Lottery touts scholarships as Ky. takes more for budget
Kentuckians will soon see ads urging them to buy lottery tickets as a way to support college scholarships.
But the ads – allowed by a new state law – don’t tell the whole story, some lawmakers complain.
For the past five years, in fact, the Kentucky General Assembly has used some lottery proceeds to plug budget holes.
The state will still dedicate about $400 million over the next two years from lottery money to scholarships, according to the two-year state budget passed this month by the General Assembly. But the General Assembly also plans to take $81 million of the state’s lottery revenue and spread it throughout the state’s budget for the next two years, where it will help pay for state police, schools and all other state government functions. This will mean 45,000 fewer college scholarships for low-income students, education leaders estimate.
State Rep. Arnold Simpson, D-Covington, believes that all the lottery money should go back into the scholarships and doesn’t think the lottery advertising campaign is a good idea.
“I don’t know it paints a completely accurate picture,” Simpson said. “In my opinion – and I say in my opinion – I don’t think it’s good public policy.”
The General Assembly this month in the two-year state budget removed the prohibition on the lottery advertising that it pays for scholarships.
Once the new law takes effect July 1, Kentuckians will see the good that the lottery money has done through the ads the Kentucky Lottery will start running across the state, said Chip Polston, Kentucky Lottery spokesman.
The Kentucky Lottery was the only state lottery in the country that couldn’t advertise that the proceeds go to scholarships, he said.
When the General Assembly created the Kentucky Lottery in 1989, some legislators feared the lottery might use the scholarships as a scare tactic to pressure people into buying tickets, Polston said. So they banned from lottery ad campaigns any mention of any government service provided by lottery funds.
“The lottery was a very unknown entity at the time,” Polston said. “Folks didn’t know how the lottery would operate as a business, what level of societal responsibility the lottery would take.”
As more states adopted lotteries, however, the fear that lotteries would use education to extort purchases proved unfounded, Polston said.
The General Assembly wouldn’t remove the prohibition until this year, when the prospect of boosting sales over the next two years by $3 million through this new advertising campaign enticed lawmakers looking for new revenue sources.
Money used to prop up other parts of state budget
The need for revenue has also prompted the General Assembly for the past five years to use lottery money for other government services.
To balance the budget, the state since 2009 has dipped into lottery revenues that normally go to scholarships.
The $81 million in lottery revenue helped reduced cuts to colleges from the 2.5 percent proposed by the governor to 1.5 percent, said Rep. Rick Rand, D-Bedford, chairman of the House Appropriations and Revenue Committee. As a result, the scholarships to help low-income students, College Access Program (CAP) and Kentucky Tuition Grants (KTG), have been limited in the past five years.
“It would be my preference that we could fund all scholarships,” Rand said. “The fact of the matter is, the state has a lot of needs across all budget units, whether it’s higher education, public protection.”
But the reduction has left many students without needed financial aid.
Of the 141,118 students who applied in fiscal year 2013 for CAP scholarships, 25 percent got them, according to the Kentucky Legislative Research Commission. For KTG scholarships, 38 percent of 32,000 students received the scholarships.
The state awards both scholarships on a first-come, first-served basis, making for a mad dash at the beginning of each year to submit applications, said Mary Givhan, financial aid director for Thomas More College. Of the 211 low-income students at Thomas More this year that receive federal Pell grants, 47 percent received a CAP or KTG scholarhsip, Givhan said.
The state rejected 53 percent because money ran out, she said.
“Having a more educated population go to college, it benefits the state,” Givhan said. “The more people earn, the more the state will benefit from taxes.”
The $81 million going into the general fund could help 45,000 get scholarships to Kentucky schools in the next two years, estimated Carl Rollins, executive director of the Kentucky Higher Education Assistance Authority, which administers the CAP and KTG programs. The CAP scholarship can go up to $1,900 a year and the KTG can go up to $2,930 a year.
“There is a considerable amount of students who qualify for aid that don’t get it even if we got all of the lottery money,” Rollins said. “Hopefully it’s temporary and eventually they’ll start giving all the money back to the scholarship programs.” ■
Where lottery money goes
Dividing it up, Fiscal 2013
Total sales: $846.6 million
Prizes: 61.1 percent, $517.3 million
Net to the state: 27.5 percent,
$232.8 million
Retailer commissions: 6.4 percent, $54.2 million
Ticket cost and operating expenses: 5.0 percent, $42.3 million
Scholarships supported
Kentucky Education
Excellence Scholarship
Provides scholarships to students who earn at least a 2.5 GPA each year they attend a Kentucky high school. The better the student performs, the more the scholarship is worth. ACT/SAT and Advanced Placement test scores also factor in the scholarship amount. Scholarship is not income-based.
College Access Program grant
Awards up to $1,900 a year for Kentucky residents to attend Kentucky colleges, based on financial need.
Kentucky Tuition Grant
Awards up to $2,930 a year for Kentucky residents to attend Kentucky colleges based on financial need. These grants provide need-based aid to help Kentucky residents attend eligible Kentucky private colleges.
Kentucky Teachers
Scholarship Program
Provides up to $2,500 per semester to Kentucky students pursuing initial teacher certification. The state has allocated $1.7 million each of the next two years in lottery proceeds for this program.
National Guard Tuition
Scholarship Program
Pays tuition for National Guard members. The state has allocated $4.9 million of the lottery proceeds each of the next two years to this program.
Source: Kentucky Higher Education Assistance Authority
Number of Scholarships
The state in Fiscal Year 2013 doled out 118,170 KEES, CAP and KTG scholarships worth $189 million.
• KEES: 69,370
• CAP: 36,400
• KTG: 12,400
Awarded At NKY colleges
KEES, CAP and KTG scholarships in 2013 at Northern Kentucky colleges:
Northern Kentucky University: 4,627, $6.9 million
Gateway Community and Technical College: 1,151, $1.1 million
Thomas More College: 903, $1.9 million
Source: Kentucky Lottery Corp.