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N.C. Lottery passage threatens S.C. education programs

May 9, 2005, 8:47 am

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South Carolina Lottery

The South Carolina lottery's impact can be felt throughout the education system, and the state faces several challenges if North Carolina gets into the lottery business.

Look no further than Irmo High School to get a feel for how important lottery-funded scholarships are in South Carolina.

Some Irmo parents were furious recently after learning that select college-prep courses, available to just 29 students, could alter class rankings. That could affect who qualifies for a $5,000 or $6,700 lottery scholarship for college.

The state provides that financial aid from lottery earnings to A and B students with upper-tier class rankings and college entrance exams above the national average, a combination that can shave thousands from future tuition bills at S.C. colleges.

However, South Carolina's lottery-financed scholarships could be hurt if North Carolina gets into the lottery business, cutting into the Palmetto State's lottery profits. Those profits are spent on education — from kindergarten through college.

"We knew this was coming," state Sen. Joel Lourie, D-Richland, said of North Carolina's move toward a lottery. "It concerns me deeply the financial impact it will have on our revenues."

Lourie's anxiety is shared by many lawmakers. But one senior colleague is less pessimistic.

"I fully expect the lottery (profits) to decline," said Hugh Leatherman, Senate finance committee chairman.

But Leatherman expects profits to drop once the lottery's novelty wears off, not because of N.C. competition. "It won't impact us tremendously."

A Collision Course

The S.C. lottery is patterned after Georgia's lottery, and roughly half of its $329 million profits this year went to pay for merit-based scholarships that high school graduates used to defray tuition costs at the state's private and public colleges.

Some S.C. lottery profits also pay for programs in kindergarten through 12th grade in public schools, including after-school tutoring and buying buses. Public schools got $102.8 million in lottery profits during the 2004-05 school year.

State Rep. Bobby Harrell, chairman of the House budget-writing committee, said the impact of an N.C. lottery on South Carolina's spending on education is unclear.

"We really don't know right now," said Harrell, R-Charleston. "The scholarship program will continue to be funded. The other items? I don't think any of it will be cut. The funding source could change" for some programs.

However, Leatherman envisions "the state will have to cap the four-year (scholarship) program." That could mean offering less money to each future recipient, but Leatherman said it would be premature to say now.

"I want to do everything I can to make sure every one of our young people has an opportunity to get to college," Leatherman said.

Already, concerns about the lottery's future profit levels are starting to affect the state's spending decisions.

For example, State Sen. Jim Ritchie, R-Spartanburg, withdrew his name from several bills this year calling for expansion of LIFE scholarships, worth as much as $5,000 a year to eligible recipients.

"We can't continue to expand eligibility at the same time that we're losing revenue," Ritchie said.

Ritchie warned the state eventually will have to act if an N.C. lottery is approved — either cap scholarship awards or make more rigorous the criteria that students must meet to get the awards.

"If we don't do something, it looks like we're putting ourselves on a collision course," he said.

Ernie Passailaigue, S.C. lottery director, estimates a North Carolina lottery would divert more than $100 million in sales away from South Carolina's lottery. That would reduce Palmetto State lottery profits by about $30 million.

A Privilege

High school and college officials are concerned lower lottery profits could translate into fewer or smaller scholarships, sending more of the state's best and brightest students to college out of state. That could hurt the academic reputations of S.C. colleges, as well as efforts to keep bright, young South Carolinians in the state.

Robert Barkley, admissions director at Clemson University, said the number and quality of applicants his office sees has taken a noticeable upswing since South Carolina went into the lottery business in 2002.

Between 1997 and this year, the number of South Carolinians who applied for admission increased 25 percent. The number of applicants with an SAT score of 1200 or higher increased 72 percent in that same period, Barkley said.

"When you have a $20,000 carrot (the value of a LIFE scholarship over four years) hanging out there for a family making a decision about an in-state or out-of-state, it can make a huge difference," he said.

High school guidance counselors across the state tell similar stories.

"I've seen a lot of bright students, while having considered going out of state and applied there, are instead going to in-state colleges," Irmo High guidance counselor Dave Symonds said.

"We're seeing a lot more of our students (who graduate) staying in state," said Sue Gulledge, a counselor at Fort Mill High in York County. "They're really not considering going out of state as much because of the money available for in-state school."

Conrad Festa, who directs the S.C. Commission on Higher Education, the agency that coordinates scholarships, said, "Citizens have come to expect the scholarship money and the help it provides to education entirely.

"Therefore, there is going to have to be a great deal of thought on how to raise revenue to cover what has become a privilege."

K-12 Big Loser?

State Sen. John Courson, the Richland Republican who is chairman of the Senate education committee, said he is confident the Legislature's commitment to activities paid for by the lottery "is not going to change regardless of what happens in North Carolina."

But Rep. James Smith, D-Richland, isn't so sure.

"We're in danger of finding ourselves short because of all the shuffling of funds (for financial aid) we've done the past several years," Smith said.

"The Legislature has to keep faith with the people of South Carolina and the expectation that when they supported the lottery, they were going to receive higher education scholarship assistance," Smith said. "We can't go back on that promise."

That could mean less for K-12 education, some fear.

Sheila Gallagher, a Florence teacher and president of the South Carolina Education Association, said she believes most of her colleagues are resigned to North Carolina's starting a lottery.

While K-12 education has received lottery profits in the past, Gallagher called North Carolina's ongoing lottery debate "the (shooting) star coming to tell us, 'Don't do that anymore.'

"(The money) is not going to be there for us anymore if that happens."

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