Even as a gaming advocate, Steve Geller offers a bit of caution as North Carolina considers sanctioning a state lottery — don't promise too much.
Geller's home state of Florida has shipped $14 billion in lottery profits to a state education trust fund since the lottery's 1988 beginning.
But it hasn't been nearly enough to escape the sort of criticisms that have come with lotteries nationwide, especially ones intended to help pay for education initiatives.
"It will help education, but it will never be enough," said Geller, a Florida state senator and president of the National Council of Legislators From Gaming States. "People made the assumption and now it's become an urban legend that a lottery is supposed to fund education. We spend $25 billion (on education). The lottery raises $1 billion."
North Carolina House lawmakers in April narrowly approved legislation authorizing a statewide lottery. Proceeds would go to public school construction, college scholarships for low-income students and other education programs, such as the governor's initiative for at-risk preschoolers.
Senate Democratic leaders included the lottery as part of that chamber's $17 billion budget proposal released last month.
But like what critics say has been done in other states, the Senate plan uses $70 million in expected lottery revenues to replace the $70 million that had been designated for public school construction and technology projects.
"We find a lot of places where education advocates have been disappointed in what enabling a lottery really means for public schools in the long run," said Elaine Mejia, director of the N.C. Budget and Tax Center, a social justice advocacy group. "There's an initial spike in per-student spending in the short run. But in the long run there is a slower rate of growth in per-student spending."
Lotteries became a popular option for state legislatures in 1964, when New Hampshire was the first state to authorize a lottery. Thirty-nine states and the District of Columbia have them now.
At least 31 states pegged lottery proceeds to support a government program, such as parks and recreation and police and firefighters' pensions. Pennsylvania uses its lottery money to fund a broad range of programs to help the elderly.
Twenty of the 31 states earmarked a portion of lottery money to support public education programs, according to a report from the N.C. Center for Public Policy Research, a nonprofit, nonpartisan, public policy think tank.
Two states — Georgia and Florida — are often cited by lottery critics and supporters as examples of success and failure. Both offer lessons for North Carolina.
The Georgia lottery has generated $21 billion since its inception in 1993 while earmarking $7.4 billion to education programs. Other money went to winners and paid administrative costs.
The state's lottery undoubtedly has been successful in generating revenue, said David Mustard, an associate professor of economics at the Terry College of Business at the University of Georgia.
Organizers also were wise to dedicate money for new programs, including HOPE college scholarships and a prekindergarten program, Mustard said.
More than 850,000 students attended college with help from Georgia's HOPE scholarship program, which gives money to students with a B average to use for tuition, books and fees at public and private colleges.
Lottery money also pays for a prekindergarten program available to 4-year-olds. At least 635,000 preschoolers used that program.
Over the past decade, more than $1.8 billion has gone to Georgia public schools, universities and technical institutes for building projects and computer and other technological upgrades.
But even with the money, the lottery has been a wash for education funding, Mustard said.
"The reality is we get money coming in from the lottery, but then we take money out of education funding to build roads," Mustard said. "The money coming in through the lottery goes out through other channels."
Georgia's scholarship program also is suffering from its own success, Mustard said.
More students are going to college, which has driven up entrance standards, making it harder to get into the best schools. And because of the popularity of the HOPE scholarships, Georgia's colleges and universities have been limited in their ability to raise tuition, Mustard said. That's good for parents or students footing the bill, but it makes it harder on the schools financially.
Florida's lottery has been equally successful in bringing in money. Totaling more than $2.5 billion in 2004, Florida experienced record-breaking sales.
Of that, more than $1 billion was earmarked for school construction, college scholarships — called the Bright Futures Program — and other education initiatives. Like Georgia, the remainder of Florida's lottery proceeds goes to cash prizes and administrative costs.
To date, more than $14 billion of lottery proceeds were transferred to the education trust fund. This money paid for 400 public school construction and renovation projects and 220,000 college scholarships.
But the Florida lottery has been dogged by questions of whether state lawmakers substituted money from state coffers with lottery profits to pay for education programs. Critics also say that lottery money has a small impact when it comes to the day-to-day funding of public schools.
"We've gone from 60 percent of general revenues being spent on education to 53 percent," said Mary Borg, a professor of political economy at the University of North Florida and the author of the book "The Economic Consequences of State Lotteries." "It's probably a little less per student, when you figure in inflation and population increases."
That money can be especially helpful during economic downswings, when states have less money to spend on education programs. During the 2001-03 recession, for example, Florida's revenue did not keep pace with the population growth.
"The question is where do you cut?" asked Ben Watkins, Florida's bond finance director. "It (lottery proceeds) helps cushion against the inevitable cuts that would be necessary to balance the state's budget."
Lay your bets
Additional money from state lotteries for education in Georgia and Florida has failed to generate big gains in student performance.
Georgia and Florida fourth-graders showed improvement on math and reading test scores from 1992 to 2003. But they still lag behind North Carolina students, according to statistics from the National Assessment of Education Progress, often called "the nation's report card" for public schools.
North Carolina's fourth-graders had an average math score of 242 out of 500 in 2003, the latest date from which statistics are available. Florida and Georgia students scored 234 and 230, respectively.
Florida students experienced the highest rate of growth in reading scores from 1992 to 2003. Their average test score climbed from 208 to 218. Comparably, Georgia's average reading score inched from 212 to 214. North Carolina's average reading score increased by nine points, from 212 to 221.
Who really wins
The winners and losers of the lottery depend on who is playing the game. Borg points to countless studies that show those who most often play the lottery tend to be poor and undereducated.
In Florida, which has minimum grade and standardized test scores in place to qualify for lottery-funded scholarships, most students receiving a free ride could afford to go to college anyway.
"We call it ‘the reverse Robin Hood effect,'" Borg said. "The taxes come mostly from poor, uneducated minority households, and you're giving it out in scholarships — merit-based scholarships only — to white, well-educated, high-income households. You couldn't have designed a worse tax and equity program."
But others say lottery players and beneficiaries come from diverse economic backgrounds.
Hispanics, at least those who live in Georgia and South Carolina, are less likely to play the lottery and more likely to benefit from lottery-funded public education programs, said Seth Mason, president and editor Vida Latina, a Spanish-language entertainment monthly distributed in the Carolinas and Georgia and based in Atlanta.
Mason found that overall Hispanic students in Georgia receive about 7 percent of all lottery proceeds through the state's various education programs. That percentage is roughly equal to the number of Hispanics living in the state.
"I think it's only fair," Mason said. "If you're going to allocate scholarship money, you should make an attempt to take in money proportionate to the population. Right now, you can make the case that there is more money going out to Hispanics through lottery-funded initiatives than coming in."
North Carolinians have a better chance of winning at a socially responsible lottery game if they continue with plans to base college scholarships on financial needs and spend some of the proceeds for "at risk" or economically disadvantage students, experts said.
"The single most important piece of advice is they need to put it into a new program like lottery scholarships so that people can say here's where it's going," Geller said. "The second piece of advice is create a citizen advisory board, where the majority is not elected officials or government employees, so that people can review it and help decide where the money would go."
The lottery proposal is being heard by a special state Senate panel. Panel members are expected to recommend changes to the lottery bill before it hits the Senate floor. Once it passes the Senate, the House must agree with the changes. If the House does not agree, representatives from both chambers will negotiate the differences. Once both chambers agree on the differences, it will go to the governor for his signature. Gov. Mike Easley has wanted a statewide lottery since he took office in 2001.