An examination of supplantation and redistribution effects of lottery allocations to a community college system

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Title:
An examination of supplantation and redistribution effects of lottery allocations to a community college system
Physical Description:
xii, 168 leaves : ill. ; 29 cm.
Language:
English
Creator:
Summers, Susan Robinson, 1952-
Publication Date:

Subjects

Subjects / Keywords:
Lotteries -- Florida   ( lcsh )
Community colleges -- Finance -- Florida   ( lcsh )
Education -- Finance -- Florida   ( lcsh )

Notes

Thesis:
Thesis (Ph. D.)--University of Florida, 1993.
Bibliography:
Includes bibliographical references (leaves 156-165).
General Note:
Typescript.
General Note:
Vita.
Statement of Responsibility:
by Susan Robinson Summers.

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Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 001962544
notis - AKD9218
oclc - 31473028
System ID:
AA00002079:00001

Full Text










AN EXAMINATION
LOTTERY


OF SUPPLANTATION
ALLOCATIONS TO A


SUSAN


AND REDISTRIBUTION EFFECTS
COMMUNITY COLLEGE SYSTEM


ROBINSON


SUMMERS


A DISSERTATION PRESENTED
OF THE UNIVERSITY OF FLORI
OF THE REQUIREMENTS
DOCTOR OF


) TO THE GRADUATE SCHOOL
EDA IN PARTIAL FULFILLMENT
; FOR THE DEGREE OF
PHILOSOPHY


S
































Copyright


1993


Susan


Robinson


Summers


































For

Gordon














ACKNOWLEDGEMENTS


am grateful


chair,


Distinguished


Service


Professor


guided


Emeritus

doctoral


James


Wattenbarger.


experience


the


University


attenbarger

of Florida.


He instilled


me an enduring


desire


to provide


leadership


carrying


forward


his


mission,


that


the


Florida


community


college


system


provide


access


to higher


education


the


citizens


of Florida.


Wattenbarger


encouraged


writing,


and


gave


me the


opportunity


to be his


research


assistant


cochair,


the


Institute


David


of Higher


Honeyman,


Education.


the


opportunity


thank


to work


full


time


as his


research


assistant,


his


endless


support


throughout


this


study,


and


the


countless


hours


spent


with


me pursuing


the


mysteries


higher


education


finance.


I wish


thank


committee


members:


Arthur


Sandeen,


ability


his


to bring


enthusiasm


this


topic


dissertation


and


to fruition,


belief


and


James


Pitts


his


abiding


faith


me.


I extend


special


appreciation


to Dr.


David


Miller


for


his


kind


instruction,


and


the


many


hours


he shared


with


me developing


the


research


design


and


regression


models


for


this


study,


aI t*:I


.C I a a


r Jh~t~a1.. -S a -1 -


.7 a CS a


....--I


r LL IY1.


u


Y


~111







with


me the


mysteries


of educational


finance,


statistics,


and


the


mainframe


computer.


This


study


was


made


possible


through


the


help


many


different


people


the


Florida


Department


of Education


and


the


Florida


Governor


s Office.


would


like


extend


deepest


appreciation


to Dr.


Edward


Cisek,


Deputy


Executive


Director,


Department


of Education,


Division


Community


Colleges.


Cisek


was


supportive


use


Divisional


on the


data


community


to analyze

colleges.


the

Dr.


effect

Cisek


the


extended


Florida


the


Lottery


assistance


of his


staff


collecting


and


verifying


the


data


used


this


Services,


study;


and


Kenneth


Howard


Jarrett,


Campbell,


Director


Bureau


of Financial


Chief


Information


Systems,


were


especially


helpful.


Mr.


Jarrett


lent


several


hours


of his


time


during


each


I paid


the


Division


and


later


answered


my questions


telephone.


Campbell


provided


enrollment


data.


the


Governor'


Office


of Budget


and


Management,


Link


Jarrett,


Educational


Policy


Director,


and


Subhasis


Das,


analyst,


Revenue


and


Economic


Analysis


Policy


Unit,


gave


ass


instance


with


supplemental


data.


colleagues


at Lake


City


Community


College


supported


doctoral


pursuit


many


different


ways.


I extend


special


thanks


to President


Muriel


Kay


Heimer,


Vice


President


Deborah


Hecht,


and


Deans


John


Davis,


Richard


Jackson,


and







her


loyalty


and


patience


throughout


the


four


years


doctoral


study.


thank


my father,


me perfectionism,


a deep


. John


belief


Robinson,


the


for


value


instilling

higher


education,


and


a reverence


research.


thank


mother,


Mrs


. Haz


el Floyd


Robinson,


her


enduring


belief


ability


to succeed,


and


the


time


spent


caring


for


children


while


was


involved


doctoral


studies.


appreciate


parents


the


examples


they


set


being


literate,


articulate,


and


meticulous


practicing


their


prof


sessions.


Most


especially,


I wish


to acknowledge


the


contributions


husband,


Gordon


Summers,


and


children,


Sam,


Catherine,


and


Daniel.


They


sacrificed


countless


hours


time


that


would


have


been


spent


with


had


I not


pursued


this


goal.


They


never


asked


me to quit


this


quest;


and


most


of all,


they


always


believed


me.















TABLE


OF CONTENTS


ACKNOWLEDGEMENTS


ABSTRACT


INTRODUCTION
Impact .
Supplantation
Redistributio
Categorical V
Allocati
The Florida E
Community
Lottery
Awa
Lottery
Rev
An Unsta


* . S S
* S S S S S S S S S S


n
er
on
du
y


S
C


Noncategori


cation Lo
College a
locations
s .


a Propo
ues .
e Period


tteries
nd K-12
as Nonc


S .


rtion


Similariti
ategorical

Operating


Community


College


Definition
REVIEW OF
Twentieth
The I

The F
Lotte

Supply
Redis
The L

Earma
The Histor


Funding . .
of Terms . .
THE LITERATURE .
Century American Lott
impact of the Lottery


Col
lor
ry
Tax
ant
tri
ott
Mon
rki
ica


lege Funding
ida Education
Revenues View

ation .
bution .
ery as a Quas
opoly .
ng Lottery Pr
1 Context of


series .
on Community


Lotteries
ed as an Exci


*~ ~ S S S
* ~ ~ S S S


Si-Bu
i-Bu


oceeds .
Contemporary


Lotteries
The Earliest
Territorial
Intercolonia
Early Exampl
Redistr
The Revocati
METHODOLOGY .


Lotteri


* S


da Lott
Inters
Suppla
on .
State
* .


erles .
tate Lotteri
nation and


Lotteries


S S S S S S


Utr^l, a+ 4 n al


nrr%, CrC 4-'


CHAPTERS
1















Procedures .
Design . .
Impact .
Supplantation
Redistribution


The

RESULTS


Effect of
Allocatio
AND DISCUSS


* a a a S a a
* a S S a S S a a
* a a a a a
* a a a a a a S a a
* S a a a a a a a S
Categorical Lottery
I i) r1 )I t)y


ns
ION


Impact . .
Supplantation .
Redistribution .
The Effect of Categ
Allocations


Summary of Findings
Conclusions .
SUMMARY AND CONCLUS
Summary of Results
Impact .
Supplantation
Redistribution
Categorical ve


* a a .
* a a a a a a a


0:


II


rical


L .o
Lott


ery


* . a .


DNS . . .


sus noncategorical


lottery
Conclusions .


awards


S. . 110


Impact .
Supplantation
Redistribution
The Effects of


Implications


and


* a a a a a a .
* . a .


(


Sugi


Categorical
gestions for


Awards
Future


Research


a a a 117


APPENDICES . . . . .
APPENDIX A THE FLORIDA COMMUNITY COLLEGES .
APPENDIX B STATE-OPERATED LOTTERIES,
CONSTITUTIONAL AND STATUTE CITATIONS, AND
LOTTERY FUND BENEFICIARIES . .


APPENDIX
Data

Data


C
Set
CAT
Set


RAW
C-I:


GRF


C-II


DATA SETS . .
The variables OBS,
TOTSTATE, FTE, and
The variables OBS,


CC, YR,
FTEX12
LOT,


LOTFTE,


GRFFTE,


STATFTE,


and


TOTAL


E&G


REFERENCES


* * .* 156


TnrnBDTF.inrra


axVrwmrt


SIC C


rt














LIST


OF TABLES


Table


1. System
categorical
lottery
allocations


differences


and


in proportions


noncategorical


funds


1992


S. . 9


Table


2. Florida
allocations


Education


the


Enhancement


K-12,


Trust


and


Fund


stems,


shown


as a percentage


total.


. . . 30


Tabl


. Per


-student


funding


history


of Florida


community


colleges


, FY 1981


-1993,


expr


esse


d in


current


dollars.


S~ S S S S S S S S S S S 32


Tabl


. Descriptive


statistic


of all


variable


Tabl


ANOVA


table


relationship


status


and


between


the Florida


parameter


estimates


he lottery
community


and


the fi


the
scal


colleges.


Tabl


. ANOVA


table


and


parameter


estimates


the


supplantation


model


GRF


=A0


+ BYR


+ B2LT


B,3YR*LT.


S ~ S S S S S S S S S S S S S S S 90


Tabl


. ANOVA


table


and


parameter


estimates


the


supplantation


model


GRF


= Bo+BYR+B2LT.


Tabl


SStepwise


analyst


of supplantation.


Table


. Stepwise


regre


ssion


the dependent


variable


FTEX12.


S~~~~~ S S S S S 95


Table


. The


effect


of categorical


vs.


noncategorical


lottery


allocations


, the mod


el TOTSTATE


=1


B1CAT


+ B2LT


B3CAT*LT.


Tabl


The


effect of cate


goric


. restri


cted


lottery


allocations


, the


model


TOTSTATE


BCAT+B2LT.


S S S S S S S S S S S S S 5 599


rabli


-;~~ Lin t- Ir i


anall vs i a


P Prt


I ./-


111


ill













LIST


OF FIGURES


Figure 1 The
States,


spread of lotteries
1964 through 1993.


across


the


United


Figure 2 Florida Lottery allocations to education, FY
1987 FY 1993, shown in current dollars (Source:
State of Florida Department of Education, 1992,
1993). . .


Figure 3. Percentages of FY 1992 lottery allocations,
categorical & noncategorical (Source: State of
Florida Department of Education, 1993, p. 4).


Figure
un
19
of
19


4. Parimutuel tax revenues rose from FY 1965
til the inception of the Florida Lottery, FY
87 (Source: State of Florida Governor's Office
Planning and Budgeting,
93). . . . .


Figure 5. Supplantation of State of Florida general
revenue dollars with Florida Lottery dollars
allocated to the community college system. .


Figure 6. Redistribution
Florida's community
1991. .


of funding sources
college system, FY


for
1972


- FY














Abstract
the Ur


of Dissertation


diversity


Requirements


Presented


of Florida


the


Degree


to the


Partial Fu
of Doctor


Graduate
lfillment


School


the


of Philosophy


AN EXAMINATION
OF LOTTERY


OF SUPPLANTATION


ALLOCATIONS


AND


REDISTRIBUTION


TO A COMMUNITY


COLLEGE


EFFECTS


SYSTEM


Susan


Robinson


Summers


December,


1993


Chairman:
Cochair
Major Di


n: James
: David S
department


L. Wattenbarger
. Honeyman


: Educational


Leadership


Thi


dissertation


was


designed


to determine


whether


institution


a state


benefitted


-operated


from


lottery


being


SA state


a designated


system


rec


of public


ipient


community


colleges


was


used


the


analysis


. The


method


was


determine


whether


there


was


any


change


since


the


inception


the


Florida


Education


Lotteri


the


available


resources


and


actual


expenditures


the


28 state


-supported


community


colleges


Florida.


Four


basic


questions


investigated


effect


of a state


lottery


as a revenue


source


a public


community


college


system:


Did


the


start


the


Florida


Lottery


coincide


with


a change


in the


expenditure


trends


the


Florida


community


colleges


study


provided


evidence


an inverse


r0al t ; nnshi in


1 n**rt


tnlr 1 a


l r* f *


Sn*rt- 1al


rFnmmiin 1 +17


hptyppn







the


Florida


community


colleges


declined


after


the


inception


the


Florida


Lottery.


Did


Florida


Lottery


funds


either


supplant


enhance


state


general


revenue


funds


expended


support


community


college


education?


The


lottery


allocations


were


shown


to have


been


too


small,


and


too


recent,


to have


exerted

total a

study i


a significant


location

indicated


effect


to community


that


on the


magnitude


colleges.


supplantation


The


effects


the


results


were


state


this


influenced


redistribution.


Did


the


addition


the


lottery


as a revenue


source


result


a redistribution


the


proportion


community


college


expenditures


funded


through


state


sources?


This


study


provided


evidence


of redistribution.


The


community


colleges


were


shown


to have


been


increasingly


dependent


on nonstate


sources


revenue


since


the


inception


the


Florida


Lottery


Fiscal


Year


1987.


The


fourth


question


concerned


the


proportion


lottery


dollars


that


were


released


to community


colleges


the


form


of a categorical


allocation


versus


lottery


dollars


that


were


awarded


without


spending


restrictions.


There


was


evidence


that


the


extent


to which


the


lottery


allocation


was


a categorical


award


was


positively


correlated


with


the


size


the


total


state


allocation.


The


issue


of categorical


awards


was


linked


to redistribution


and


supplantation.














CHAPTER


INTRODUCTION


The


latter


third


the


20th


century


has


been


a time


when,


politically


expedient


reasons


, governments


have


experimented


with


the


use


of alternative


, nontax


methods


generate


funds


social


programs


. One


the


most


pervasive


methods


over


the


past


three


decades


was


the


implementation


of state


-sponsored


lotteri


as supplemental


government


revenue


sources


. While


some


lotteries


were


used


to generate


funds


the


state


treasury


, state


lottery


revenues


were


often


earmarked


a publicly-supported


social


system


such


as education,


parks


and


recreation,


economic


development.


The


scal


purpose


results


thi


of earmark


dissertation

ing lottery


was


revenues


examine


for


the


a public


system


of higher


education


. Thi


study


was


designed


determine


whether


such


a sy


stem


benefitted


from


being


designated


recipient


of a portion


the


profits


from


state


-operated


lottery


A state


system


of public


community


colleges


was


used


the


analysis


. The


method


used


address


question


was


to determine


whether


there


had


been


any


change


since


the


inception


the


Florida


Education









the


28 state-supported


community


colleges


Florida.


Did


the


Florida


community


colleges,


fact,


benefit


financially


from


being


earmarked


a portion


the


proceeds


from


the


Florida


Lottery?


Impact


The


first


issue


addressed


this


study


concerned


the


use


of a state


lottery


as a revenue


source


a designated


beneficiary.


Did


lottery


dollars


have


an effect


on the


financial


status


the


beneficiary?


Did


the


start


the


lottery


allocations


coincide


with


a change


the


expenditure


lottery


patterns


revenues


the


correlate


beneficiary?


with


Did


a significant


the


addition


change


the


total


funds


available


expenditure


the


beneficiary?


Specifically,


did


the


Florida


community


colleges


incur


greater


expenditures


after


the


Florida


Lottery


was


added


a revenue


source?


Suplantation


The


second


issue


addressed


this


study


was


whether


or not


the


lottery


had


an effect


on the


amount


state


nonlottery


funds


that


were


allocated


to the


beneficiary.


Were


lottery


dollars


addition


or a substitute


for,


nonlottery


state


funds?


In other


words,


did


the


addition









lottery


dollars


as a revenue


source


Florida


community


colleges


affect


the


total


amount


state


funds


that


were


allocated


the


28 community


colleges


Florida?


Redistribution


The


third


issue


addressed


this


study


concerned


the


extent


to which


the


annual,


current


expenditures


the


beneficiary


were


derived


from


state


funds.


Did


state


all-


source


allocations


decline


or increase


relative


beneficiary


current


source


this


expenditures


analysis,


that


the


were


annual


funded


through


expenditures


per


weighted


full


time


equivalent


student


(FTE)


at each


the


Florida


community


colleges


were


examined


as a function


State


of Florida


general


revenue


fund


allocations


to the


community


colleges.


Categorical


Versus


Noncatecorical


Allocations


The


fourth


and


final


issue


addressed


this


study


was


whether


or not


affected


beneficiary


expenditure


amount


(Appendix


restrictions


of nonlottery


dollars


In Florida,


on lottery


allocated


lottery


funds


dollars


the


were


initially


allocated


exclusively


as categorical,


restricted-


expenditure


awards.


The


extent


to which


the


lottery


allocation


was


categorically


restricted


decreased


each


year.









college'


annual


lottery


allocation


that


bore


categorical


spending


restrictions


correlate


with


the


supplantation,


enhancement,


or redistribution


of state


nonlottery


funds?


this


analy


sis,


total


state


expenditures


from


sources,


including

percentage


lottery funds,

to which the


were e

lottery


examined


as a function


allocation


was


the


categorical.


The


Florida


Education


Lotteries


Between


1965


and


1993,


voters


35 states


and


the


District


of Columbia


approved


referenda


to implement


government-operated


lottery


for


the


purpose


of creating


new


state


revenue


source.


The


Florida


Lottery,


like


24 other


state


lotteries,


was


earmarked


serve


as a revenue


stream


to fund


a designated


beneficiary


. In


Florida,


the


three


systems


of public


education


were


the


designated


beneficiary


es.


The


Florida


lottery


currently


operation


was


initiated


approved


through


a constitutional


statewide


referendum


amendment


1986


that


the


was


expressed


purpose


of generating


new


dollars


the


treasury


that


would


be spent


to enhance


education.


To underscore


the


purpose

Florida

to the


the


Education

State Educ


Florida


lottery,


Lotteries.


action


The


Lotteries


was


net p

Trust


named


proceeds


statute


were


the


deposited


Fund









contributed


the


support


of education,


adverti


sing


was


required

lottery


to "inform


funding


the

the


public

state's


about


the


overall


significance


system


of public


education,


" (FL


St. 24


.1215)


Florida


typical


of other


lottery


states


the


use


of a lottery


to attempt


to forestall


increasing


the


citizens


' tax


burden.


All


governments


are


required


generate


funds


the


operation


of governmental


functions


Most


state


governments


generate


revenue


through


combination


of personal


corporate


income


taxes,


and


sales


excise


taxes


. Florida


is one


of only


seven


states


without


a state


income


tax;


the


others


are


Texas


, South


Dakota,


Washington,


which


like


Florida


are


lottery-


operating


states;


Alaska


and


Wyoming,


where


revenue


earned


from


taxes


on the


extraction


of natural


resources;


Nevada,


where


bulk


of state


general


revenue


generated

parimutuel


through e

gambling


xcise


taxes


(Fisher


on casinos


, 1988)


. In


and


Florida


other

, the


forms

state


, tourism,


corporate


taxes


and


user


ees


are


the


primary


sources


of general


revenue


(Wood


Honeyman,


1992


Florida


voters,


like


those


in other


states,


had


routinely


rejected


referenda


that


attempted


to instigate


new


forms


state


revenue,


or new


taxes.


Floridians


were


protected


through


their


state


constitution


from


both


a personal


income









constitution


to permit


a lottery


but


continued


to resist


the


concept


of a state


income


tax


(Karcher,


1989).


Stark (1991)

demonstrated that


and

the


Stark,

lottery


Honeyman,


was


and


associated


Wood


with


1991)

the


supplantation


secondary


of general


education


revenue


Florida.


funds

There


elementary


need


and


extend


the


question


to the


higher


education


sector


general,


and


community


colleges


particular.


Have


community


colleges


benefitted


from


the


addition


of a state


lottery


as a revenue


source?


Specifically,


have


lottery


proceeds


either


supplanted


or enhanced


general


revenue


funds?


Have


lottery


funds


correlated


with


the


redistribution


of community


college


funding


sources?


what


extent?


This


study


specifically


addressed


the


community


college


system


four


different


reasons,


which


follow.


Community


Collecre


and


K-12


Similarities


The


first


reason


focussing


on the


community


college


system


was


based


on the


similarities


between


the


school


districts

secondary


and


community


school


(K-12)


colleges

funding


The


systems


elementary


have


and


been


extensively


examined


purposes


of determining


fiscal


equity.


The


methods


used


to study


K-12


may


be extended


the


community


college


system,


as was


done


Harrell


(1992









higher


education


with


the


closest


kinship


to elementary-


secondary


schooling


" The


district


organi


zation


and


funding


formulas


the


community


colleges


Florida


are


many


ways


similar


to the


elementary


and


secondary


school


districts


funded


. Both


through


community


weighted


colleges


FTE


and


formulas.


school

Further,


districts


the


are


community


college


system


consists


of 28 separate


institutions


that


are


each


governed


a local


board


with


a board-appointed


press


ident


heading


each


college


. The


community


college


system


local


governance


analogous


the


K-12


system


district


school


boards


and


superintendents


. The


emphasis


local


governance


contrasts


sharply


the


with


K-12

the c


and


central


community


college


governance


systems


Florida


State


University


System


(SUS)


. Thus


this


study


extended


the


work

the


of others

regression


weighted


who


examined


analysis


. The


school


across


similarities


time

that


district


of dollars


were


funding


using


expended


identified


per


between


the


K-12


and


community


college


systems


would


underscore


any


concerns


that


would


be raised


disparate


fiscal


treatment


the


community


colleges


were


observed.


Lottery


Allocations


as Noncatecorical


Awards


The


sec


reason


focussing


on the


Florida


community


college


system


was


because


the


community


college









local gover

expenditure


nance,


the


local


discretion


lottery


funds


concerning


should


the


facilitate


responsiveness


to district


needs,


and


result


a highly


visible


effect.


Thus,


the


allocation


lottery


dollars


noncategorical


spending


as opposed


to categorical


grants


and


aids


may


be perceived


as beneficial


to both


the


community


college


leaders


and


have


K-12


been


systems.


Florida


successful


s community


getting


college


virtually


all


categorical


spending


restrictions


lifted


from


the


lottery


allocation.


Florida


s school


district


superintendents


continue

lottery

included


to receive

allocation


an examination


a significant portion

as a categorical award


whether


the


the


. This


community


K-12

study

colleges


have


experienced


a greater


degree


of general


revenue


supplantat ion


because


the


lottery


funds


began


to flow


into


the


Community


College


Program


Fund


(CCPF)


without


categorical


spending


restrictions.


Table


1 shows


the


K-12,


community


college


(cc)


and


lottery


allocations


for


1992


dollars


allocated


as either


categorical


noncategorical


awards,


and


the


categorical


and


noncategorical


percentages


of each


system


s total


lottery


allocation.


The


trend


toward


a completely


noncategorical


lottery


allocation


to the


Florida


community


colleges


may


traced










1990)


. The


question


must


be asked


: Did


lifting


the


categorical


restrictions


on the


lottery


allocation


exacerbate


the


supplantation


of general


revenue


fund


Interestingly,


the


K-12


and


noncategorical


fund


lottery


allocations


of FY


1992


included


the


term


"for


enhancement,


and


carried


specific


accounting,


auditing


reporting


requirements


to document


expenditures


of lottery


dollars;

college


no similar


system


requirement


FY 1992


was


(Florida


made

Senate


the


Bill


community

278-H,


.517;


524;


.540;


.544;


.569;


579)


. As


may


Table


. System


noncategorical


differences


funds


in proportions


1992-93


lottery


of categorical
allocations.


and


Categorical


Unrestricted


K-12


allocations


78,57


,355


,427,645


Total


,000,000


Percentages

CC allocations


13.5%


,550,000


86.5%


121,650,000


Total


,200,000


Percentages


allocations


11,5


58,579


113,641


Total


,200,000


Percentages


9.2%


90.8%









seen


Table


the


community


college


system


received


the


lowest


percentage


lottery


funds


as categorical


awards


1992


dollars


categoricals


awarded


comprised


to community


less


colleges,


than


all


while


comprise


lottery

ing


nearly


for


the


and


about


for


K-12.


The


1993-94


Florida


Senate


Appropriations


Act


allocated


all


lottery


dollars


the


community


college


system


as noncategorical


awards.


Additionally,


million


noncategorical,


nonrecurring


lottery


funds


allocated


to the


Community


College


Program


Fund


(CCPF)


FY 1992


were


not


restored


the


FY 1993


allocation


(State


of Florida


Board


of Community


Colleges,


1993).


Lottery


as a Proportion


of Operatino


Revenues


The


third


reason


focussing


on the


Florida


community


college


system


was


that


the


community


college


system


received


the


largest


per-FTE


lottery


allocation,


and


the


lowest


per


-FTE


general


revenue


fund


allocation


. Both


enrollment


the


community


college


system


and


funding


per


FTE


were


lower


than


was


true


K-12;


therefore,


the


total


state


allocation


the


community


colleges


was


considerably


less


than


dollars


the


per


K-12


FTE


than


allocation.


were


The


community


was


colleges,


awarded


and


more


the


total


operating


budget


exceeded


that


the


community










the


Florida


community


colleges


generated


of student


postsecondary


FTE,


while


the


earned


37.4%


. The


community


college


share


of student


headcount


1990


was


even


greater


: 72


7% of all


postsecondary


students


attended


the


community


colleges


(Campbell


, 1992


. However


, the


community


college


system


was


awarded


total


net


proceeds


from


the


lottery,


which


was


the


same


percentage


allocated


to the


. Because


the


financial


needs


the


community


colleges


were


so great,


the


lottery


has arguably


had


a substantially


greater


effect


on the


overall


scal


health


the


community


college


system


than


either


the


K-12


or SUS


system.


In fact,


lottery


dollars


comprised


29.4%


the


per


-FTE


funding


community


colleges


FY 1991


(State


of Florida


Board


Community


Colleges


, 1993)


. Any


supplantation


redistribution


that


occurred


may


be a real


cause


concern.


An Unstable


Period


Community


College


Funding


The


fourth


reason


focussing


on the


Florida


community


state


colleges


lottery


system


coincided


was


with


that

sharp


the

peak


life

s and


span


the


valleys


the


per-FTE


level


of state


support


the


community


colleges.


The


Florida


during


a fi


Lottery

scally t


s few


urbulent


years


of existence


period


of history


have

. It


occurred

was









first


year,


FY 1987,


exceeding


the


revenue


projections.


the


earliest


years,


all


awards


made


to education


were


the


form


of categorical


allocations


accompanied


specific


reporting


requirements


to document


the


enhancements


on which


lottery


dollars


were


expended.


Then,


this


nation


s economy


declined


into


recession.


FY 1990,


30 state


governments


made


midyear


allocation


reductions


their


systems


of higher


education,


and


college


presidents


states


reported


FY 1991


allocations


that


were


lower


Florida


was


than


one


the


the


1990


allocations


recession


states


(Sweeney,


. Throughout


1991)


FY 1990,


Florida


s revenues


fell


short


of projections.


Florida'


former


Governor


Bob


Martinez,


who


law


was


obligated


balance


the


state


budget,


took


the


unprecedented


step


ordering

general


three

revenue


separate


midyear


allocations


of all


1990


systems


reductions


to the


of education.


The


Florida


State


Board


Community


Colleges


responded


recommending


the


lifting


of categorical


spending


restrictions


the


lottery


allocation


(Maxwell,


1990).


the


ensuing


years,


the


proportion


of lottery


funds


that


was


allocated


the


community


colleges


with


categorical


spending


restrictions


rapidly


declined.


In FY


1993,


the


community


college


lottery


allocation


was


entirely


noncategorical.


Thus,


a brief


span


time


presents


a unique










Definition


of Terms


The


beneficiary


the


designated


recipient.


Here,


the


term


pertains


the


agency,


service


institution


that


designated


receipt


of earmarked


lottery


funds.


Categorical


carants


and


aids


are


restricted-expenditure


allocations


within


the


Community


College


Program


Fund


(CCPF)


used


the


legislature


to fund


new


or existing


programs


keeping


with


the


Florida


Master


Plan


(Judd,


1988) .


The


source


these


funds


primarily


the


Educational


Enhancement


Trust


Fund


(EETF)


they


are


also


comprised


general


revenue


funds.


Categorical


allocations


comprise


the


Restricted


Current


Fund.


The


Community


College


Program


Fund


(CCPF)


consists


the


funds


allocated


the


Legis


lature


to operate


the


community


colleges


during


the


fiscal


year


(State


of Florida


Department


of Education,


1992b).


It is comprised


of both


noncategorical


program


funds,


and


restricted-expenditure


categorical


grants


and


aids.


Earmarkinac


is to set


aside,


or designate,


funds


specific


allocation


use,


earmarking


the


community


college


of lottery


proceeds


system.


Educational


general


operations


(E&G)


are


the


routine


activities


that


are


funded


through


the


general


a ~ ~~~ a a -


A 1


I


I


f


rrl 1









Educational


Enhancement


Trust


Fund


(EETF)


the


State


Florida


established


treasury


the


fund


Florida


receipt


Lottery


lottery


Act


revenues,


1986.


contained


Article


Section


15.c. 1


of the


Florida


Constitution


and


enacted


Florida


Statute


.120


and


.121.


Enhancement


refers


to lottery


funds


as they


pertain


the


state


nonlottery


allocation


to the


beneficiary.


lottery


funds


enhance


the


total


allocation,


they


comprise


new


dollars,


or an additional


sum


the


total


state


allocation.


For


example,


the


nonlottery


allocation


were


$100


per


fiscal


year,


and


the


lottery


allocations


were


enhancement


dollars,


the


nonlottery


allocation


would


continue


to be $100


and


the


lottery


allocation


would


additional


sum,


perhaps


. Thus,


the


total


state


allocation


would


be $102


with


the


enhancement


lottery


dollars.


Full


time


equivalent


(FTE)


refers


to student


enrollment,


as a function


of student


course


load.


FTE


computed


the


total


number


student


credit


hours


divided


40 for


Advanced


and


Professional


courses,


and


Postsecondary


Vocational


instruction.


FTE


computed


the


total


number


of student


instructional


clock


hours


divided


other


forms


postsecondary


instruction


(State


of Florida


Department


of Education,


1992b)










lottery


always


includes


three


elements


prize,


an award


chance,


and


a consideration


(Little


River


Theatre


Corporation


. State


ex rel


. Hodge,


1939)


. In


the


Florida


lottery


the


these


prospect


chances


are


of winning


purchased


a much


greater


one


dollar


amount


each


money.


The


grand


prize


the


lotto


game


is often


as high


as several


million


dollars


. The


chance


win


a great


prize


for


a small


investment


constitutes


the


risk,


or gamble


. The


purchaser


may


select


numbers,


which


introduces


an element


of skill


strategy


. Alternatively,


one


may


purchase


computer-generated


numbers


or scratch


-off


tickets;


thus,


no skill


or special


knowledge


is required


order


to play.


Program


funds


are


allocations


within


the


CCPF


used


general


operating


expenditures


and


cost


-to-continue


existing


programs


(Judd,


1988)


. The


major


source


is the


Florida


general


revenue


fund,


but


program


funds


are


also


comprised


of EETF,


or lottery,


revenues.


Redistribution


to reallocate,


reapportion,


or spread


a specific


quantity


to other


areas;


redi


stribution


a new


distribution


study,


of a given


redistribution


total


pertains


(Lambert,

to the p


1989) .


,roportional


thi


weight


the


revenue


sources


which


fund


a state


-supported


agency,


such


as a community


college


. For


example,


consider


that


state


taxes


have


historically


funded


the


current









shifts


to 60%


of current


expenditures,


redistribution


said


to have


occurred.


Restricted


Current


Fund


the


accounting


fund


used


track


the


resources


available


the


operation


and


support


instructional


programs


that


are


restricted


donors


donor


agencies


as to


the


specific


purpose


which


they


may


be expended


(State


of Florida


Department


of Education,


1990b) .


Categorical


funds


are


restricted


funds.


Supplantation


to take


the


place


or substitute,


one


thing


for


another,


as in


to substitute


lottery


funds


general


revenue


funds


. Supplantation


the


opposite


revenue


enhancement.


For


example,


consider


that


a state-


supported


agency


has


historically


been


awarded


$100


per


year.


A state


lottery


implemented


with


the


profits


earmarked


the


agency


. The


lottery


allocation


per


year.


the


state


nonlottery


allocation


drops


less


than


$100


when


the


lottery


added


as a revenue


stream,


supplantation


is said


have


occurred.















CHAPTER


REVIEW


OF THE


LITERATURE


An extensive


body


literature


exists


on the


subject


of American


lotteries


. Much


the


literature


thi


review


was


found


the


fields


economics


, tax


law,


public


finance,


political


science,


and


American


history


. A void


was


found


exis


t concerning


use


of a state


lottery


to fund


higher


education


general,


or community


colleges


particular


Twentieth


Century


American


Lotteri


In FY 1993,


District


lotteries


of Columbia


existed


(Appendix


states


their


and


the


popularity,


20th


century

lottery


American


lotteries


worldwide.


In 198


reflected

6, 140 di


the


ffere


resurgence

nt country


permitted


some


form


of legalized


gambling;


these


countries


had


legalized


lotteri


(Clotfe


lter


Cook,


1989)


Many


nations


operate


lottery


as a consumer


entertainment


product


as well


as a national


revenue


source


. For


example,


the


Philippine


government


has


operated


a national


lottery


since


1933;


the


Chinese


government,


since


1988


. The


former









billion


tickets


annually,


and


prizes


that


included


such


scarce


consumer


commodities


as washing


machines,


cars,


and


cash


(Clotfelter


of lotteries


& Cook,


across


the


1989)

United


. Figure

States,


1 displays the

beginning with


spread

the


New


Hampshire


lottery


the


1964.


Note


that


the


most


recent


lotteries,


as well


as a number


of nonlottery


states,


are


clustered


the


so-called


Bible


Belt


states


the


Southeast.


Twentieth


century


lotteries


represent


the


revival


old


and


honored


way


to raise


funds


worthy


activities


(Clotfelter


& Cook,


1990a)


. The


revival


of United


States


lotteries


was


a phenomenon


that


began


New


England


the


1960s


and


States.


the


spread


The


birth


rapidly


birth


of four


the


other


across

Florida

state lo


the


continental


Lottery


tteries.


United


corresponded


On the


with


general


election


day


1986


when


Florida


voters


approved


a lottery


referendum,


voters


Idaho,


Kansas,


Montana,


and


South


Dakota


approved


state


lottery


referenda


as well


(Mikesell


Zorn,


1987).


After


three-quarters


of a century


when


lotteries


were


illegal


every


state


and


territory,


1993


lotteries


were


approved


operation


the


governments


35 of


the


United


States


as well


as the


District


of Columbia


(Appendix


State


lotteries


the


20th


century


appeared


to be


an expedient


way


to raise


new


revenues


for


a state


































Copyright 1993 Broderbund Software, Inc. All Rights Reserved.


Figure


The


spread


1964 through 1993.


lotteries


across


the


United


States,


(Created using the PC Globe copyright 1993


Br0derbund
company.)


Software


Reprinted


with


permission


the


1975;


Clotfelter


Cook,


1987,


1990b).


When


lottery profits


were earmarked for public education or some other


socially-


redeeming purpose,


as they were


states,


a lottery was


commonly


held to be a morally


legitimate form of


recreational


gambling.


Despite


their popularity,


there existed an historic and


extensive body of


literature showing that government-


operated


lotteries were regressive


in nature,


unstable as a


-n A at~


1---


---3 --- -


, .~1-


Ara


-- %C r* '*a r ~ _f l UI ff l n I *-' n I- o1 a nn r nn U~ nvnn rn nh r rt r. *-a r


rB~li~ll~e~


CA IYA*ICIUICA


r~rn









been


voted


into


states


where


other


forms


gambling


were


illegal,


sometimes


under


the


guise


being


a deterrent


illegal


gambling


. However,


lotteries


have


been


found


have


no impact


on the


prevalence


of illegal


gambling


(Thomas


Webb,


1984)


. At


the


same


time,


lottery


have


been


associated


with


a 3%


the


crime


rates


certain


lottery


states


(Mikesell


& Pirog-Good,


1990)


. Additionally,


lotteries


have


been


shown


to have


exerted


a suppressing


effect


on parimutuel


wagering


(Vasche,


1990)


Since


parimutuel


wagering


generates


exci


tax


revenues,


the


suppression


of commercial


gambling


also


the


suppression


of a state

years of a


revenue


annual


source


growth,


e. In fact,

parimutuel


after 23 consecutive

revenues in Florida


declined


from


the


lottery


s inception


1987


through


figures


FY 1991,


were


the


most


available


recent


the


fiscal


time


year


thi


which


study


(State


Florida


The


Governor


decline


s Office


constituted


of Planning


a revenue


and


loss


Budgeting,


of $24


1993)


.9 million


to the


State


of Florida


treasury.


The


Impact


the


Lottery


on Community


Collecae


Fundincr


While


there


was


an extensive


body


literature


regarding


the


lottery,


there


was


a real


dearth


of research


concerning


the


lottery


as a revenue


source


higher










colleges


are


worthy


of special


attention


owing


to their


size


and


spectacular


operated


college


lottery


growth


has


enrollments


" The


growing


coincided


during


an era


with


prevalence

swelling


of fiscal


of state-

community


restraint.


The


result


was


that


state


lottery


revenues


have


comprised


increa


singly


common


source


of community


college


funds.


was


time


to examine


the


state


-sponsored


lottery


as a revenue


source


community


colleges.


Voters


prefer


lottery


over


new


taxes


Nationwide,


the


1980s


and


1990s


have


been


decades


decentralization,


fiscal


restraint


, and


economic


recession.


the


along


1980s,


with


federal


a reorganize


general


action


revenue


sharing


the federal


came


budget


an end


that


put


more


responsibility


to fund


state


operations


on the


individual


states,


and


ess


on the


federal


government


(Blackley


DeBoer


, 1993;


Hildred,


1991)


. The


tax


relief


and


tax


state


reduction


tax


1981


measures


increases


, in


1970s


. Legis


states


gave


lators


1982


way


states


, and


41 states


the


rais


1980s


taxes


at least


one


state


tax


was


raise


ed in


1983


(Swartz


Peck,


1990)


In the


political


climate


the


1980s


and


1990s,


taxpayers


simultaneously


experienced


stagnant


wages


and


growing


tax


burden.


In such


a climate,


a lottery


was


viewed


many


citizens


as being


an unmitigated


good,


a voluntary









lottery


was


politically


more


popular


than


the


passage


additional

Clotfelter


taxes

& Cook


(Allen,

, 1989;


1991;

Wyett,


Borg &

1991)


Mason,

. This


1988,


1990;


viewpoint


was


reinforced


dollars


with


would


the


only


common

provide


held


revenue


contention that

enhancement for


lottery

the


beneficiaries,


and


would


not


supplant


general


revenue


dollars.


The


lottery


as a share


of total


state


revenues


Even


successful


state


lotteries


generate


revenues


that


comprise


only


a small


percentage


the


total


state


treasury.


As a proportion


of all


state


revenues,


the


lottery


shares

reflect


increased

real gro


somewhat


wth


the


lottery


1980s.


revenues,


This

but


increase


may


may


also


reflect


a decline


other


state


revenues


relative


lottery


revenues.


Nationwide,


state


lotteries


were


reported


to generate


an average


ranging


from


(Mikesell


& Zorn,


1988)


to 4%


(Clotfelter


& Cook,


1991)


of state-earned


revenue.


Year-to-year


and


state-to-state


variations


were


considerable.


FY 1985,


the


range


extended


from


a low


only


0.09%


own-source


state


revenues


Vermont,


high


of state


revenues


Maryland


(Mikesell


Zorn,


1988)


. In


1985,


the


lottery


states


earned


average


profits,


of general


from


revenue


FY 1980


dollars


(Mikesel


from


lottery


1 & Zorn,


1987).









1985,


rising


to about


3.3%


own-source


state


revenues


(Clotfelter


Cook,


1989).


Allocatina


lottery


profits


to community


colleges


The

community


actual allocation

colleges appears


of state

to have


lottery


been


profits


a pervasive


phenomenon,


yet


one


that


was


difficult


to quantify.


The


method


of allocation


varied


from


state


to state.


Fourteen


state


legis


latures


earmarked


the


lottery


profits


education,


while


others


earmarked


the


funds


other


beneficiaries.


Thirteen


state


lotteries


generated


general


revenue


1993,

funds


funds


about

that


the


two-thirds


flowed,


state


of all


part,


treasury


state

the


(Appendix


lotteries


public


In FY


generated


community


colleges.


was


not


always


clear


from


reading


the


legislation


which


state


community


college


systems


received


lottery


allocations,


because


the


earmarking


was


often


unspecific.


example,


the


beneficiary


was


generically


termed


"education"


the


lottery


legis


lation


from


Connecticut,


Ohio,


Michigan,


New


Hampshire


(Appendix


Sometimes


profits


were


earmarked


in a way


that


could


have


been


received


a community


college


through


a categorical


grant


award.


funded


In Arizona


economic


and


Iowa,


development,


example,


the


Indiana


lottery


lottery


dollars


funded









commonly


participate.


In 13 states


the


lottery


profits


flowed


into


the


general


revenue


fund,


where


they


may


have


been


reallocated


to the


community


colleges


as a special


appropriation.


For


these


reasons


was


useful


compare


the


information


compiled


from


the


state


constitutional


and


statute


citations


found


Appendix


with


information


collected


over


the


years


from


a consistent


source.


National


Community


College


Finance


Surveys


were


conducted


since


the


1960s


James


Wattenbarger


and


his


associates


at the


Institute


Higher


Education,


University


of Florida.


the


1988


edition


the


Community


College


Finance


Survey,


which


collected


data


FY 1986,


only


the


California


respondent


reported


receipt


of lottery


funds


(Wattenbarger


Mercer,


1988).


In the


1990


edition


the


same


study,


15 state


respondents


reported


that


state


lottery


dollars


California


provided


was


partial


joined


funding


Connecticut,


community


Florida,


colleges:


Indiana,


Iowa,


Michigan,


New


Hampshire,


New


Jersey,


New


York,


Oregon,


Rhode


Island,


Virginia,


Washington,


West


Virginia,


and


Puerto


Rico


(Honeyman,


Williamson,


Wattenbarger,


1991)


The


total


rose


to 21 states


with


the


subsequent


edition


the


study,


when


6 additional


state


respondents


reported


lottery


Kentucky,


funding


Missouri,


community


colleges:


Pennsylvania,


and


Arizona,


Vermont


Illinois,


(Honeyman,









the


most


recent


editions


the


survey


. Idaho,


Minnesota,


and


Montana


were


lottery


-operating


states,


where


the


proceeds


were


earmarked


various


projects,


but


those


state


respondents


did


not


specify


that


lottery


dollars


were


expended


on community


college


education


. Georgia


voters


approved


public


a lottery


education


referendum


. Thus,


1992


the


which


21 state


was


earmarked


respondents


who


reported

college


that


lottery


education


dollars


supported


were


the


expended


estimate


tha


on community

t two-thirds


35 state


lottery


provided


funds


public


community


colleges


in FY 1993.


Do lottery


beneficiaries


receive


ess


state


money


Hines


(199


compared


FY 1993


with


1991


allocations


to higher


education


. When


Hines


' results


were


overlaid


with


the


result


the findings


described


above,


some


interesting


patterns


appeared.


Hines


grouped


states


into


four


quartiles


based


on their


allocations


higher


education


in FY


1993


relative


to FY 1991


. Those


cla


ssed


"lowest"


had


the


lowest


increase


the


biennium--in


fact,


these


states


reported


allocation


decreases


ranging


from


.51%


to 3


.34%


. Those


classed


"highest"


had


allocation


increases


of 27


.09%


.90%


. The


next-highest


were


classed


"second;"


the


next


lowest,


"third"


(Hines,


1992


If lottery


funds


were


intended


to enhance


the


total









with


better


state


funding


for


education.


However,


Hines


analysis


state


funding


higher


education


indicated


that


the


higher


education


systems


with


the


greatest


gains


funding


were


found


among


the


group


15 states


where


there


was

were


no state


found


lottery

states


. The

which


most


lucrative


budgeted


state


funding


lotteries


reductions


higher


education.


In Hines


' analysis


the


two


states


showing


the


greatest


funding


gains


higher


education


were


Nevada


and


Arkansas,


neither


of which


had


a state


lottery


. Of


the


entire


"highest"


quartile,


8 of


the


states


did


not


operate


a state


lottery


. Only


states


the


"highest"


group


had


a lottery


that


was


earmarked


education


(Oregon,


New


Jersey,


and


Montana)


. Conversely,


the


states


the


"lowest"


grouping,


only


Alaska


was


a nonlottery


state.


The


other


"lowest"


states


had


a state-operated


lottery;


these,


5 state


lotteri


were


earmarked


education


(New


York,


Ohio


, Connecticut,


Florida,


and


California)


. Thus,


there


appeared


to have


been


an inverse


relationship


during


the


early


1990s


between


the


existence


a state


lottery


and


the


the


state


allocation


higher


education.


Interestingly,


the


lotteries


California,


Florida,


and


New


York


were


the


highest-grossing


state


lotteri


1990,


with


net


receipts


$924


to $809


million


dollars


per









Florida


and


New


York


lotteri


(Calkins,


1992


. The


drop


FY 1993


funding


after


a highly


success


sful


1990


lottery


may


have


indicated


a plateau


or erosion


lottery


profits,


combined


with


a reliance


those


state


legi


slators


on the


lottery


as a funding


source


higher


education.


Perhaps


the


states


where


lottery


revenues


were


earmarked


education,


legi


slators


developed


a reliance


on the


lottery


as an education


funding


source,


diverting


general


revenue


funds


to other


projects


When


lottery


revenues


plateau


or decline


When


the


funding


an agency


is tied


to a state


lottery,


there


is cause


concern


about


the


stability


that


funding


. The


expansion


the


use


of a state


lottery


a revenue


source


a designated


beneficiary


had


coincided


with


a national


trend


state


lottery


revenues


to plateau,


and


even


(1990)


decline.


noted


that


In studying


gross


the


and


New


net


York


revenue


lottery,


were


DeBoer


stagnant


over a 3-year

DeBoer (1986)


period

used r


the


egression


mid-1980s.


analy


In a separate


to predict


study


that


lottery


growth


nationwide


would


slow


before


1995


. In


both


of hi


studi


, DeBoer


established


that


the


phenomenally


rapid


growth


of state


lotteri


the


early


1980s


was


not


present


the early


1990s


. DeBoer


s work


was


supported


Mikesell


(1987)


Calkins


(1992


. Mikesell









findings


should


ever-increasing


temper e
revenue.


enthusiasticc


portraits


252)


Calkins


found


that


on-going


state


lotteries


generated


annual


revenue


increase


of 26%


to 31%


the


years


1981


1985.


1990,


the


rate


growth


over


the


prior


year


had


sharply


declined


only


The


Florida


Education


Lotteries


according


to the


advertising


campaign


used


to lobby


passage


the


amendment,


and


written


into


the


enabling


legis


lation,


the


citizens


were


told


that


the


Florida


lottery


would


generate


enhancement


funds


improvements


education


(Clotfelter


& Cook,


1989;


FL St.


S24.102.1


The


enabling


legis


lation


stated,


further,


that


the


lottery


would


not


be used


to substitute,


or replace,


general


revenue


funds


(S24.102


.2.a


While

amendment


the

was


actual

vague a


wording


nd,


the


therefore,


constitutional

flexible in


interpretation,


the


enabling


legis


lation


specifically


addressed


the


appropriate


and


allowable


uses


for


lottery


profits.


In accordance


with


Article


Section


15.C.I1


the


Florida


Constitution,


et proceeds
deposited to
ie State Ed
appropriated


derived
a state
ucation


the


from
trust


the 1
fund


Lotteries


Legis


otteries


shall


to be designated


Trust


Fund,


to be


lature.









Statute


24.102


the


enabling


legi


slation


the


lotteries,


specified


That


the


net


conducted pu
improvements
proceeds not
resources fo


proceeds


rsuant


the


to this


public


r


be used
public


education


lottery


be use
n and


as a substitute


games
d to support


that
for


such
existing


education.


The


legis


lation


further


stipulated


that


the


funds


were


distributed


among


the


three


systems


of publicly


-funded


education


Florida.


Section


24.121


.5.b


specified,


The
in


Legis
the tr


lature
ust fun


shall e
d among


quitably
public


apportion


schools


monies


, community


colleges


and


universe


The


allowable


uses


the


lottery


profits


, described


24.121


May


include,


scholar


res


ship,


earch


education,
independent
consistent


post


are


matching
economic


salary


not


limited


funds


direct


development


enhancement,


institutions


with


secondary


program


the


state


education


or purpose


deemed


endowment,
grants,


related


contracts


to conduct


master
or any


pla


other


desirable


to
with


programs
n for


educational
the


Legis


lature.


The


Florida


lottery


was


required


to retain


least


gross


revenue


from


sale


lottery


tickets


and


other


earned


revenue


deposit


the


Educational


Enhancement


Florida


Trust


lottery


Fund,


allocation


as specified


to community


.121.2


colleges


Since


that


1991


flow


, lottery


school


profits


have


districts,


been


and


the


allocated


community


4









community


college,


and


systems


for


FY 1987


through


FY 1992


. Prior


the


FY 1991


allocation,


the


proportional


allocations


varied.


For


example,


FY 1987,


community


colleges


received


14.4%


the


Florida


Education


Trust


Fund


receipts,


while


the


SUS


received


23.1%;


FY 1989,


community


colleges


received


8.5%,


and


the


was


awarded


15.1%


(State


of Florida


Department


Education,


1992)


The


that


fund


Florida


specific


higher


and


California


percentages


education


the


as well


lotteries

profits


as school


were

were


unique i.

earmarked


districts.


Although


the


lottery


states


earmarked


at least


a portion


Table


. Florida


Education


Enhancement


Trust


Fund


allocations


the


K-12


' CC,


and


systems,


shown


percentage


total


Fiscal


Year


1987

1988

1989


1990


K-12


60.8%

78.9%


CC

14.4%


sus


11.6%


15.1%


75.2%


8.9%


14.3%


1991


70.0%


15.0%


15.0%


1992


70.0%


15.0%


15.0%









the


lottery


profits


education,


the


earmarking


was


almost


always

Although


limited

h the


the


Illinoi


school

lottery


districts

profits


(Appendix


were


initially


earmarked


level


of public


education,


the


Illinoi


legislature

proceeds to


1985


higher


suspended

education


the

(Borg


allocation


Mason,


of lottery

1988).


Table


shows


the


funding


history


the


Florida


community


colleges


since


FY 1981,


reflecting


the


erosion


the


general


revenue


allocation


as the


lottery


gained


momentum,


and


the


overall


decline


the


funding


per


FTE


despite


increasing


size


lottery


allocations.


Despite


the


additional


support


of lottery


funds


since


1987


, Jones


and


Brinkman


(1990)


noted


that


the


Florida


community


colleges


were


under-


funded


and


over


-stressed


Florida


s community


colleges


. have


comparatively
expenditures


only


two


national


few
per


Florida
median


resources


FTE
ins


student
titution!


on thi


. An analysis
S. indicates


s


are


measure.


of
that


above


cons


ider


this


prima
level


facie


se


enrollments
enrollments


has


not


kept


evidence


rvices
are a


inadequate


being


generally


in other


pace


rendered


increasing


states


in recent


and
year


funding


. Because


faster


because


the


lorida
than


funding


it is probable


that


more


recent


data


would


reveal


a worse


, not


better


, picture.


. A-6)


Fundinca


public


education


with


the


Florida


Lottery


In Florida,


educational


the


support


proportion


comprised


of each

lottery


year'

fund


s total

s has been


essentially


constant


since


the


first


two


years


following


the









decline


during


the


first


three


years


lottery


funding,


the F





Table


colleges


lorida


. Per


, FY


general





'-student


1981


revenue e





funding


allocation


history


to education


Florida'


current


dropped





community


dollars


GRF


LOTTERY


STU
FEES


LOT


TOTAL


AS %


OF TOTAL


1981


1982


,027


,036


1983


1984


1985


1986


1987


,348


3,010

3,280

3,398

3,587


,678


,826


,893


3,829


1988


2,936


1989


,816


11.0


1990


1991


,262


1992


1993


2,30


1,084


1,124


3,971

4,046


16.1

15.3


source

Notes:


State


All sums


Florida Board


expressed


Community


FTE.


FY 1981


-rr .n a, a a -I 4


Colleges

-1991 r-


1993


presents


C C


-1993,


expressed


,659

,685


3,956

3,924


. 17.

actual


-B









(Karl,


19911.


Meanwhile,


as a proportional


source,


lottery


revenues


at first


rose,


then


declined.


The


proportion


total


state


educational


support


comprl


sed of


lottery


dollars


more


than


doubled


from


FY 1988


to FY


1989;


lottery


dollars


comprised


less


than


the


total


1988


state


allocation


to education


(Allen,


1991)


and


compri


9.5%


the


total


educational


allocation


FY 1989


(State


of Florida


Department


of Education,


1990b)


. In


FY 1992,


about


the


level


was


state


s total


comprised


allocation


lottery


dollars


education


(State


Florida


Department


of Education,


1992,


1993*


As a proportion


total


budget,


these


percentages


approximated


the


projections


made


former


Florida


Commi


ssioner


of Education


Ralph


Turlingtonr Turlington


lobbied


hard


the


lottery


s passage,


linking


the


lottery


to enhancement


dollars


education


. Turlington


s pro-


lottery


campaign


emphas


ized


that


passage


the


lottery


was


crucial


the


fiscal


health


of education


. However,


1986


Turlington


projected


annual


lottery


revenues


$350


million,


an amount


that


would


have


comprised


only


about


the


1986


total


state


allocation


education


(Clotfelter


& Cook


, 1989).


The


future


of Florida


Lottery


revenues


The


instability


lottery


as a revenue


stream


..

























6.5


i~fl 1.9* 539* 991 992 99)))


Fla.l Year
D In fBlllion


Fi ure


Florida Lottery allocations


to education,


FY 1987


1993,


shown


Department of


current


Education,


dollars


1992,


(Source:


State


Florida


1993)


absorb the weight of


the effect?


For the


lottery has


long


been noted to


be an unreliable source of


income,


"subject to


major year-to-year swings,


" (Mikesell


& Zorn,


1988)


. By


1993,


the Florida Lottery


allocation


to education had never


regained


the FY


1989


level


(State of Florida Department of


Education,


1992,


1993).


The fluctuations


the size of


the


Florida Lottery allocations to all systems of


education are


shnwn in in Firnr









the


Florida


lottery


the


implementation


the


Georgia


lottery


S ne


probable


contributing


factor


the


success


the


Florida


lottery


is that,


prior


to 1993,


none


the


states


contiguous


to Florida


operated


a lottery


. The


presence


of contiguous


co-lottery


states


was


found


to be


negatively


correlated


with


lottery


revenues Mikesell


Zorn,


1987)


. However,


a contiguous


state


lottery


has


also


been


reported


to facilitate


ticket


es: Stover


(1990)


found


that


a lottery


in a neighboring


state


could


improve


increasing


enthusiasm


consumer


awareness


Georgia


voters


approved


a lottery


referendum


in 1992


. The


following

Georgia


year,


Lottery,


in the

$52 m


first


million


seven


days


dollars


wel


' operation

re wagered,


the


a sum


that


represented


per


capital


the


state.


With


feat


the


Georgia


Lottery


surpassed


a six-year-old,


unbroken


national


record


first-week


lottery


the


Florida


equivalent


Lottery,


where


to $7


per


first-week


capital.


gross


receipts


Interestingly,


were


the


Georgia


Lottery

chief e


is headed


executive


Rebecca


officer


Paul,


the


who


Florida


was


the founding


Lottery


(Florida


lottery


record


fall


, 1993)


. In


1993


, Florida


Lottery


revenues


should


reflect


an effect


from


the


Georgia


Lottery,


which


may


well


be suppression


of sal


es.


Second,


as the


newness


Florida


lottery


gives


way


to maturity,









analysis


suggested


a revenue


peak


at a lottery


age


years,


which


the


Florida


Lottery


will


reach


1997:


Maturing


the


hurts
the s
only


lotteries


presence


sales.


econ
the


a strong


d


at first


of a neighboring


. The


strongest


influence
r effect.


forces


effect


sell


more,


state


then


s lottery


of lottery


on sales


of a neighboring
(p. 252)


age


less;


also


have


. with


lottery


having


Enhancement


dollars


or subsistence?


The


Florida


lottery


s seven


years


of existence


have


coincided


with


a general


recession,


a devastating


hurricane,


and


a drop


tourism


, the


state


s major


industry.


Lottery


dollars


were


used


FY 1990


subsistence


at the


community


colleges


during


the


three


mid-year


reductions


the


state


allocation


. While


the


community


college


system


had


initially


used


lottery


dollars


such


tangible


enhancement


projects

library


as system-wide


collections


library


the


automation


individual


and


expanded


colleges,


1990


the


college


presidents


supported


the


lifting


of categorical


restrictions


on lottery


funds


order


to fund


basic


current


expenses.


In FY


1991,


the


Florida


legis


lature


implemented


policy


to permit


the


governing


bodies


the


K-12


school


districts,


community


colleges,


and


state


university


system


(SUS)


to decide


internally


the


method


with


which


most


the


lottery


allocation


would


be awarded


(State


of Florida


frof P1ir'nra4 I nnn


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Iclrczt pm









on about


the


K-12


lottery


allocation


In comparison,


the


legi


slature


reserved


categorical


awards


about


the


SUS


lottery


allocation,


and


less


than


the


community


college


allocation


. Each


year


since


1990,


the


legislature


had


placed


a declining


proportion


the


community

spending


college


lottery


restrictions


. In


allo


cation


FY 1993,


under


the


categorical


lottery


allocation


community


colleges


was


entire


noncategorical


. Figure


graphically


depicts


the


proportional


differences


between


the


K-12

the


, community


lottery


college


(CC) ,


allocations


and


1992


educational


that


were


systems


categorical,


as opposed


to noncategorical,


awards.


Lottery


Revenues


Viewed


as an Exci


Tax


IOne


reason


the


lottery


s popularity


was


that


was


commonly


considered


to be a nontax


public


revenue


(Berry


Berry,


1990;


Clotfelter


Cook,


1989;


Hersch


& McDougall


1989)


. However


, many


diff


erent


researchers


have


argued


that


lottery


revenues


should


be viewed


as an excise


tax,


even


though


the


partic


ipation


lottery


games


is voluntary


Contemporary


American


lottery


began


in New


Hampshire


1964,


where


a state


lottery


was


implemented


order


funds


education


to relieve


the


tax


burden


property


owners.


was


viewed


the


citizens


of New


































K-t12 ii BUS


Oh?


Ficrure


categorical
Department


Percentages of FT
& noncategorical


of Education,


1993,


1992


Source:


lottery


State


allocations,
of Florida


. 4).


Webb,


1984


, p.


. New


York


voters


followed


approving


state


lottery


1967;


the


New


Jersey


voters,


1970.


the


1970s,


voters


states


approved


lottery


referenda.


the


1980s,


18 states


were


added


the


lottery-operating


list.


A lottery


was


implemented


Wisconsin


1988


explicitly


property


tax


relief


.10)


. In


the


1990s


, four


more


state


lotteries


were


approved,


Georgia,


T." i


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Elnna


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Iflpy=l C









referenda


(Clotfelter


Cook,


1989)


. However,


the


trend


rely


on a state


lottery


needed


revenues


may


have


come


full


circle


. Garland


(199


conducted


a survey


of New


Hampshire


voters


attitudes


toward


implementing


a state


income


or sal


tax


to equalize


the


funding


the


states


public


school


His


findings


suggested


that


the


voters


were


ready


approve


higher


taxes,


those


taxes


were


earmarked


to benefit


public


education.


the


lottery


reqress


iv.?


Regard


ess


the


prevalence


and


popularity


the


20th-century


state


lottery


, a strong


case


may


be made


that


the


state


lotteries


are,


in fact,


exci


axes


that


are


more


regres


sive


than


the


excise


taxes


on liquor


or tobacco.


Several


different


researchers


have


used


regression


techniques


lottery


measure


as a tax


the


, as well


economic


as the


regress


ivity


prevalence


the


lottery


play


among


different


demographic


groups


(McConkey


Warren,


1988)


. The


most


comprehensive


analyst


the


state


-operated


lottery


as a public


revenue


source


was


written


Clotfelter


and


ass


ociates


(Brinner


Clotfe


Iter


, 1975


Clotfelter


Cook,


1987


Brinner


anm


, 1989,

d Clotfe


1990a,

iter a


1990b,


argued


1991)


that


. As


lottery


early


as 1975,


revenues


might


analyzed


using


the


techniques


used


to study


tax


public


policy:









lottery tax imposes a burden
judged within the framework
analysis. (p. 395)


which may properly
of traditional tax


more


states


implemented


lotteries,


Clotfelter


and


Cook


(1987)


extended


the


analogy:


Not
net
not
to
rat


only is it appropriate to label the resulting
revenue an implicit tax, it is interesting to
that this implicit tax is closely analogous
corporate tax on net income, but with a tax
of 100 percent. (p. 534)


The


emotional


intensity


of Clotfelter


and


Cook's


publications


was


evident.


They


described


a lottery


wager


a "sucker


bet,


" (1989,


70),


then


a "lousy


bet,


" (1990b,


104),


and


finally


a "crummy


bet,


" (1991,


228).


Karcher


(1989) ,


an attorney


and


former


New


Jersey


legislator,


used


an emotional


tone


to describe


the


lottery


as a regressive


tax


The end result
regressive and
that target the
a manner that i
These, indeed,
avarice, consci
hypocrisy." (p.


is a system that, as tax policy, is
rapacious, that uses promotions
poor, and that markets tickets in
s often abusive and exploitative.
are the three "sins" of the states:
ous oppression of the poor, and
7)


Thomas


and


Webb


(1984)


supported


the


Clotfelter


and


Cook


argument,


that


the


lottery


should


be viewed


as a


regressive


tax


That portion
profit serves
Regardless of
tax or a prof
contribution
nri rC ann r n


represented


in
wh
it,
to
4"k


practice
ether the
the resul
the state


s


"state
s an ex
revenue
is the
treasury
yn rP a a


r


share" or
ise tax .
s considered a
same; the
is in
4-ba nyMItrn grrbse l









Predictor


variables


of lottery


participation


Mikesell


Zorn


(1988)


argued


that


a state


lottery


was


an exci


tax


that


was


highly


regressive


because


the


demographic


descriptions


the


persons


who


have


the


greatest


participation


rates


Lotteries


and


classes


bear


because


, appear


a high
the p
to wo


implicit


attern


rsen


exci


of play


the


overall


tax


cross
equi


rate
income
ty of


the


revenue


system.


Clotfelter


and


Cook


(1989)


concluded


that


the


lottery


was


regressive


many


reasons,


including


the


demographic


descriptions

strongest pr


the


edictor


players.


These


variable


researchers


lottery


partic


found

ipation


the

to be


level


of formal


negatively


education.


correlated


with


They


found


lottery


education


play,


which


to be


the


inverse


casino


the


gambling


positive


and


correlation


education.


found


Thus,


to exist


the United


between


States,


the


people


who


are


the


most


educated


are


most


likely


gamble


in casinos;


the


least


educated


people


are


most


likely


to play


the


state


lottery


Clotfelter


a predictor


Hispanics


and


Cook


variable


having


(1989)


lottery


greater


found


play


participation


, with


rates


that


Blacks


than


ethnicity


and


whites


Further,


while


income


per


se was


not


found


to be predictive,


frequent


participants


from


the


lowest


income


groups


were


shnwn


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. 38)


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percentage


of household


wealth.


Therefore,


Clotfelter


and


Cook


concluded


that


the


lottery


was


regressive.


Does


earmarking


exacerbate


rearess


ivitv?


Borg


and


Mason


(1988,


1990)


examined


the


uses


to which


lottery


revenues


were


put


as well


as the


demographics


the


players


. Using


regression


analysis


they


showed


first,


that


the


lottery


had


become


more


regressive


over


time;


second,


that


the


people


who


played


the


lottery


most


were


those


who


received


the


least


direct


benefit


from


the


state


expenditure


lottery


profits


. Borg


and


Mason


concluded


that


the


demographic


disproportion


of benefits


received


versus


partic


ipation


rates


increased


the


regressivity


the


lottery.


Wyett


(1991)


argued


that


lottery


were


regressive


taxes


legis


whose


lators


regre


ssivity


earmarked


the


was


exacerbated


proceeds


when


any


state


recipients


other


than


the


state


general


revenue


fund.


Like


Borg


and


Mason,


Wyett


found


that


lottery-funded


projects


were


not


heavily


used


low-income


citizens.


Further,


Wyett


found


that


low-


income


citizens


disproportionately


constituted


the


pool


lottery


players.


Lotteries
taxation


are


fall


regressive


most


taxes


heavily


whose


incidence


on low-income


family
regres


. In fact,


sive


tax


lotteries
existence


are


the


the


most


United


States


today
taYS -o


. Not


but


the


only


are


directed


these


use


U.


lottery


the


1 otterv


implicit









TvPe


of lottery


came


versus


regressivitv


All


lottery


games


are


not


equally


regressive;


some


games


are


more


regressive


than


others


. The


on-line


lotto


games


were


found


to be


the


least


regressive,


because


they


were


played


most


heavily


higher-income


persons,


and


were


ess


favored


members


the


lower-income


groups


(Clotfelter


& Cook,


1989;


Mikesell,


1989)


. On-line


games


also


generated


the


most


excitement


and


earned


state


treasury

incurred


the


huge


highest

jackpots,


revenues

often m


because


any


they


millions


sometimes

of dollars


(Masters


& Gaines,


1993)


SupDlantation


The


tendency


of lottery


dollars


to supplant


general


revenue


funds


was


recognized


Weinstein


and


Deitch


(1974)


nearly


two


decades


ago,


using


data


collected


from


five


different


states


from


1968


through


1973


. These


researchers


concluded


that


the


supplantation


of general


revenue


funds


with


lottery


dollars


was


a more


probable


outcome


than


the


enhancement


of available


resources


any


given


beneficiary


Wyett


(1991)


noted


that


earmarking


the


lottery


proceeds


a specific


beneficiary


was


most


likely


to lead


supplantation


of general


revenue


dollars


. Wyett


viewed









unstable,

revenue.


and

When


unpredictable


lottery


when


revenues


used


plateaued


as a source


or actually


declined,


as they


did


Colorado,


Illinois,


Missouri,


West


Virginia,


and


the


District


of Columbia


FY 1988,


the


supplanted


general


revenue


funds


typically


were


not


immediately


restored


to the


lottery


beneficiaries.


Is sucrlantation


inevitable?


Clotfelter


and


Cook


(1989)


argued


that


supplantation


was


inevitable,


despite


measures


like


earmarking


which


were


designed


to control


the


use


revenues,


because


the


fungible


nature


the


state


budget


process.


Even


state


particular


does


purpose,


earmark


there


lotte


reason


ry income
to believe


the


effect.
revenues


legisl
into a
agency


budget
Despite


process
efforts


impose


ature
account


from
when


receiving


nullifies


the


to segregate


sible


taking th
voting o
earmarked


to prevent


at


source


intended
lottery
the


revenue


n appropriations


funds.


for


228)


The


Illinoi


lottery


profits


were


earmarked


public


education


sing


trend


analysis


, Borg


and


Mason


(1988)


determined


that


supplantation


general


revenue


funds


did,


fact,


occur


in Illinoi


, concluding


that


The


evidence


. The


problem


redirecting.


that


the


has been
otherwise
diverted


fund


overwhelmingly


extends


There h
s truly


no policy


have


away


gone
to oth


suggests


beyond


as been


legi


no way


to education


to prevent


funds


to education
er programs.


from


(p


that


has


slative
to guarantee


since
that w


there


would


being


. 81)


Ciinnvvl nn4 4 n


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W1 nr4 iA


that









Florida.


Stark,


Honeyman,


and


Wood


(1991)


found


that


lottery


funds


were


used


to substitute


a portion


of general


revenue


funds


support


of elementary


and


secondary


education


1989.


According t

In Florida,


;o MacManus

there is


and


Spindler


no legal


(1989),


prohibition


against


slative


revenues


legi


other
the p


source


ast.


substitution


that


There


creates


a net


lottery


have support
no guarantee


gain


ted
tha


the


revenues
education
t a new r


education


f


revenue
funding


base


. (p.


MacManus


and


Spindler


predicted


that


true


beneficiary


an earmarked


lottery


would


not


the


designated


beneficiary,


which


the


case


of Florida


was


education.


They


predicted


to city


and


that,


county


Florida,


governments,


the


because


benefits


the


would


accrue


supplanted


state


education


funds


might


then


be redistributed


expenditure


on transportation,


social


services,


health


care,


enforcement,


and


other


services


that


often


burdened


city


county


governments.


the


Florida


Supreme


Court


opinion


concerning


the


legality


of Article


which


amended


the


Florida


Constitution


to permit


lottery,


Justice


Boyd


wrote,


The


amendment


itself


makes


clear


that


revenue


realized
placed i
absolute


operation


a state


trust


requirement


on education.


that


Even


the
fund


lottery


but


the


is all


that


unds
used


will b
there


be spent


only


education


this


would


not


necessarily


increase


the


level


states


TrS1nnrnss


i sPvntsd


tn tlrnnat-i nn


s lnns


iS E









Redistribution


The


issue


the


supplantation


of general


revenue


funds


linked


to the


separate


issue


fiscal


redistribution.


The


concept


of redi


stribution


applies


to the


manner


which


a finite


quantity


divided.


the


proportional


divi


sion


changes


over


time,


the


quantity


said


have


been


redistributed.


The


distribution


and


redistribution


goods


is a problem


that


extensively


addressed


economic


theory,


often


using


regr


ess


analysis.


The


politics


redistribution


The


redistribution


income


has long


been


a function


of government.


According


to Tullock


(1983,


"Redistribution


is probably


most


important


single


function


of most


modern


governments.


" Further,


according


Lucas


(1992


, p.


246) ,


"The


study


of distribution


over


long


enough


time


period,


the


study


of social


mobility.


" On


microeconomic


level,


taxes


paid


one


citizen


are


collected


the


government


to be redistributed


other


citizens.


referendum


approving


a state


lottery


may


be approved


because


the


citizens


the


state


desire


to raise


money


a common


good,


such


as education


Florida,


California,


and


other


states),


public


parks


and


recreation


Arizona


and


Colorado),


or senior


citizen


aid


New


Jersey


and


4 'a~h 1 ~ 4 nfl,. *1 -~4S f S '-a,, ..t- ,~4.


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citizens


purchase


lottery


tickets


(Hersch


& McDougall,


1989).


Redistribution


of personal


income


Clotfelter


Cook


(1989)


used


the


redistribution


personal


income


their


arguments


against


the


lottery.


They


argued


that


the


effect


the


lottery


on individual


was


always


redistributional


: "Many


lose


so that


a few


might


win,


" (p.


134)


. If


one


considers


the


category


of players


having


the


most


frequent


participation,


those


in the


lowest


economic


household


group


wealth


commit


a greater


to lottery


percentage


consumption,


their


while


the


wealthiest


commit


the


smallest


percentage.


If dollars


more


given
higher


implicit


spent
weight


incomes


tax


an increase


those


than


lower


dollars


, an increase
n lotteries i


in the


rate


incomes


spent


in the


ess


tax


are


those


with


rate


desirable


on most


other


than
state


taxes
& Cook


on distributional


, 1989,


grounds


alone


. (Clotfelter


. 227)


Redi


stributional


effects


on institutional


support


Macroeconomically


, a state


treasury


contains


finite


amount


money


that


may


be distributed


to all


the


institutions


which


the


legis


lature


elects


to fund


scal


year


. One


method


used


study


to consider


the


redistribution


of general


revenue


funds


was


to look


at the


percentage


sources


the


community


colleges


' fiscal


support.









conducted


the


University


of Florida,


of which


the


most


recent


included


information


about


state


lotteries


(Honeyman,


Summers,


& Wattenbarger,


1993;


Honeyman,


Williamson,


Wattenbarger,


1990;


Wattenbarger


& Mercer,


1985,


1988).


The


information


collected


from


the


Florida


respondent


indicated


that


the


state


s share


the


Florida


community


college


operating


budgets


had


eroded


over


time,


while


the


local


share


had


grown,


and


the


federal


and


"other"


categories


had


been


unstable.


A redi


stribution


of inputs


leads


to a redi


stribution


outputs,


a fact


which


has


often


been


overlooked


fiscal


planning


. Clotfelter


(1992)


noted


that


a shift


in an


institution


s sources


of financial


support


leads


redistribution


redistribution


the


effect


array


was


services


readily


provided.


apparent


This


Florida


community


colleges


, which


were


the


primary


point


of entry


disadvantaged


education


. Federal


students

support


into


Florida


to these


coll


s system

eges was


of higher


mainly


the


form


of grants


specific


demographic


groups


and


specific


academic


programs.


For


example


, there


were


need-


based


Pell


grants


to individual


students


, and


Carl


Perkins


scholarship


funds


disadvantaged


students


in high-wage


vocational pr

or inadequate


ograms.

to meet


When

the


scholarship


students


funds


' needs,


were

these


unavailable

demographic









assist


with


implementation


the


Americans


with


Disabilities


Act.


The


funds


these


grants


were


obtained


the


redistribution


of funds


from


other


federal


projects.


Redistribution


state


own-source


revenues


One

revenue


final

source


aspect


of redistribution


supplanting,


or suppressing,


that


another


one

. Borg,


Mason,


and


and


Cook


Shapiro


(1989)


(1993)

modeling


extended


the


the


extent


work


of Clotfelter


to which


lottery


ticket


purchases


suppressed


revenues


from


other


state


tax


sources


. For


example,


a dollar


that


was


spent


on a lottery


ticket


was


subject


to sales


tax,


and


may


have


supplanted


a dollar


that


would


have


been


spent


on a sales-taxable


item.


, an out-of-state


lottery


jackpot


winner


would


have


resulted


the


redistribution


in-state


dollars


the


winner


s home


determined


tha


state

t for


. Using

every


regression


dollar


analysis


of state


, Borg


lottery


et al.


revenue


generated,


from


to 23C


of other


tax


revenue


was


lost.


Even
state


though


receives


extreme


77 cents


still


more


implies


tax


revenue


that


the


than


before
earmark


lottery


their


was


lottery


imposed,


dollars


those


likely


states


that


see


significant


reductions


in their


nonlottery


revenue


sources
budgets
budget


shortfall


that


need


. Otherwi
causes a


to be accounted


a bonanza


sizable


elsewhere


eel,


one


and likely
. 123)


in their


area


unexp


the


ected


Borg


state


et al.


income


found


tax,


the


with


strongest


effects


a relatively


great


states


reliance


without


on sales









proceeds


a designated


beneficiary,


redistribution


occurred


among


the


state-supported


agencies


as a consequence


the


rising


or falling


tides


the


lottery


fortunes.


Redistribution


of Florida


revenues


While


the


states


studied


Borg


et al.


did


not


include


Florida,


their


findings


suggested


a strong


suppression


effect


Florida


s lottery


profits


on own


-source


revenues,


and


a redistribution


of expenditures


from


the


general


revenue


fund


. The


suppre


ssion


of Florida


parimutuel


taxes


that


corresponded


with


the


Florida


Lottery


years


operation


was


readily


apparent


. Parimutuel


tax


revenues


Florida


commenced


1965


and


increased


every


year


until


FY 1987,


which


was


the


year


the


start


the


Florida


Lottery


After


FY 1987,


parimutuel


revenues


declined


each


year


, for


a total


decrea


from


FY 1987


to FY 1991,


or a revenue


decline


million


(State


of Florida


Governor


s Office


of Planning


and


Budgeting,


1993)


. Figure


illustrates


the


and


fall


of Florida


s parimutuel


tax


revenues.


The


Lottery


as a Quasi


-Business


Monopoly


Twentieth


-century


state


lottery


were


operated


somewhat


lottery


like


was


a business


a government


. The


agent


chief


whose


executive


explicit


officer


duty


the


was



































1970 19*80 17


O In 8 Millionn


Figure 4
inceptio
Florida


. Parimutue


the


Governor


tax


Florida
s Office


revenues


rose


Lottery, FY
of Planning


from


1987
and


FY 1965


(Source:
Budgeting,


until


the


State
1993)


Cook,


1989;


Fisher,


1988;


Karcher


, 1989;


Karl


, 1991)


. The


quasi-business,


profit


-generating


function


the


lottery


department


was


often


specified


the


legis


lation,


was


Florida:


That


the


of state


lottery


games


government


tha


be operated
t functions


by a department
as much as


p053


ible


in the


manner


an entrepreneurial


siness


enterprise


. (FL


St. 24


.102


The


purpose


department


to operate


the


en te *n mnmim


1 at 5 a r~t


c!+~ta


r at id nl r a a









An interesting


analogy


between


higher


education


and


the


lottery


as a state-produced


consumer


good


was


drawn


Clotfelter


and


Cook


(1989):


States se
sell, but
marketed,
the state
insignifi
lotteries
(p. 31)


ldom promote th
both lotteries
publicized, an
s, each in its
cant appendage
have become a


e liquo
and hi
d impli
own way
to stat
highly


r or utilities
gher education
citly endorsed
. Far from bein
e government,
visible enterpr


they
are
by
g an


ise.


Ethical


considerations


Although


much


effort


was


expended


lottery


directors


to promote


the


sales


their


product,


Gulley


and


Scott


(1993)


questioned


whether


promotion


were


appropriate:


One .
their goa
accruing
monopolie
citizens
marketing


1
f
s
t


issue
the
rom
do
o dr
of 1


e is whether s
maximization
the lottery. S
not glamorize
ink more, as i
ottery product


states
of net
states
alcohol
s done
s. (p.


should set as
revenue
that run liquor
1 and exhort
in the
21)


Karl


(1991)


objected


as much


to the


content


the


advertisements,


L
a
a
a
i


* S


as to the


lottery promote
aggressive adve
nd pernicious
re big on prom
investment than
. Another pop
levates gambli
responsibility.
social programs
construction at
reluctant state
p. 14)


on


rti
* .
oti
sa
ula
ng
To
fr
tra
le


am
si

ng
vi
r
to
ut
om
ct
gi


.5.


fact


of promoting


ounts to public
ng that is oft
These governm
the lottery a
ng or education
lottery market
the level of
ing lotteries
education to
s new players
slatures to ad


cly


en
ent
s a
n o
ing
civ
as
pri
and
opt


m


r


state


finan
islea
funde
bette
hard
techn


lotteries:


cing
ding
d ads
r
work
ique


ic
a boon to
son
convinces
lotteries.


Allen


(1991)


expressed


concern


that


the


lottery


funds









was;


further,


that


lottery


dollars


were


diverted


from


their


intended,


expressed,


purpose.


The


budget


suppression


effect


of education


lottery


revenues r
legitimacy
negotiated
government


lies
of


directly


the


between


. (pp.


the


lottery


the


face


self,


state


the


which


s public


has


been


and


302-303)


Allen


noted


that


lotteri


had


been


implemented


low-


tax


states


, and


also


states


without


a personal


income


tax


such


as New


Hampshire


, Connecticut,


and


Florida,


where


the


lottery


was


viewed


as an expedient


nontax


revenue


source.


High-tax


states


such


as New


York


and


New


Jersey


implemented


lotteri


shrinking


to offset

industrial


the


revenue


revenue


base.


>sses

The


that


resulted


popularity


and


from


"moral


legitimacy"


of state


lotteries


was


viewed


Allen


as a form


of public

exposure


naivete


to lottery


as a function

corruption,"


of having


(Allen,


no recent


pp. 300-301)


Allen


and


others


argued


that


the


rapid


expansion


the


prevalence


of state


lottery


was


a reaction


three


interrelated


elements


: first,


the


federal


cutbacks


the


Carter,


Reagan,


and


Bush


administrations


(Clotfe


Iter,


1991;


Hildred,


1991) ;


second,


the


political


mantra


new


axes


(Berry


& Berry,


1990,


* 396);


and


third,


the


growing


demand


new


expanded


social


and


health-care


services


(Swartz


& Peck,


1990).


Wyett


(1991)


called


the


abolition


of state









shirk


responsibility


finding


adequate


revenue


sources


through


levying


explicit


taxes:


"Political


should


the


accountability"


replace


"lip


"buzzwords"


. Perhaps
lotteries


and


reading"


state


as a matter


should


"tax


and


finance


of public


be abolished


"tax


honesty"


amnesty"


the


policy


1990


state


. state


legis


lators


should


be held


a new


level


accountability


politicians
sources to


have
"tax,


to rai


" rather


practices


. By


will


abolishing


have


supplement


taxes
than


find


their


and


lotteries,


other


tax


actually


resorting


. promoting


revenue


bases.


say


to such
lotteri


They


the


will


word


deceptive


. (pp


. 14-


A separate


but


related


problem


was


the


fact


that


lottery


revenues


usually


accounted


a much


smaller


proportion


of a beneficiary


s operating


funds


than


the


public


was


encouraged


to believe


. In


the


most


successful


lottery


increase


the


states


in the


height


, proceeds


were


state


the


roughly


tax


Florida


equivalent


(Clotfelter


Education


& Cook,


Lotteries


to a 1%


1989)


campaign,


newspaper


poll


conducted


August


1986


"found


that


over


half


the respondents


believed


that


the


lottery


would


pay


for


'major


portion


' of


the


total


state


budget


education,


" yet


the


state


Commi


ssioner


of Education


projected


enhancement


revenues


equal


to only


one


-fifteenth


his


total


budget


(Clotfelter


& Cook,


1989,


155)


Earmarkinca


Lottery


Proceeds









Are


lottery


beneficiaries


better


funded?


Borg


and


Mason


(1990)


found


that


earmarking


actually


to a decline


fiscal


support


the


beneficiaries,


accompanied


a rise


the


erroneous


perception


the


general


public


that


these


agencies


were


being


well


funded.


In fact,


Borg


and


Mason


reported


that


earmarking


lottery


proceeds,


whether


education


or any


other


designated


purpose,


to demonstrated


supplanting


states


studied


since


1968


. They


found


that


only


two


the


five


lottery


states


incurred


actual


growth


nominal


total


allocations


to education,


while


the


other


three


states


experienced


declines


the


absolute


growth


of education


expenditures.


The


only


states


that


showed


an upward


trend


total


allocation


per


were


states


with


a simultaneous


drop


enrollment


coinciding


with


growth


the


general


revenue


fund


. Borg


Mason


determined


that


What


driving


earmarking


the


state


status


question.
lotteries


support
s is not


total


This
have


for
the


revenues


provides


not


been


early
boons


education
lottery,
for the


evidence


their


in the


but
state


that


rather
in


the


statutory


beneficiary


because


the


advent


lottery


revenues
revenues


is not
as they


enough
affect


to avert


the


trends


funding


in general


of education.


295)


Supplantation


versus


economic


recession


Borg


and


Mason


(1990)


concluded


that


the


lottery


itself


did


not


hurt


educational


funding;


rather,


"What


can









the


education


exist?


raised


lotteries
al systems


*. the
more likely
have SUDD


Therefore,
earmarked
statutory


the


- &


y


improved
in the


answer
that


wanted


general


lotteries


have


the c
states


conditions


where


is a resounding
those additional


alternative
conclusion


not


of the


they
no .
funds


sources.
is that


benefitted


the


recipients.


the
been


In fact,
relative


the


benefit


concurrent


expenditures


states,
because
of each


and


with


recipients


do not


of neutrality.


the


in nominal


real


lottery


camouflages


tax


revenue


school


the st
their


term


revenues


a


decline


terms
s in


in
all.


provide


tes with
inability


to adequately


systems


their


p


sta


even


achieve


Earmarking
education


some
This


the


a procedure
to raise
provide for
tes. (pp.


has


the


occurs


legis


lators


that


sufficient


the


299


public


-301)


Political


expedience


of earmarkincr


One


for


reason


a specific


that


so many


beneficiary


state


was


lotteries


that


helped


were


earmarked


to get


the


referendum


passed,


it did


Florida.


A second


reason


was


that


an advertising


campaign


that


linked


the


beneficiary


with


the


lottery


was


believed


increase


ticket


sales


(Clotfelter


& Cook,


1989;


Karl


, 1991).


Earmarking


had


the


greatest


effect


where


the


lottery


funds


constituted


a large


portion


the


an agency


inherent


s total


fungibility


budget;


the


otherwise,


budgeting


because


process,


earmarking


had


little


real


effect


on the


beneficiary


financial


The


status (Clotfelter


Historical Context


& Cook,


of Cont


1989).


:emDorarv


Lotteries


Have










Roman,


Biblical,


and


even


Colonial


American


times.


Neverthel


ess


, a review


the


history


the


lottery


lends


perspective


the


discussion


at hand


The


Earliest


Lotteries


The


lottery


as a form


of entertainment


or a method


allocating


history


resources


. Lotteries


has


were


very


used


long


the


and


well-documented


Romans


entertainment


the


Greeks


to facilitate


the democratic


government


process


(Karcher,


1989).


Lotteries


were


mentioned


both


the


Old


New


Testaments


the


Bibl


the


Old


Testament,


in the


Book


of Numbers


, the


Lord


God


instructed


Moses


use


lottery


to divide


the


Promised


Land


among


the


tribes


of Israel:


The


lots


land


shall


. shall


be cast


be apportioned


the


lot;


properties


the


family


the


father


line.


Properties


shall


apportioned


the


smaller


Testament,


. (The


Numbers


between


New


the


English


26:55-56


larger
Bible,
. 182)


family


and


Old


In Proverbs


the


outcome


of a lottery


was


mentioned


being


determined


Divine


providence


rather


than


fate:


The


lots


may


be cast


into


the


but


the


issue


depends
767)


wholly


on the


Lord


. (Proverbs


16:33


Because


their


beli


divine


intervention


into


the


lottery


s outcome


, Colonial


Quakers


opposed


the


lottery


-A -- t .1 --


1. .1- -a


a- ^-- C1 a1


~nLL


1 ~L L nur t


L~~L


nu


P










Increase


Mather


wrote


his


1687


Testimony


against


Several


Prophane


and


Superstitious


Customs,


that


affair


makes


use


to a superi


of a Lot
or Cause


wholl
than


commits


either


his


nature


art,
done


In the


Apostl


determine


therefore


unto


in a Sportful


New


the


which


God.
Lusory


Testament,


remaining


disciple


But
way


the


apostles


should


this ought
. (Ezell,


Book


Christ


become


not


Acts


used


an apostle,


to be


the


lots


replacing


Judas


Iscariot:


They


drew


lots


and


the


fell


on Matthias,


who


was


then


apostles


assigned


. (New


a place


Testament,


among
Acts


the


twelve


1:26,


. 148)


The


first


lottery


to offer


cash


pri


zes


while


rais


funds


the


state


was


held


Florence,


Italy


1530


. The


Italians


brought


lotteri


to France


around


1533


. In


England,


the


first


government


lottery


was


chartered


Queen


Elizabeth

Colonial


1566


America


. The


with


English


brought


an authorized


drawing


lotteries


into


to support


Jamestown


settlement


1612


(Clotfelter


Cook,


1989)


Territorial


Florida


Lotteries


The


first


Florida


lottery


was


cited


as occurring


1766,


when


Nathaniel


Thompson


was


authorized


the


Council


of West


Florida


to sell hi


house


lottery


ell,


1960)


The


first


Florida


education


lottery


was


launched


when


the


trustees


of Union


Academy


Jacksonville,


Florida,


were


. a


1,S


*J S


1 -


~ LL


nlnLr~u


C. n AAYI rrl\\AL


Ja~n


P q


1










including


lotteries


(Greater


Loretta


Improvement


Association


. State


ex rel


. Boone,


1970)


Intercolonial


and


Interstate


Lotteri


The


first


Colonial


lottery


to be earmarked


education


was


held


1746,


when


lottery


was


used


as a


fund-raiser


the founding


of King


s College,


later


to be


called


Columbia


University


. In


1747,


Yal


College


was


approved


lottery


raise


funds


housing;


Harvard


was


approved


a similar


lottery


housing


funds


1765


(Ezell


, 1960).


In early


American


times,


the


population


was


sparsely


distributed;


lotteri


therefore


order


, fund


to maximi


raisers


devi


revenue.


intercolonial


Princeton,


then


called


the College


of New


Jersey,


was


the


recipient


proceeds


from


lottery


held


simultaneously


Connecticut,


Delaware,


and


Pennsylvania


1753,


setting


the


earliest


recorded


example


an intercolonial


lottery


(Ezell,


1960)


The


example


was


followed


the


20th


century


, when


the


smallest


most


sparsely


populated


states


formed


lottery


consortium


the


1980s


1990s.


The


first


contemporary


example


was


the signing


the


Tni


-State


Lotto


Contract


legi


slators


Maine,


New


Hampshire,


and


Vermont


1985;


Delaware


was


added


1988


. The


Lotto


America


consortium









was


replaced


1992


the


Powerball


lottery,


a lucrative


consortium


which


included


small


or sparsely-populated


states


(Delaware,


Idaho,


Indiana,


Iowa,


Kansas,


Kentucky,


Minnesota,


ssissippi,


Montana,


Oregon,


Rhode


Island,


South


Dakota,


West


Virginia,


and


Wisconsin)


and


the


District


Columbia


($110


million


lottery


prize


not


yet


claimed,


1993)


In Kansas,


where


a lottery


was


approved


1987,


legis


lators


with


foresight


wrote


into


the


enabling


legis


lation


that


interstate


lotteries


could


be operated


between


Kansas


and


any


other


state


or the


District


of Columbia


574-


8731).


Expedience


the


lottery


Colonial


America


Thomas


Jefferson


was


said


to have


originally


opposed


the


government


operation


lottery


(Karcher,


1989)


. He


later


Colonial


supported


the


America,


practice


where


because


currency


was


expedience


scarce:


An article
at all, o
worth, is
purchaser


has


r not


property,
without


sometimes


can


no other


no other


be found


means


chance


insusceptible


great diminution
so large a value
while the owner


of payment,


of obtaining


and


but


his
by


of divi


sion


of its


as
owes


that


debts,


creditors


sale


a full


and


fair


price.


The


lottery


is here


salutary


run


small


instrument


risks


for
the


disposing
chance of


where


obtaining


men


a high


prize


. (in


Ezell,


Thomas


and


Webb


(1984)


responded


to thi


quotation


saying


that,


7~ 1 4-hn.,nlk


nf- +


nil


n t^ n v^ eC an


11 nnar+ aA


JL.. 1-


r n uI C fr


. 13)


r -


c.









voluntarily


nature


and


paid,


regardless


spite


corrupt


regres
history


sive
. (p.


Early


American


education


lottery


In Colonial


America,


a lottery


the


good


education


was


considered


morally


acceptable


citizens


whom


gambling


sport


was


not


permissible.


The


Quakers


Pennsylvania


generally


prevented


the


authorization


lotteri


civil


or general


purposes


, but


approved


lotteries


to benefit


Princeton


(then


the


College


of New


Jersey)


1749,


1750


1761.


The


College


, Academy


and


Charitable


School


of Philadelphia,


later


to become


the


University


of Pennsylvania,


was


endowed


with


lottery


that


dated


to 1755


(Ezell).


Early


Examples


of SuDolantation


and


Redistribution


An early


version


the


struggle


over


lottery


funds


that


were


earmarked


higher


education


was


found


Colonial


New


York


1753,


concerning


lottery


King


College


(Columbia)


. The


enabling


legis


lation


Bore


testimony


Presbyterians,


the


who


growing


opposed


the


feud


between


school,


and


the
the


cans,


Angli
from


statute


who


diverting


sponsored


the


declared


funds,


that


any


. To


keep


an unusual


the


former


clause


representative


who


the


voted


or consented


to a diversion


this


money


would


ineligible
assemblies


to sit


or vote


. An identical


in that
scheme a


or succeeding


gain


was


approved


following


December


. (Ezell,


. 37)









Action


was


Anglicans


legis


College
"Pest


Distempers


action,


precaution


1753


and


lature


to restore


Presbyterians


the


of New


City


" Mindful


legis


of repealing


when


funds
York


with
the p
first
that


. 38)


S


the


between


New


raised


a jail


"contagious
nalty for s
had taken t


the


York


King
and


uch
he


Early


attempts


to divert


lottery


funds


earmarked


higher


education


into


the


general


treasury


were


also


recorded


during


the


Confederate


period


following


the


Revolutionary


War,


and


preceding


the


War


Between


the


States.


In Delaware,


In 1835
included
February
sought f


thi
the


same


manage


College
$5,000


a $100,000


,000


1852


approach
rs for 1


(later
or the


project


the


to benefit


general


, an additional


needs


1812


otteries


and


education


treasury;
$100,000


Jersey


. New


1823


approved


and


was


used


by requiring
for Queens


Competition


state


funds


One


justification


the


Confederate-period


diversion


lottery


funds


was


that


state


governments


the


early


19th


and


century


public


were


health


becoming


services,


more


involved


providing


that


formerly


social


was


funded


predominantly


churches


and


private


chariti


es.


Thus,


even


in the


Confederate


days,


social


services


, law


enforcement,


and


health


care


were


competitors


with


education


receipt


of state


lottery


profits.


was


true


in the


nfl~~~~~~ ~ ~ ~ ~ 1 ,%Cn- -44 n -i.a n e4 a 4 a, -r en~r .nA w4


taken


gave


harmony


half


to the


house"


persons


the


lators


. (Ezell,


section


the


law


governmental


Rutgers
state.


to obtain


zell,


an additional


. 109)


a province


7nCL


nAmnAC; C; hn


nAnCnr~T


Ck n


I\mA*lrr









An elastic


source


revenue


After


the


Revolutionary


War,


lotteries


earmarked


higher


education


were


authorized


to fund


Harvard


College


Massachusetts


Dartmouth


College


New


Hampshire


(Ezell,


1960).


Lottery


revenues


the


Colonial


period


sometimes


fell


below


century,


projections,


and


the


just


same


as they


reasons


did


the


: partially


from


20th


saturation


the


public


s interest,


but


also


because


the


economic


depr


session


the


period


. The


Dartmouth


College


lottery


1787,


expected


to rai


1,800


, brought


only


360


despite


the


tacti


of adding


new


games


special


twists


, and


extension


period.


The


percentage


lottery


proceeds


that


actually


benefitted


the


colleges


was


sometimes


much


lower


in those


days


than


was


true


the


Florida


lottery


1993


Harvard


lottery


of 1806


paid


out


$1,250,000


zes


and


overhead


expenses,


a net


proceed


The


to Harvard


Revocation


of only


of State


000.


Lotteri


Lotteri


remained


popular


Confederate-period


America


. Between


1790


1860,


24 of


states


used


the


lottery


to finance


internal


improvements


. However


, anti


lottery


sentiment


was


growing:


Important
assemblies


factors


in the


to regulate


deci


sons


lotteries


various


included










difficult,


class


ses.


and


the


(Thomas


harmful


Webb,


effects


1984,


on lower


293)


Constitutional


revocation


of state


lotteries


The


lottery


was


outlawed


constitutional


amendment


a number


of states


during


the


18th


century,


beginning


Massachusetts


in 1719,


and


extending


to Pennsylvania


1720


New


York


1721,


Connecticut


1728,


Rhode


Island


1733,


and


New


Jersey


1748.


1840,


12 of


the


26 states


had


temporarily


banned


lotteries.


the


start


the


Civil


War,


the


remaining


states


except


Delaware,


Missouri


and


Kentucky


had


banned


the


lottery


(Thomas


& Webb,


1984).


Thi


action


was


taken


because


the


administration


state-


supported


lotteries


had


evolved


the


point


that


corruption


was


rife


among


the


brokerage


houses


that


sold


lottery


tickets,


the


promotion


of lottery


sales


invoked


concerns


about


the


state


governments


' encouragement


of public


immorality,


began


and


to decline


the


actual


the


returns


proportion


the


expended


on overhead


greatly


increased


. Public


backlash


against


the


lottery


was


well


summarized


thi


excerpt


from


a United


State


Supreme


Court


case


of 1850:


The


suppression


of nuisances


injurious


to public


health


duti


or morality is
of government.


among


the


Experience


most
has


important


shown


that


common


innocuous w
wide-spread


r .~


forms
hen D


of gambling


laced


pestilence


I.


are


in contrast


with


lotteries.


e.


the


The


former


.23


while


beneficiaries


the


comparatively


1


J,


1










the


ignorant


and


simple.


(Phalen


Virginia,


1850,


168)


The


last


the


early


American


lotteries


The


Loui


siana


Lottery


was


the


most


infamous


and


long-


lasting


state


lottery


the


19th


century.


was


finally


halted


federal


intervention,


a result


the


fact


that


of all


tickets


were


purchased


through


the


U.S.


Mail


citizens


of other


states


or foreign


countries.


In 1895


Congress


outlawed


the


importation


and


interstate


carriage


lottery-related


materials,


an act


which


the


Supreme


Court


upheld


1903


. The


Louisiana


Lottery


was


dissolved


soon


thereafter


(Thomas


Webb,


1984).


No 20th-century


state


lottery


existed


until


the


New


Hampshire


Lottery


was


approved


1964.














CHAPTER


METHODOLOGY


The


purpose


this


study


was


to determine


whether


state-supported

designated reci


agency


pient


benefitted


of a portion


fiscally


the


from


profits


being

from


state-operated


lottery


. The


Florida


Lottery


and


the


Florida


system


of 28 community


colleges


were


used


to explore


the


issue.


The


analysis


was


divided


into


four


separate


questions.


Regression


model


were


constructed


to examine


each


the


four


questions


proposed.


Impact


. The


first


question


was


whether


the


start


the


Florida


Lottery


coincided


with


a change


the


expenditure


trends


the


Florida


community


colleges.


Supplantation.


The


second


question


was


whether


Florida


Lottery


funds


either


supplanted


or enhanced


state


general


revenue


funds


expended


support


of community


college


education.


Redistribution


. The


third


question


was


whether


addition


the


lottery


as a revenue


source


resulted


change,


or redistribution,


the


proportion


of community


college


expenditures


funded


through


state


sources.


('nl onnr 4 l 1 /nr,,r'a fonri m5 l l


mbah


frnirth


mliof i flfl









released


to community


colleges


the


form


of a categorical


allocation

spending r


versus


lottery


restrictions


into


dollars


the


that


Community


flowed


without


College


Program


Fund


(CCPF)


. The


goal


was


to determine


whether


the


percentage


of categorical


restrictions


correlated


with


the


total


amount


of state


funds


allocated


the


community


colleges.


The


method


used


to address


these


four


questions


was


archival


study


that


analyzed


three


conditions


using


regr


session


over


time


(Chatterjee


& Price,


1991;


Cook


Campbell,


1979)


. The


first


condition


was


the


expenditure


trends


the


28 state-supported


community


colleges


Florida.


The


second


condition


was


the


allocation


State


Florida


general


revenue


and


lottery


funds


to community


colleges


. The


third


condition


was


the


percentage


of each


year


s lottery


allocation


that


was


categorical


rather


than


noncategorical


Hypothetical


Constructs


The


statistical


model


study


were


designed


test


four


basic


hypothetical


constructs:


A relationship


exists


between


the


Florida


Lottery


and


the


fiscal


condition


the


community


colleges


Florida.


Thi


relationship


may


be reasonably


known.









. If


reasonably


the


relationship


known,


then


plausibly


cause-and-effect


causal


and


constructs


may


involved


between


the


Florida


Lottery


and


the


fiscal


status


the


colleges.


. If


there


a probable,


causa I


relationship


between


the


Florida


Lottery


and


the


fiscal


condition


the


colleges,

other sta


then


ite


thi


lotteries,


relationship


state


may


community


be generalized


college


across


systems,


state


educational


systems,


and


other


state-supported


agencies


that


are


earmarked


for


lottery


funding.


Also,


this


relationship


may


be generalized


across


other


time


periods


(Cook


& Campbell,


1979)


Assumptions


Each


the


proposed


model


assumed


linearity


SScatter


plots


and


residual


plots


were


constructed


to assist


testing


the


five


basic


assumptions


that


concern


the


dependent


variable


linear


regression


model


A Y distribution


exists


the


X variable


studied


, with


a finite


mean


and


variance.


The


Y observations


are


statistically


independent


one


another.


The


Y values


are


a linear


function


the


values









The


Y distribution


normal


any


fixed


combination


of X1,


. ., Xk


(Kleinbaum,


Kupper,


Muller,


1988)


Where


indicated


the


residual


and


scatter


plots,


other


versions


the


models


were


tested


with


the


introduction


of a quadratic


term.


every


instance,


the


linear


model


was


found


to be the


model


which


best


the


data.


There


were


two


assumptions


made


the


explanatory


variable


es:


The


explanatory


variables


were


nonstochasti


the


X values


were


fixed


selected


in advance


this


study


The


X values


were


measured


without


error


(Chatterjee


& Price,


1991).


The


values


the


data


used


this


study


were


robust


to both


these


assumptions.


Data


Did


the


Florida


community


colleges


benefit


from


being


earmarked


a portion


proceeds


from


the


Florida


Lottery


This


archival


study


used


fiscal


expenditure


and


enrollment


data


each


the


Florida


community


colleges


, and


general


revenue


and


lottery


allocation


data


from


the


State


of Florida


Department


of Education


State









State of


Florida Department of Education Division of


Community Colleges


1974,


70-74;


1975,


. 32,


61-65;


1976,


58-61;


1977,


65-72;


1978,


64-71;


1979,


62-69;


1980,


pp. 33,


65-74;


1983,


41-45;


1981,


44-53;


1986,


44-53;


1984,


, 54-58;


1982,


44-48;


1987,


. 11,


44-53;


1985,


75-79;


1988a,


1988b,


pp. 15,


77-81;


1989


, pp.


77, 79-83;


1990a,


1990b,


Pp. 13,


81-85;


1991a,


1991b,


1991c;


1992a,


28-29,


76-77;


1992b;


1993a,


1993b).


The State of


Florida


Commissioner of Education mandated


a sophisticated,


uniform system of


data


collection to track


the


institutions of the


Florida


public community


college


system.


Therefore,


data


concerning


each of


the


28 community


colleges


each of


the fiscal


years under study were


available


from a


central


source,


and the data


were


objectively


considered


to be uniform and reliable


(Cook &


Campbell,


1979;


Mason & Bramble,


1989).


Additionally,


the


Florida Department of Education,


Colleges staff


Division of


persons who were responsible


and reporting the community


Community

for compiling


college data assisted with


the


data


collection


for this study


. Indeed,


one staff person was


directly responsible


for data management


throughout


the


entire


fiscal


years


included


in this


study,


and


indicated









resulted


in a modification


the


definition


one


independent


variable,


TOTAL


E&G


(Total


Education


and


General


expenditures)


and


thus


reduced


a potential


instrumentation


threat


to validity


the


statisti


cs.


The


data


were


comprised


of State


of Florida


lottery


nonlottery


allocations


to the


community


colleges,


TOTAL


E&G,


and


weighted


each


the


28 Florida


community


colleges


every


fiscal


year


under


study


. Expenditure


data


was


shown


Harrell 1


and


others


to be appropriate


to the


study


of community


college


finance


(Harrell,


1992


Harrell,


Honeyman,


Wattenbarger,


Wood,


1993)


. Data


each


institution,


rather


than


the


system


as a whol


, was


used


increase


total


number


of data


points


, and,


therefore,


the


power


the


statisti


(Mason


& Bramble,


1989)


Procedures


Regression


analysis


over


time


was


the


stati


stical


method


used


this


study


. The


community


college


scal


status


was


operationalized


as fiscal


and


enrollment


data


consistently


collected


over


a 22-fiscal-year


period


. The


data


seri


was


divided


into


two


segments,


which


were


comprised


of lottery


and


nonlottery


years


(McCain


McCleary,


1979;


McDowell,


McCleary


, Medinger,


& Hay,


1980)


Regression


analysis


over


time


was


found


throughout


the









for


analyzing


the


outcome


when


state


lottery


profits


were


introduced


as a revenue


source.


In order


to increase


the


power


the


regression


analyses,


fiscal


data


years


points


the


were


study,


reported


from


for


each


each


the


the


28 community


colleges,


rather


than


the


community


college


system


as a


whole.


As a result,


this


study


included


data


points.


Population


data,


rather


than


sample


data,


were


used


for


computations.


The


population


consisted


of 28


separate


community


colleges


throughout


the


period


under


study.


Fiscal


Years


(FY)


1972


through


1993


were


selected


calculations


except


those


involving


community


college


year-


end


expenditures


. For


community


college


expenditure


data,


1972


through


1991


were


used,


because


data


from


subsequent


years


were


unavailable


the


time


this


study.


Fiscal


Year


1972


was


chosen


as the


starting


year


the


data


used


this


study,


because


FY 1972


was


the


first


full


year


of completion


the


State


of Florida


Master


Plan,


which


implemented


the


full


system


of 28 community


colleges


(State


of Florida


Department


of Education,


1990).


Design


The


basic


research


design


was


a simple


regression


analysis


over


time.


The


design


observations


from









.. 093


For


every


O there


were


28 entri


, one


each


community


college,


identified


as CC=1


, CC=2,


...CC=28


(Appendix


. The


was


the


term


introduction


the


lottery


as a revenue


source.


Selected


indicators


lottery


effect


were


variations


around


the


X in


the


regression


equation


intercept,


slope,


and


variance,


as well


indications


of cyclical


variation,


which


were


reflected


the


scatter


plots.


Linear


regression


model


were


constructed


to examine


the


four


central


questions


concerning


the


effect


the


Florida


lottery


on community


college


finance.


Forward-


selection


stepwise


regression


was


used


to isolate


the


variables


which


were


correlated


with


the


fiscal


effect


that


lottery


dollars


have


had


on the


Florida


community


college


system.


Tolerance


and


the


variance


inflation


factor


(VIF)


were


used


to detect


data


redundancy,


or collinearity


the


independent


variable


(Chatterj ee


& Price,


1991)


. A Type


error


probability


level


ess


than


or equal


was


selected


to support


each


decision


to reject


or fail


reject


the


null


hypothesis


(Blalock,


1972


. Nondirectional


hypothe


ses


were


used


because


the


goal


was


to detect


any


change


in trend,


whether


positive


or negative.


There


was


0,










an improved,


or worsened,


fiscal


status


at the


community


colleges.


When


the


data


met


the


criteria


established


statistical


significance,


the


squared


multiple


correlation


coefficient


was


used


to further


assess


the


adequacy


the


regression


models.


To interpret


the


magnitude


effect


size


as reflected


the


multiple


correlation


coefficient,


the


following


parameters


were


used:


A large


effect


was


an R2


greater


than


or equal


.15.


A medium


effect


was


an R


greater


than


or equal


.06.


A small


effect


was


an R2


greater


than


or equal


.01.


An R2


ess


than


was


not


significant


(Cohen,


1977,


. 284-288).


Each


regression


was


summarized


tabular


form


detailing


the


partial


and


model


squared


multiple


correlation


coefficients


(R2),


sums


squares


and


mean


squares


the


model,


the


values


the


regression


coefficients,


T and


test


values,


and


significance


level


Impact


The


first


question


addressed


this


study


was


whether









Lottery


as a revenue


source.


The


variables


used


model


controlled


differences


FTE,


because


fluctuating


enrollments


within


each


community


college


over


the


in annua


ears

1 FTE


study,


across


the


as well


community


the


major


colleges


differences


. The


model


used


to detect


the


impact


lottery


dollars


on community


college


expenditures


was


FTEX12


= Bo


+ B1GRFFTE


+ BSTATFTE


where


FTEX12


= the


dependent


variabi


Funds


and


(Total


Education


and


General,


E&G)


expenditures


per


FTE


the


individual


community


college,


= the


intercept


the


regression


equation,


= the


regression


coefficient


the


slope


the


variable


GRFFTE,


GRFFTE


= the


independent


variable


general


revenue


fund


dollars


per


FTE,


= the


regression


coefficient


the


variable


STATFTE,


STATFTE


= the


independent


variable


sum


of general


revenue


and


lottery


dollars,


expressed


per


FTE,









- 0


The


null


hypothesis


stated


that


there


was


no difference


between


Funds


nonlottery


and


and


(E&G)


lottery


years


expenditures


per


community


weighted


college


FTE


(McDowall,


McCleary,


Medinger


, & Hay,


1980)


SuDDlantation


State


of Florida


nonlottery,


general


revenue


allocations


to each


community


college


(GRF)


1972


through


FY 1993


were


regressed


against


two


independent


variable


and


an interaction


term:


the


continuous


variable


fiscal


not


year


lottery


(YR),


funds


the


were


dummy


variable


a community


denoting


college


revenue


whether


source


that


year,


and


YR*LT,


the


interaction


term.


regression


analysis


, interaction


refers


the


condition


where


the


relationship


of interest--here,


YR and


GRF--i


different


at different


level


an extraneous


variable


e--


here,


(Kleinbaum,


Kupper,


& Muller,


1988).


The


model


proposed


the


supplantation


question


was


GRF


+ BIYR


+ B,LT


+ B3YR*LT


where


GRF


= the


dependent


variable


total


state


general


revenue


expenditures


per


community


college


for


each


fiscal


year,


A,


A,









= the regression coefficient for the slope of


the variable


YR = the continuous


independent variable


Fiscal


Year for any year,


1972-73


through 1993-94,


= the regression coefficient


LT = a dummy variable coded


for the variable


no lottery


allocation,


1 if


lottery


allocation,


any year;


= the regression coefficient for the


interaction term for the


variables


YR and LT;


YR*LT


-= the


interaction


term for the


variables


YR and LT,


= the random error term


The null


and alternative


hypotheses


to test


for supplantation were


= 0;


The null hypothesis


Lottery


stated that the existence of


had no effect on GRF


the Florida


allocations to the community


colleges.


The alternative hypothesis


had an effect on GRF


which would be


stated


that the Lottery


interpreted


in one of


two ways,


depending


on whether the coefficient 83


were


positive or negative.


were not


zero,


it would


indicate


a change


in GRF because of


a change


in LT.


Thus,


the


alternative hypothesis stated that the simple existence of









dollars


were


supplanted,


would


ess


than


GRF


dollars


were


enhanced,


would


greater


than


A second


analysis


of supplantation


used


forward-


selection


stepwise


linear


regres


sion


. The


purpose


was


learn


which


variables


were


predictive


of State


Florida


-source


allocations


to community


colleges


(TOTSTATE)


Predictor


variables


used


thi


analysis


were


LOT,


GRF,


CAT,


and


where


TOTSTATE


state


= the


continuous


expenditures


per


dependent


community


variable


college


per


fiscal


year,


LOT


= the


continuous


independent


variable


the


college


s annual


lottery


allocation,


expressed


dollars


GRF


= the


continuous


independent


variable


for


total


state


general


revenue


expenditures


per


community


college


for


each


scal


year,


expressed


dollar


CAT


the


- the


percentage


continuous


lottery


independent


expenditure


variable


per


community


college


that


was


a categorical,


rather


than


noncategorical,


award,


and


LT = a dummy


independent


variable


coded


there


was


no lottery


allocation,


there


was









Redistribution


A forward


-selection


stepwise


linear


regress


approach


was


used


examine


the


question


the


redistribution


funding


sources


variable


was


the


FTEX12


community


. The


colleges


predictor


. The


variable


dependent


were


GRFFTE,


LOTFTE,


and


STATFTE,


where


FTEX12


= the


continuous


dependent


variable


total


Funds


expenditures


per


and


FTE


(E&G)


each


year


-end


community


college,


GRFFTE


= the


continuous


independent


variable


general


revenue


fund


dollars


per


weighted


FTE,


LOTFTE


= the


continuous


independent


variabi


lottery


dollars


per


weighted


FTE


, and


STATFTE


= the


continuous


independent


variable


the


sum


of general


revenue


and


lottery


dollars


, express


per


weighted


FTE.


Tlhe


Effect


Categorical


Lottery


Allocations


The


final


question


concerned


whether


the


proportion


the


lottery


allocation


that


was


a categorical,


as opposed


a noncategorical,


award


, could


corre


lated


with


a change


-source


state


allo


cation


to the


community


colleges


. The


annual


state


allocations


from


both


lottery


nonlottery


funds


(TOTSTATE)


per


community


college


were









noncategorical,


and


the


dummy


variable


denoting


whether


or not


lottery


funds


were


a community


college


revenue


source


that


year.


The


model


for


this


equation


was


TOTSTATE


= B0


+ B1CAT


+ B,LT


+ B3CAT*LT


where


TOTSTATE


= the


continuous


dependent


variable


for


all


state


expenditures


per


community


college


per


fiscal


year,


= the


-= the


intercept


regression


the


B regression


coefficient


the


equation,


slope


the


variable


CAT,


CAT


= the


continuous


independent


variable


percentage


lottery


expenditure


per


community


college


that


was


categorical,


rather


than


noncategorical,


= the


regression


LT = a dummy


coefficient


independent


variable


the


variable


coded


there


was


no lottery


allocation,


there


was


lottery


allocation,


any


fiscal


year;


= the


regression


coefficient


the


interaction


term


the


variables


CAT


and


CAT*LT


= the


interaction


term;


and


= the


random


error


term.









The null hypothesis


stated that CAT was not predictive


of TOTSTATE.


The alternative hypothesis


was predictive of TOTSTATE.


If H0


were rejected,


cited that CAT

the


interpretation would depend


on the sign of


A positive 83


would


indicate a positive correlation between CAT and


TOTSTATE;


higher values of


CAT were associated with more


state funds.


Likewise,


a negative 83


would


indicate a


negative correlation between TOTSTATE and CAT;


of CAT were associated with


higher values


lower state allocations.













CHAPTER


RESULTS


AND


DISCUSSION


This


study


examined


State


of Florida


fiscal


and


enrollment


colleges


data


answer


the


four


28 state-supported


basic


community


questions.


Impact.


The


first


question


was


whether


the


start


the


Florida


Lottery


coincided


with


a change


in the


expenditure


trends


the


Florida


community


colleges.


SuDDlantation.


The


second


question


was


whether


Florida


Lottery


funds


either


supplanted


or enhanced


state


general


revenue


funds


that


were


allocated


the


support


the


community


college


system.


Redistribution.


The


third


question


was


whether


the


addition


the


lottery


as a revenue


source


resulted


change,


or redistribution,


the


proportion


of community


college


expenditures


that


were


funded


through


state


sources.


Cateqorical/noncateqorical.


The


fourth


question


concerned


the


proportion


lottery


dollars


that


were


released


to community


colleges


in the


form


a categorical


allocation

spending r


versus


lottery


restrictions


into


dollars

the Co


that


immunity


flowed


without


College


Program


Fund


(CCPF).


The


goal


was


to determine


whether


the









total


amount


of state


funds


allocated


to the


community


colleges.


Fiscal


and


enrollment


data


each


the


28 community


colleges


were


obtained


from


the


State


of Florida


Department


of Education,


Divi


sion


of Community


Colleges


. Fiscal


Years


(FY)


1972


through


1993


were


used


model


except


those


involving


year


-end


Funds


and


II expenditure


data


(TOTAL


E&G


and


FTEX12)


data


subsets


which


were


only


available


through


1991


time


study


. The


data


were


examined


outliers,


or data


points


which


were


overly


influential,


using


Cook


s Distance,


DFITS


, and


standardized


residual


(Chatterjee


statistical


Price,


methods


1991)


, and


. No


scatter


outlying


and


data


residual


points


plots


were


found


that


were


excess


ively


influential;


therefore,


none


were


removed.


The


scatter


residual


plots


supported


the


five


assumptions


linearity


of each


the


regr


ess


model


hence,


no higher


-order


terms


were


used.


Following


a listing


the


abbreviations


and


definitions


of each


the


variable


included


study


CAT


the


percentage


the


lottery


allocation


that


was


categorical,


as opposed


to noncategorical.


- community


college


- a categorical


variable


ranging


from


to 28,


corresponding


to the


alphabetical


listing


the


community


colleges


and


used


to identify


the


community









Community


College


was


identified


as 1,


while


Valencia


Community


College


was


(Appendix


FTE


- full


time


equivalent,


a continuous


variable


referring


to the


weighted


unit


measure


used


to describe


community


college


enrollment.


FTEX12


- all


-source


Funds


I and


(Total


E&G)


expenditures


per


. Thi


figure


included


state


and


nonstate


sources


revenue.


GRF


- general


revenue


fund


allocation,


dollars.


GRFFTE


- general


revenue


fund


dollars


per


FTE


LOT


the


college


s annual


lottery


allocation,


dollars.


LOTFTE


- lottery


dollars


per


FTE.


- a nominal


, dummy


variable


coded


0 for


nonlottery


years,


1 for


lottery


years.


STATFTE


the


sum


general


revenue


fund


and


lottery


dollars,


expressed


per


FTE.


TOTAL


E&G


- all


-source


Education


and


General


(Funds


and


expenditures.


TOTSTATE


- the


sum


of state


general


revenue


fund


and


lottery


dollars.


- fiscal


year,


a continuous


variable


ranging


from


1972


-73)


to 93


1993


-94)


Descriptive


stati


the


variables


studied









which


controlled


differences


in FTE:


LOTFTE,


GRFFTE,


STATFTE,


and


FTEX12


. There


was


a considerable


range


the


values


FTE,


TOTSTATE,


and


TOTAL


E&G,


a fact


which


reflected


the


considerable


variation


in the


size


and


relative


wealth


the


community


colleges.


In general,


the


smallest


colleges


tended


to have


the


highest


expenditures


per


FTE


(FTEX1


while


the


largest


colleges


had


the


lowest


FTEX12


values


. This


reflected


the


economic


sca


the


that


greater


were


present


operating


costs


large,


per


urban


student


institutions


served


, and


the


smallest,


rural


colleges.


Impact


The


first


question


addressed


study


was


whether


a corre


lation


existed


between


the fi


sca


status


community

revenue


colleges


source.


and


Could


the

the


use


Florida


of a state


Lottery


lottery

be shown


as a

to have


had


an effect


on community


college


finance?


The


variable


used in


model


controlled


FTE


an attempt


minimi


the


influence


the


institution


on its


relative


wealth.


GRFFTE


contained


only


general


revenue


funds


per


FTE


, while


STATFTE


included


both


general


revenue


and


lottery


dollars.


The


model


proposed


to test


impact,


and


the


null


and









FTEX12


= 80


+ BSGRFFTE


+ BSTATFTE


= 0


The


null


hypothesis


stated


that


there


was


no difference


between

Funds I


nonlottery


and


and


(E&G)


lottery


years


expenditures


per


community


weighted


college


FTE.


The


results


the


analysis


supported


the


deci


sion


reject


the


null


hypothesis


the


chosen


level


significance.


There


was


evidence


that


the


addition


lottery


funds


as a revenue


source


correlated


with


a change


Tabl


. Descriptive


statistics


of all


variable


es.


VARIABLE


COUNT


MEAN


MINIMUM


MAXIMUM


STAND


DEV


VALUE


VALUE


n/a
n/a


n/a
n/a


FTE


5720


35828


6042


n/a


n/a


LOT


968761


22241388


2426117


LOTFTE


CAT
GRF


10816104


395244


87941772


12464390


GRFFTE
TOTSTATE
STATFTE
FTEX12


2029


11784866
2179
3160


4787


395244
784
966


103538111


14139740


5177


1057


7410


1410









community


college


expenditures


. Further,


the


sign


was


negative,


meaning


that


community


college


expenditures


were

words


negatively

, larger 1


correlated


ottery


with


allocation


lottery

s were


dollars


. In


associated


other


with


lower


community

Lottery


college


dollars


expenditures.


to community


The


college


allocation

s coincided


Florida


with


decline


the


all-source


E&G


expenditures


the


Florida


community


colleges.


The


mod


multiple


correlation


coeffi


cient


was


, indicating


that


the


variance


in FTEX12


was


explained


the


model


that


included


both


GRFFTE


and


STATFTE


(Blalock,


1972


, p.


464)


. This


was


large


effect


size


(Cohen,


1977,


284


-288)


. The


Y intercept,


was


not


interpretable


because


there


was


no probable


case


when


the


independent


variable,


GRFFTE,


would


equal


. All


statisti


had


large


F values


the


F for


the


model


was


.04.


The


ANOVA


source


tabl


and


parameter


estimates


are


shown


Table


Thus,


the


first


test


met


with


a statistically


significant


response.


The


addition


the


Florida


Lottery


a revenue


source


was


shown


to have


coincided


with


a downturn


the


expenditures


Florida


community


colleges


. The


next


step


was


to determine


nature


the


effects


that


occurred


the


fiscal


status


the


community


colleges


of 62


(RZ,









revenue


redistribution,


and


the


percentage


each


lottery


allocation


that


was


categorical


rather


than


noncategorical


were


examined.


SuDDlantation


The


second


question


concerned


whether


the


existence


the


Florida


Lottery


correlated


with


either


the


supplantationor


enhancement


of general


revenue


fund


allocations


to community


colleges.


Table


ANOVA


relationship


Florida


table


between


community


the


and


parameter


lottery


and


the


estimates


fiscal


for


status


the


of the


colleges.


FTEX12


= 80


+ B1GRFFTE


+ B2STATFTE


= 0;


Analysis


:82


of Variance


Source


Decrees


Sum


Mean


square


F Value


freedom


squares


Model
Error
Total


800781497
805968428
1606749925


400390749


1325606


Parameter


Estimates


Parameter


Estimate


Standard


P>F


error


Intercept


11.06


.0009
.0001