was less than $52,151 spent an average of $250 per year on the lottery, whereas those who lived in zip codes with an average salary of more than $141,132—spent $89 on lottery tickets each year. In addition, less wealthy neighborhoods had more lottery retailers per capita. The ratio of lottery retailers per 5,000 people was 4 to 1 in low-income areas, compared to roughly 1.5 to 1 in wealthy neighborhoods.[8] Minority and low-income students do not have proportionate access to higher education in lottery states.[9] Footnotes [1] [2] Philip J. Cook, one of the coauthors of the National Gambling Impact Study Commision’s (NGISC) Final Report. [3] Ross Rubenstein and Benjamin Scafidi, in “Who Pays and Who Benefits: Examining the Distributional Consequences of the Georgia Lottery for Education” (National Tax Journal, vol.52, no.2,June2002), and Christopher Cornwell and David Mustard, in The Distributional Impacts of Lottery Funded Merit-Based Aid (1999), [4] Joseph McCrary and Thomas J. Pavlak of the Vinson Institute of Government Studies at the University of Georgia review in Who Plays the Georgia Lottery?: Results of a Statewide Survey (2002, and White Papers/Lotteries/Georgia Lottery.pdf) [5] Tennessee Education Lottery Scholarship's Annual Report for 2005-06. [6] Tennessee Education Lottery Scholarship Annual Report, 2006. [7] “ThePoorPlayMore”(Chicago Reporter, October 2002), Leah Samuel analyzes the lottery sales in Illinois since 1997 by comparing lottery sales figures around the state with income and demographic data from the 2000 census [8] Robert Gebeloff and Judy DeHaven report similar findings in “Who Really Pays for the Lottery” (Star-Ledger [Newark, New Jersey], December 6, 2005). Gebeloff and DeHaven gathered data on lottery sales in New Jersey by zip code and compared that data to income and population data for each zip code from 2000 to 2004. [9] In “State Lotteries: Their Effect on Equal Access to Higher Education” (Journal of Hispanic Higher Education, vol. 3, no. 1, 2004), Randall G. Bowden of Saint Leo University finds that