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New Report Raises Questions About Scholarship Lotteries

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

How to pay for college is one of the most vexing issues facing American families. You get a college degree so that you can get a better job, so that you can afford to send your children to college, so that they can get a better job, so that they can afford to send their sons and daughters to college. We all know HOW to pay for college: set $100 to $150 a month aside every month from the day of the child’s birth in conservatively invested accounts.

Actually, doing that given medical bills, insurance costs, car repairs, the mortgage, school activities, clothes, rising energy prices, career setbacks, low wages, paying off our own student loans, etc. often proves more difficult. Politicians recognize the stress that college produces and many will promise anything…..including government paid for scholarships to get elected…..and since this is an election year several Alabama politicians from both political parties have proposed education lotteries to send kids to school for free.

A new study by the American Association of State Colleges and Universities (AASCU) by Daniel J. Hurley, PhD, looked deeply at how other states (including Georgia, Tennessee, and Florida) lottery paid for scholarships were working and found a mixed track record.

Alabama State Senator Bryan Taylor (R) from Prattville said on Facebook. “So much for that lottery idea! According to new report from American Association of State Colleges and Universities, in states that have lottery funds earmarked for education, state spending on education actually declines over time. Compare that with states that DON’T have lotteries — they spend 10 percent more of their budgets on education.” “I think the problem is that it can’t, in practical terms, be executed to work. You would have to have a legislature uninfluenced by the people who will actually make money from the thing, you’d have to have a legislature that wouldn’t supplant existing funding, etc.”

Graduate Student Kati Lebioda actually wrote the paper based on Dr. Hurley’s work wrote: “An Overview of Lottery-Funded Scholarship Programs Among the potential policy alternatives for improving college affordability, state-run lotteries with revenues dedicated to education have stood out as a popular solution. In fact, despite the slow economic recovery after the Great Recession, non-tax revenue sources to support higher education—a category which includes lottery funds—has increased by nearly one-third to $2.9 billion in 2013 from $2.2 billion in 2008.” “44 states have established lottery programs, 26 of which have earmarked proceeds for education—either K-12, higher education or both. Only six states (Alabama, Alaska, Hawaii, Mississippi, Nevada and Utah) do not currently operate lotteries, with Wyoming being the most recent to approve legislation in 2013 creating a lottery that commenced in August 2014.”

Leboida wrote, “…the trend began with the Georgia HOPE (Helping Outstanding Pupils Educationally) scholarship program was established in 199. The Georgia HOPE program initially provided scholarships for students with a minimum high school GPA of 3.0 to cover the full tuition at an in- state public institution or a set amount to be applied to a private college or university in the state. The Georgia HOPE program increased the number of students who stayed in-state for college, it also drastically increased the average competitiveness—or increased ACT/SAT scores and GPAs—of students attending public institutions in Georgia.”

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According to the report, Florida’s plan served the largest number of students (162,980) and spent the second highest amount of any state—$312 million. Georgia, near the top of the list in terms of both reach and expenditures, served 117,085 students at a cost of $463 million. On the opposite end, West Virginia has the smallest program, serving 9,954 students at a cost of $48 million. The average award ranged from $1,500 (Kentucky) to over $5,000 (South Carolina), with six of eight lottery-funded scholarship programs covering between one-third and one-half of the average cost of published tuition and fees at that state’s public institutions. The Kentucky scholarship only covered 17.2 percent of the actual cost to attend while the West Virginia scholarship was the highest at 76.7 percent of the cost. Georgia’s HOPE program, lottery-funded scholarships have acted as a lever to encourage the best and brightest students to remain in-state.

Leboida writes, however, that, “While lotteries appear to create a new source of non-tax revenue, actual proceeds rarely match projections. When a state first establishes a new lottery, it does draw funds previously lost to neighboring states’ lotteries, but these initial gains tend to decay or drop off after about five years…A large part of this is the cost associated with running and promoting a lottery in the first place. The largest contributing factor, however, may be the inherently inefficient profit margin of lotteries: after payments to winners, sales commissions to vendors, and lottery administration expenses, only about 34 cents of every dollar generated by lotteries ends up in the state budget (Bowden & Elrod, 2004; Covert, 2014). For comparison purposes, states typically spend less than 1 percent of the amount collected to acquire traditional tax revenues. Moreover, some researchers argue that when considering their high administration costs, lotteries affect state economies negatively, not positively, because dollars spent gambling could have otherwise been spent on consumer goods and services and could be subject to less wasteful collection methods of sales tax (Bowden & Elrod, 2004).”

Leboida continues, “Not only are lottery revenues more expensive to collect than traditional tax revenues, but they also tend to supplant, rather than supplement, general state appropriations for education. In fact, when lottery funds are earmarked for education, the risk of supplanting over supplementing actually increases. Numerous studies in the past three decades have found that while educational expenditures tend to increase immediately in states that enact lotteries, overall spending tends to decrease over time. States without lotteries, on the other hand, end up spending approximately 10 percent more of their budget on education than states with lottery funds earmarked for education (Covert, 2014; Heberling, 2002). This trend is particularly indicative of the unintended, counter-intuitive, negative consequences of employing lottery programs to support education.”

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Despite the hype, Leboida writes that lottery revenues are actually a fairly small revenue stream, generally comprising less than 2 percent of state appropriations to education and citizens in lottery states tend to vote against ballot initiatives intended to increase educational expenditures because the lottery proceeds and education are so visibly linked.

Meanwhile legislators in lottery states have used the lottery as an excuse to move other educational expenditures to other high-need areas like corrections or healthcare.

The poor typically do not gain by their state having a lottery, because typically for every dollar of scholarship assistance they receive they lose federal Pell Grant dollars they otherwise would have qualified for. Because scholarship dollars typically only cover outstanding tuition and fees once all other financial aid has been accounted for, low-income students do not receive grant or scholarship dollars above and beyond tuition costs, leaving them to struggle to pay for books, transportation, housing, childcare, and other non-tuition expenses involved in pursuing a post-secondary education. Scholarships like Georgia’s typically are awarded based on merit not need. Upper middle class children (who would have gone to college anyway) get the scholarships because typically they typically score higher on the standardized testing.

It pays to be smart. According to Leboida in the lottery-funded scholarship states, $301 million in grants were awarded based on financial need, but $1.6 billion in grants were based on academic merit.

Leboida writes, “Part of this shift away from need-based aid can be attributed to underlying ideologies: merit- based scholarship programs play into American values of democracy and the theoretical success of those individuals who work hardest. Additionally, unlike need-based grant programs, which inherently benefit only the poorest students, non-need-based programs can also support middle- and upper- income households—populations that tend to vote at higher percentages. Yet there is significant evidence that rewarding the notion of ‘merit’ only presents an illusion of fairness among student populations…Research shows that merit-based programs disproportionately benefit white and higher income families. These programs’ eligibility standards are designed to limit the pool of students who qualify for award dollars, but in doing so, they often restrict funds to those students with greater financial resources.”

According to Leboida, only 52 percent of high school graduates from the lowest 20 percent of income households enroll in college within one year after graduation, while 82 percent of students at the highest fifth in family income do. However only 26 percent of the lowest fifth get a bachelor’s degree in five years versus 58 percent of those in the highest fifth of income finish with a degree.

Leboida writes that since lower income people are much more likely to play the lottery, “In essence, poor families are helping send wealthy students to college. Moreover, due to the aggressive nature of lottery advertising and the addictive nature of gambling in general, some critics even argue that the lottery is considerably less voluntary than a traditional economic model typically allows.”

Since State-run lotteries, as an arm of the government, are not subject to the Federal Trade Commission’s truth-in-advertising regulations, Leboida writes, “Many lottery advertising campaigns exploit the addictive nature of gambling to prey on especially vulnerable populations like minorities, low-income families, the elderly, and high school drop-outs (Heberling, 2002). Furthermore, as lottery revenues decay over time, states must invest in more aggressive ad campaigns and create new, more addicting games in order to keep revenues flowing. It is paradoxical for a state government to exploit public ignorance involving the detrimental consequences of gambling in order to help fund public enlightenment through a college education (Selingo, 1999). This ethical ambiguity is particularly salient given the unequally regressive nature of lotteries, and the pattern of decreased state appropriations from the general budget when states earmark lottery revenues for education.”

Democratic candidate for Governor of Alabama, Parker Griffith, has made a lottery one of his campaign promises. Republican incumbent Robert Bentley has said he will not oppose efforts by legislators to pass lottery legislation, but has said that revenues from a lottery should at least partially go to the State’s troubled general fund, where corrections and Medicaid are facing critical funding challenges.

Brandon Moseley is a senior reporter with eight and a half years at Alabama Political Reporter. You can email him at [email protected] or follow him on Facebook. Brandon is a native of Moody, Alabama, a graduate of Auburn University, and a seventh generation Alabamian.

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Economy

Alabama unemployment rate drops more than 2 points to 5.6 percent

Micah Danney

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(STOCK PHOTO)

The state’s seasonally adjusted unemployment rate decreased to 5.6 percent in August, down from 7.9 percent in July, according to the Alabama Department of Labor. 

The figure represents 127,186 unemployed people, compared to 176,556 in July. It compares to an August 2019 rate of 2.8 percent, or 62,149 unemployed people.

“August showed a larger drop in the unemployment rate than we’ve seen for a few months,” said Alabama Labor Secretary Fitzgerald Washington. “We are continuing to see our initial claims drop, staying under 10,000 for the past several weeks. We regained another 22,200 jobs this month but are still down more than 86,000 from this time last year.”

Washington said that the number of people who are working or actively looking for work is at its highest level ever, which he described as a sign that people are confident that there are jobs to be found. 

Gov. Kay Ivey said the numbers are good news for Alabama. 

“We have worked extremely hard to open Alabama’s businesses safely, and to put our hard-working families back to work,” Ivey said in a statement. “We know that challenges remain, and we will endeavor to meet them so that we can get back to our previous, pre-pandemic record-setting employment numbers.”

All the state’s counties and metro areas experienced a decrease in unemployment rates from July to August. The most gains were seen in the government sector, the professional and business services sector and the trade, transportation and utilities sector.

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Counties with the lowest unemployment rates were:

  • Clay County – 3.4 percent
  • Randolph, Franklin, Marshall, Cullman, Cleburne and Cherokee Counties – 3.6 percent
  • Blount County – 3.7 percent

Counties with the highest unemployment rates were:

  • Wilcox County – 14.8 percent
  • Lowndes County – 13.8 percent
  • Greene County – 10.9 percent

Major cities with the lowest unemployment rates are:

  • Vestavia Hills – 3 percent
  • Homewood  – 3.2 percent
  • Madison – 3.3 percent

Major cities with the highest unemployment rates are:

  • Prichard – 15.4 percent
  • Selma – 12.9 percent
  • Bessemer – 10.7 percent

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Corruption

Former State Sen. David Burkette pleads guilty, avoids jail

Josh Moon

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Former Alabama Sen. David Burkette

Former State Sen. David Burkette will avoid jail time and be sentenced to a 30-day suspended sentence as part of a plea deal reached on Monday. 

Burkette, who pleaded guilty to one count of violating the Fair Campaign Practices Act, will also have to pay a $3,000 fine and serve 12 months of probation as part of the deal. He was sentenced in Montgomery Circuit Court on Monday after being charged two weeks ago with failing to deposit more than $3,600 in contributions into campaign accounts — a misdemeanor.

He also resigned his seat in the Alabama Senate as part of the plea deal. 

“I’m just happy to still be here,” Burkette told the court following his sentencing, according to multiple media reports. 

The former senator suffered a stroke in 2018 and has been confined to a wheelchair since. His current health status played a role in his sentence considerations. 

The charges against Burkette stem from a series of complaints filed against him with the Alabama Ethics Commission — all of them related to various issues during his time on the Montgomery City Council. The charge for which he pleaded guilty occurred in 2015.

The Ethics Commission referred numerous charges to the Alabama attorney general’s office, according to sources familiar with the investigation of Burkette, but the attorney general’s office elected to charge Burkette with only the misdemeanor as part of the deal that saw him resign. 

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“Candidates for public office at the state, county and municipal levels must comply with the State’s Fair Campaign Practices Act,” said Attorney General Steve Marshall. “Personally profiting from campaign funds erodes public confidence in the system and will not be tolerated.”

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National

Governor surveys damage from Hurricane Sally

Brandon Moseley

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Alabama Gov. Kay Ivey held press conferences in Gulf Shores and Dauphin Island after touring the storm damaged Alabama Gulf Coast, which was battered by Hurricane Sally last week.

Three Alabama counties have been approved for individual and public assistance from FEMA. Baldwin, Mobile and Escambia counties were approved for both IA and PA.

“When I was on the coast Friday, it was clear that there has been significant damage, and people are in need of relief,” Ivey said in a statement. “My Office has been working on putting in the request for individual and public assistance to help bring the needed aid, and I appreciate FEMA for quickly delivering to the people of Alabama. Being approved for individual and public assistance is an important step in the recovery process. Coastal Alabama, we are with you the whole way!”

Gov. Kay Ivey took a tour of the damage from Hurricane Sally on the gulf coast Friday September 18, 2020. (Governor’s Office/Hal Yeager)

FEMA Administrator Pete Gaynor, U.S. Rep. Bradley Byrne and Sen. Doug Jones also toured the damaged areas.

“I appreciate FEMA Administrator Pete Gaynor for quickly getting down to Alabama to check out the damage from #Sally,” Byrne said. ”President Trump has already approved Alabama’s request for Public Assistance and Individual Assistance, so I encourage everyone to register for help from FEMA online at DisasterAssistance.gov or by calling the registration phone number at 1-800-621-3362. Residents of Baldwin, Escambia, and Mobile counties are currently eligible.”

“President Trump and his team have been outstanding to work with in making sure Alabama gets the help we need and deserve,” Byrne continued.

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Ivey toured the area by helicopter to survey the damage.

Gov. Kay Ivey took a tour of the damage from Hurricane Sally on the gulf coast Friday September 18, 2020. (Governor’s Office/Hal Yeager)

 

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“I’m sure it could be worse, but from what I’ve seen this morning in the flyover it is really, really bad,” Ivey said.

Over 200,000 people lost electric power due to Hurricane Sally. Alabama Power said Sunday that more than 99 percent of those people have had their power restored.

“Our electric companies are making progress every hour to restore power,” Byrne said. “A lot more work remains, but know that crews are working hard to get all the power back online. Hurricane Sally caused major damage to our electric infrastructure, and I appreciate all those working to get our lights turned back on.”


Gov. Kay Ivey took a tour of the damage from Hurricane Sally on the gulf coast Friday September 18, 2020. (Governor’s Office/Hal Yeager)

Alabama Power said that it may take into early this week to restore power to some portions of downtown Mobile, Bayou La Batre and Dauphin Island.

“With the Major Disaster Declaration, individuals may apply for disaster aid from FEMA,” Byrne explained.

You can apply online at disasterassistance.gov or by calling the registration phone number at 1-800-621-3362 (TTY: 800-462-7585).

Even though electric power has been restored, many homes have been severely damaged. Some are a total loss. Most homeowners are still waiting on insurance adjusters to complete their work. There was a lot of roof damage, not just in Gulf Shores, Dauphin Island, Fort Morgan and Orange Beach, but also in Foley, Robertsdale, Loxley, Bayou La Batre, Bay Minette and beyond — both from the winds and from the trees that fell.

Some homes near the coast were impacted by the storm surge, but many more well into Baldwin County as well as in Pensacola, Florida, were impacted by flooding. Many people are still in need of supplies for the cleanup as well as daily essentials.

“There are a number of food, water and supply distribution sites across Baldwin County,” Byrne said. “According to Baldwin County Emergency Management Agency, these locations have MREs, tarps, bottled water, ice, and other supplies.”

  • Baldwin County Coliseum (Robertsdale)
    19477 Fairground Road Robertsdale, AL
  • Seminole Fire Department
    32268 Highway 90 Seminole, AL
  • Lillian Community Club
    34148 Widell Avenue; Lillian, AL
  • Lana Park (Fairhope)
    523 Volanta Avenue; Fairhope, AL
  • Foley Soccer Complex
    18507 US Highway 98; Foley, AL
  • Orange Beach Community Center
    27235 Canal Road; Orange Beach, AL
  • Gulf Shores SportsPlex
    19025 Oak Road W; Gulf Shores, AL

On Saturday, literally hundreds of cars lined up to pick up supplies from the Robertstale Church of God in Robertsdale.

Hurricane Sally made landfall near Gulf Shores before dawn on Wednesday as a category two storm. Forecasters on Saturday had expected the storm to impact Louisiana but the hurricane turned to the northeast and made landfall in Alabama instead, gaining strength before coming ashore.

“No one expected this storm to be that strong,” Ivey said.

Ivey said most of the piers have been destroyed. Alabama’s State Fishing Pier had just finished a $2.5 million renovation. Now a large portion of the pier is missing. Most of the Gulf State Park campground went underwater. A few campers actually weathered the hurricane in their campers.

Debris removal is ongoing.

The Mobile County Commission announced that it will manage Hurricane Sally debris removal from all areas of Mobile County, located outside the 10 municipalities, except for the Town of Dauphin Island. Dauphin Island will be the only municipality to receive hurricane debris removal managed by the county.

To ensure pick-up removal, residents are asked to adhere to the following guidelines: Only Hurricane Sally-related vegetative and construction and demolition (C&D) debris will be collected. That excludes removal of normal household trash, appliances, electronics and household hazardous waste. Debris must be placed curbside or in right-of-way areas that do not block roadways or storm drains. Do not place material in drainage ditches. Vegetative debris should be piled separately from C&D debris material. Vegetative debris includes tree branches, limbs and non-bagged leaves. C&D debris includes building materials, fencing and bagged materials.

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Corruption

Mike Hubbard’s attorney asks court to reconsider prison sentence

Eddie Burkhalter

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Mike Hubbard reported to the Lee County Jail on Sept. 11, 2020. (VIA LEE COUNTY SHERIFF'S OFFICE)

One week after he began serving his prison sentence, the attorney for former Alabama House Speaker Mike Hubbard has asked the court to reconsider his four-year sentence.

Hubbard, 57, began serving his sentence on Sept. 11 after being free on an appeals bond for four years. He was ultimately convicted on six felony charges of using his office for personal gain.

“Mike Hubbard is not a danger to society, nor a threat to the public and a revised sentence will better serve the State’s interest in rehabilitation and the ends of justice,” Hubbard’s Birmingham attorney, David McKnight, wrote to the Lee County Circuit Court on Friday.

Hubbard had originally been convicted by a Lee County jury on 12 ethics violations, and the Alabama Court of Criminal Appeals upheld 11 of those convictions, but the Alabama Supreme Court later reversed five of those convictions and upheld six.

McKnight, in his motion to the court, argues that due process compels the court to reconsider Hubbard’s sentence, and that his removal from office, loss of the right to vote and “divestment of business interests” have already punished the former House speaker.

The state’s attorney general at the time of his conviction determined that Hubbard had bilked Alabama out of more than $2 million.

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