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Fund the scholarships from state lottery revenues or
tobacco settlement funds
The nation’s two largest merit aid programs, Georgia
HOPE and Florida Bright Futures, are funded from lottery
revenues in each state. Research on lottery participation has
found that tickets are disproportionately purchased by lower-
income individuals, making it among the most regressive of
all implicit state taxes. Charles Clotfelter and Philip Cook in
their 1991 book, “Selling Hope: State Lotteries in America,”
also note, “The fact that participation declines with education
appears to support critics’ charges that with their relatively
high takeout rates, lotteries take advantage of the ignorance
of bettors.”
The regressive nature of lotteries, when combined with
the income-stratified nature of college participation in the
nation, leads to a situation described by the Business/Higher
Education Partnership of Florida as a “popular wealth
transfer from low- and mid-income people to the well-to-do.”
(
St. Petersburg Times
, December 21, 1997) In commenting
on the trend toward state funding of merit scholarships via
lotteries, Philip Cook said, “An education lottery is an odd
link between two government enterprises. One exploits the
public ignorance, and the other is supposed to be helping that
ignorance.” (
Chronicle of Higher Education
, April 16, 1999)
Michigan took a different tack toward funding its merit
scholarships. Rather than relying on lottery revenues, it
instead decided to apply a portion of its tobacco settlement
funds (slated to reach 75 percent of the total by 2002) to
support the scholarships. While most of the states looked to
spend the tobacco funds on public health programs such as
youth anti-smoking
initiatives, other states,
including Oklahoma
and South Carolina,
have proposed to use
the settlements for
merit scholarships.
Like lotteries,
cigarette use—and
thus the payment of
cigarette taxes—tends
to be correlated
with socioeconomic
status. Lower-income
and less-educated
individuals are more
likely to be smokers,
and therefore provide
a disproportionate
share of the state
revenues from these
taxes. The policy of
funding merit scholarships with tobacco settlement funds
represents one more mechanism for transferring financial
resources from lower-income to upper-income individuals.
Following these three steps in creating merit scholarship
programs will ensure that individual states and the nation as
a whole will move even further away from the goal of using
financial aid to promote access to college.
Publicly funded merit scholarships are a form of public
welfare program, and can perhaps best be understood
through analogy with a similar public benefit. We do
not provide food stamps to people who can afford to eat
anyway—doing so would do nothing to promote the
overall nutritional health of the nation. Similarly, from the
perspective of public policy and the use of public resources,
it makes little sense to give financial aid to individuals who
would attend college without that assistance.
Doing so does
little to move us toward the goal of promoting college access
for needy students.
u
Donald E. Heller is a professor of education and director
of the Center for the Study of Higher Education, at The
Pennsylvania State University.
The policy of funding
merit scholarships
with tobacco
settlement funds
represents one
more mechanism
for transferring
financial resources
from lower-income
to upper-income
individuals.