"I know no safe depository of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power." - Thomas Jefferson 1820

"There is a growing technology of testing that permits us now to do in nanoseconds things that we shouldn't be doing at all." - Dr. Gerald Bracey author of Rotten Apples in Education

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Friday, November 30, 2012

Missouri Education Wins In Powerball

The latest Powerball jackpot will mean an extra $10 million for education in Missouri. A quarter of all revenue collected from lottery ticket sales in our state goes directly to education. In fiscal year 2012, that amount totaled over $280 million distributed to various programs. A complete list of programs that the legislature has appropriated lottery funds for can be found at the end of this post.

This is generally good news for Missouri's kids. Consider, by comparison, what Kansas does with its lottery proceeds (excluding prize payout amounts and administrative costs): 58% going to the state’s Economic Development Initiatives Fund, 30% going to the state’s general fund and 9% going into a fund for juvenile detention and correctional institutions. Colorado targets their revenue towards environmental protection and Arizona spends its money on transportation and state parks.

Critics say states substitute lottery revenue for normal state appropriations so there is no net positive to the programs they are meant to benefit, like education. A study by the North Carolina Center for Public Policy Research, found some states like California, Florida, and Michigan substitute lottery revenues for normal appropriations.

Others complain that it is a regressive tax on the poor. As a percentage of total income, low income earners spend more on lottery tickets than do middle and upper income earners. The Tax Foundation argues that "lottery 'profits' constitute an implicit tax. When state governments removed lottery prohibitions from their constitutions, they did so only for themselves. Seeing lotteries as a potential goldmine for state coffers, they maintained the ban on private lotteries and created for themselves a monopoly and, in effect, a source of tax revenue."

The more insidious side of acknowledging the lottery as a tax is recognizing that it is really a hidden tax. "The state creates a monopoly for itself and builds the tax into the price of the tickets, then advertises the lottery as a recreational activity rather than a revenue-raising activity. The government never has to admit that the money it keeps is tax revenue."[TaxFoundation.org]

Lotteries have a long history of falling in and out of favor. They have been increasing in popularity since 1964 with North Carolina being one of the last states to institute a lottery. Does knowing it is a voluntary tax make one any less likely to buy a ticket? Does anyone even care where the proceeds go, i.e. when they buy a ticket are they really thinking about "Playing It Forward?" Probably not, although it may ease the guilt of gambling a bit for some.  According to the Federal Reserve Bank of St Louis which noted in a 2002 working paper, "sales are significantly influenced the top prize amount and odds of winning it, but that sales are not significantly affected by the expected value of the remaining lower prizes." It's all about the size of the prizenot the care for the cause.

For a deeper understanding of these arguments, I suggest reading this page on the TaxFoundation website. They provide an interesting history of lotteries. For instance, lotteries started with King James I in 1612 as a means to aid Jamestown, the first British colony in America. "Lotteries soon came to be seen as more of a civic responsibility than a form of entertainment or gambling.3 The colonists viewed them as a more palatable revenue raiser than explicit taxation. And, in fact, some people did see the lottery as a type of tax. In 1892, A. R. Spofford, Librarian of Congress, wrote, '[The lottery was] not regarded at all as a kind of gambling; the most reputable citizens were engaged in these lotteries. . . . It was looked upon as a kind of voluntary tax. . . .' 4 Adding to the lottery’s appeal was the shortage of other sources of public funding. Taxes were unpopular and, prior to 1790, there were only three incorporated banks. Lotteries therefore helped fill a void in both public and private financing."

Thinking of buying a lottery as a "civic responsibility" makes me shudder, but perhaps today's third graders will see it as such once the school system the lottery helps fund is done with them.

Breakout of Education Expenditures from Missouri Lottery Proceeds
(Percentages given as % of total program funding coming from the lottery)

3% Foundation Program
  (43% of lottery education total)
These funds help pay for the Foundation Formula, transportation, early childhood special education services, Career Ladder, vocational education and early childhood development.

67% Special Education Excess Costs (7% of lottery total)
The "High-Need Fund" was established to reimburse school districts for the educational costs of serving children with individualized education programs exceeding three times the current expenditure per average daily attendance. This fund will be both disability- and placement-neutral, creating a safety net for school districts that have no way of projecting the extraordinary cost of certain high-need students.

3% Classroom Trust Fund (4% of lottery total)
The fund consists of all monies transferred to it under section 160.534, RSMo, all monies otherwise appropriated or donated to it and all unclaimed Lottery prize money. The money deposited into the fund is distributed to each school district in the state qualified to receive state aid on an average daily attendance basis. The funds distributed shall be spent at the discretion of the local school districts.
77% Public Placement Excess Cost Program (2% of lottery total)
This program was established to assist school districts in providing education services to students in residential placements through the Missouri Department of Mental Health or the Missouri Division of Family Services. It pays the excess cost incurred by those school districts for educating these students placed outside the school district where their parents reside.

29% Performance-Based Assessment Program (1% of lottery total)
This program provides funding for continued development, administration and scoring of the statewide Missouri Assessment Program (MAP). The Lottery funding covers testing costs for the subjects of math and communication arts.

3% Vocational Rehabilitation Program (.3% of total)
This money will be used by the Division of Vocational Rehabilitation to assist clients who have disabilities to obtain employment by diagnosis, physical restoration, training, placement and other related services.

55% Virtual Schools (.1% of lottery total)
These proceeds fund the Missouri Virtual School Instruction Program (MoVIP), which offers instruction in a virtual setting using technology, intranet and/or Internet methods of communication. Any student under the age of 21 in grades K-12 who resides in Missouri is eligible to enroll, regardless of the student's physical location.

100% Character Education Initiatives (.003% of lottery total)
These funds will provide teacher training and resources to schools to emphasize the importance of universal values such as responsibility, respect, trustworthiness, fairness, caring and citizenship.

Additional monies went to things like A+ Schools Program, Minority Teacher Scholarships, vocational rehabilitation, and ACCESS Missouri which provides higher ed scholarships based on financial need.

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