College was getting more expensive. African-American students were lagging behind their white peers in standardized test scores. Universities and colleges needed money, but raising taxes was a political pipe dream.
That was in 2000, when voters amended the state constitution to allow a state-run lottery. The key part of the program was scholarships, designed to help students attend college who otherwise couldn’t afford it.
Fast forward to today. Despite the lottery raising $5 billion since 2002, those who benefit the most from the lottery scholarships are not those who need it the most, according to The State’s analysis of data and public records. Rather, working-class people and minorities spend a disproportionate amount of their income playing the lottery, funding scholarships for primarily wealthier, white students to attend the state’s flagship universities, statistics show.
That’s no surprise, say longtime critics of the lottery. A state-run lottery was a ploy Democrats used throughout the South to woo white, suburban voters into voting blue, say critics, some of whom are Democrats.
“We concentrated so much on scholarships, and I know why,” said Sen. Darrell Jackson, a Richland County Democrat who sits on the Senate Education Committee. “They had to find a way for upper-income, white families to support the lottery.”
It was a political strategy that hasn’t held up in the long run. South Carolina hasn’t elected a Democratic governor since Jim Hodges, who based his 1998 gubernatorial campaign largely on a push for a state-run lottery. And both the S.C. House and Senate remain in Republican control.
Voters aren’t likely to switch from Republican to Democrat based on support for a lottery alone, said Scott Huffmon, a political scientist at Winthrop University. In order for it to be effective, voters would have to know their children would disproportionately benefit from the lottery and then associate that benefit to the Democratic Party. It’s unlikely a significant number of voters will draw that conclusion, considering a Republican-controlled legislature approved the laws regulating the lottery and a Republican administration continued the program after Hodges left office, Huffmon said.
“It’s not a game-changer,” Huffmon said. “It’s not going to make the difference, even in a really close election.”
Even those who hoped the lottery would help lift underprivileged communities out of poverty say it hasn’t lived up to the promises made.
In 2000, “just the general concept of the lottery seemed to be such as positive thing,” said J.T. McLawhorn, CEO of the Columbia Urban League, a nonprofit that seeks to improve conditions for underprivileged communities in the Midlands. “As it has been implemented ... I don’t think African Americans are getting an adequate return for scholarships based on how much money they put into the lottery system.”
That trend doesn’t just apply to communities of color. Rural, poor, communities also don’t get what they put into the lottery.
For example, Orangeburg County has the 11th highest poverty rate in the state and has spent $1,274 per person on the lottery since 2008 — more than any other county, according to data from the S.C. lottery, the S.C. Revenue and Fiscal Affairs office and the U.S. Census Bureau. But for every dollar Orangeburg County residents has spent on the lottery, they have received just 41 cents in scholarships, K-12 funding and other lottery funds.
Pickens County, which has the 15th lowest poverty rate, has spent $141 per person on the lottery since 2008, the least of any county, records show. But for every dollar Pickens County residents spent, they received $3.26 in scholarships, K-12 funding and other lottery funds.
This trend applies throughout the state. The more impoverished a county, the less money they receive back from the lottery, data show.
“People who are impoverished and less educated are paying for wealthier, more educated people to go to school,” said state Sen. Vincent Sheheen, a Kershaw Democrat who sits on the Senate Education Committee.
Asked about the tendency for poor areas to fund scholarships for higher-income areas, S.C. Lottery spokeswoman Holli Armstrong said in an email “The South Carolina Education Lottery is solely responsible for raising funds for education, and the General Assembly is responsible for appropriating those funds.”
Lottery proponents often point to the amount of money that has flowed to underprivileged communities — over $200 million in scholarships, K-12 funding and other money since 2002 — as a result of the lottery program.
“It has been a vital source of access to working-class kids,” said former Gov. Jim Hodges in a recent interview.
Like many states, South Carolina splits its scholarship funding between its highest achieving students and those who need it the most. But last year, 93 percent of lottery scholarship dollars “were allocated to students without regard for financial need,” according to a July report from the Legislative Audit Council.
Those scholarships, HOPE, LIFE and Palmetto Fellows, are based on grade point average and standardized test scores. Financial need is not factored in.
While S.C. spent roughly 8 percent of its aid on need, neighboring Tennessee spent 14 percent and North Carolina spent 94 percent, (Georgia was not listed), according to 2015 data from the Commission on Higher Education, the most recent available. In fact, S.C. spent a smaller percentage of its scholarship money on need-based scholarships than all but two states — South Dakota and Arkansas — that have need-based scholarship programs.
“We’re very much out of the norm compared to other states in that we don’t measure students’ need in awarding most scholarships,” Sheheen said.
In the poorest 20 S.C. school districts, 27 percent of students qualify for the LIFE and Palmetto Fellows scholarships, while 47 percent of students in the state’s richest 20 school districts qualify, according to S.C. Department of Education data.
A similar split also applies across racial lines. The more a scholarship is worth, the more likely the recipient is to be white, according to Commission on Higher Education data.
In 2017, 42 percent of students who received the entry-level, $2,000 per year HOPE scholarship were black, while only 3 percent of the $6,700 Palmetto Fellows recipients were black, according to Commission on Higher Education data.
“For kids who were going to go to college anyway, this is just a bonus to mom and dad,” Sen. Brad Hutto, D-Orangeburg, said during a March committee hearing on the lottery scholarship.
A disproportionate amount of lottery scholarship money is spent by students attending the state’s pricier, flagship schools. Though 17 percent of in-state S.C. students attend the University of South Carolina or Clemson University, those students received 32 percent of all lottery scholarship money in the 2016-2017 academic year, according to data from the Commission on Higher Education.
The lottery scholarships can also be used at private schools. There, 13 percent of S.C. students attended a private school and received 15 percent of all lottery scholarship dollars.
“We are thankful for lottery money because it does provide students who want to go to school another route to get financial aid,” said Mike LeFever, the former president and CEO of S.C. Independent Colleges and Universities, an organization that advocates for the state’s private colleges.
In contrast, 46 percent of in-state S.C. students attended technical college, but those roughly 80,000 students received 26 percent of all lottery scholarship dollars in 2016-2017, data show.
“We really need to put more money into need-based scholarships, because the children of the people playing the lottery tend to need a need-based scholarship rather than qualify for a merit-based scholarship,” Hutto said in a recent interview.
Need-based scholarships, when they are awarded, may be enough to get a student through technical college, but come up far short in paying for traditional, four-year schools.
When Jonathan Solomon was attending Trident Technical College in Charleston for his first two years of college, he was earning enough money from the lottery’s tuition assistance program to get rebates, he said. But when he transferred to the College of Charleston, those scholarships paid roughly 60 percent of his costs.
Solomon, now a senior, plans to graduate with $35,000 in college debt, he said.
“When you look at four-year college where tuition is rising faster than inflation and wages, you start to get in trouble,” Solomon said.
Not only are the poor less likely to benefit from the state’s most prestigious scholarships, they are also more likely to pay for them.
Average lottery spending per person has nearly quadrupled since 2002, and it appears to still be increasing. In 2016, the average lottery player spent $20.50 per month — 22 percent more on lottery tickets than in 2014, according to the demographic study, which a consultant firm produced based on interviews with over 1,200 South Carolinians. Last fiscal year, the lottery raised a record $435 million, lottery officials said in a press release.
“The increase is largely driven by those who are ages 35-44 or 65+, African American, lower education, extremely low income or extremely high income, not married but living with a partner, have two children in the household, students, managers/professionals, and laborers,” according to the study.
The study offers several facts to back this up
- Non-white lottery players spend 44 percent more per month on the lottery.
- Unemployed players spend $14.74 per month on the lottery.
- People who do not have a college degree are four times more likely to play the lottery.
- Laborers spend the most, on average, $36.60 per month on the lottery. Those in the medical profession spend an average of $5.30 per month.
“As the data shows, these poor counties spend a lot of money (on the lottery), but it doesn’t come back to them in scholarships,” said state Rep. Terry Alexander, D-Florence.
These aren’t new facts. In 2014, the Legislative Audit Council found lottery players who either: make less than $35,000 a year, have a high school education or less, were temporarily unemployed, lived in urban areas or were African American spent the highest amount on the lottery by demographic.
“Minority communities are supporting a lot of the funding from the lottery... but the opportunities are not trickling down to these communities,” said Rep. Joshua Putnam, a Republican state representative from Anderson who will lead the anti-lottery group Palmetto Family when his tenure is up.
Lottery tickets are what economists call an “inferior good,” which means that the more money a person makes, the less they spend on the good, said Raymond Sauer, a Clemson University professor of economics.
Sauer said the legislature is looking at lottery scholarship reform backward. Rather than figure out how to spend the money they have, lawmakers need to first figure out what they want, he said.
“The effect of relying on it as a funding source is regressive,” Sauer said. “They have to be concerned with cost, but the objective has to come first, and that’s educating students.”