Alabama Lottery: Neighboring states have awarded millions in college scholarships

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MONTGOMERY, Ala. - As Alabama’s legislators head to a special session to consider Gov. Robert Bentley’s call for a state lottery, the experience of neighboring states is bound to be part of the discussion.

Neighboring states Florida, Georgia and Tennessee all have a state lottery. Mississippi does not, but the state does have casino gambling.

Bentley said last week a lottery would help the state address its “funding crisis."

“This solution will provide funding that we can count on year after year, without ever having to raise your taxes or put one more band-aid on our state’s money problems,” Bentley said.

The governor also pointed out Alabama residents regularly head to the borders to buy lottery tickets from the neighbors.

“Alabamians are some of their best customers, it’s time we stop supporting other state’s budgets and keep our money at home to solve our own problems,” Bentley said.

For Georgia and Tennessee the state lottery has provided substantial funding for college through each state’s Hope Scholarship program. Generally, it requires the students to maintain a B average in high school and continue that through college.

Tennessee’s Lottery has been in effect since 2004. The state lottery money has provided more than 100,000 students with $304 million of college, junior college and tech school funding in 2014-15.

Tennessee says overall 940,000 students have earned lottery-funded scholarships since the program began totaling about $3.8 billion.

Georgia’s lottery began in 1993. The state’s lottery commission says $8.4 billion in Hope Scholarships have been provided, covering 1.7 million recipients.

Pat Pierce, a professor at St. Mary’s College in Indiana, has studied state lotteries and the relationship to education funding since 1995.

Pierce said his research has shown that states that use lottery dollars to boost education spending will see a short-term increase in lottery spending. But over time, education spending decreases as state budget dollars are shifted to other programs, leaving the lottery as the primary funding source.

Pierce said the Hope Scholarship has been successful because it created a new program funded by lottery dollars.

Pierce believes the lottery is a poor way to fund education. He said if states truly want to prioritize education, they should ask voters directly to fund it through taxes, rather than shifting the burden to lower-income residents.

“Disproportionately folks who are older poorer, less well-educated, so they’re paying the tax, and those scholarships are not going to, predominantly, to children of families that are less well-off,” Pierce said.

Bentley hasn’t offered many specifics about his lottery proposal. He didn’t pledge the money for the state’s education trust fund – the education budget – he suggested it should go into Alabama’s general fund budget.

“To help fund essential state services for our children, our elderly, those with mental illness and those who are in most need,” Bentley said. “As well as the men and women in law enforcement.”

Bentley estimated the lottery would generate $225 million annually for Alabama to spend.

Pierce said states that don’t specify where lottery money will be spent tend to have regular disputes over where the dollars should go.

And it can be a lot of new money.

Florida has 20 million residents, Alabama has about 4.8 million. So Florida`s lottery results aren't a great comparison, but Florida generated more than $5.5 billion in lottery ticket sales last year. It awarded $3.6 billion in prize money. After paying retailers and other expenses, Florida`s Lottery provided $1.5 billion to its Education Trust Fund last year.

Georgia`s population is just over 10 Million. It had $4 billion in lottery ticket sales according to 2014 figures.

It gave out $2.4 billion in prizes. After Expenses, that left $945 million for its Education Account.

Tennessee has 6.6 million people. It sold more than $1.3 billion worth of lottery tickets last year. Tennessee gave out $869 million in prizes, and after expenses provided $335 Million for education funds and $12 million for after school programs.



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