From Boon To Bust: State Lottery Policy & How Stakeholder-Created Beneficiary Fund Structure Determines Vulnerability To Future Legislative Grabs

Authors

Lisa Mathews, University of Nebraska-LincolnFollow

Date of this Version

Spring 2012

Comments

A THESIS Presented to the Faculty of The Graduate College at the University of Nebraska In Partial Fulfillment of Requirements For the Degree of Master of Arts, Major: Political Science, Under the Supervision of Professor Kevin B. Smith. Lincoln, Nebraska: May, 2012

Copyright (c) 2012 Lisa Mathews

Abstract

Funding K-12 education is one of the largest public expenditures for most states in the U.S., and Nebraska is no exception (Nebraska Department of Administrative Services, 2011). Since the 1960s, the policy of state-enacted lotteries has slowly but steadily spread throughout the country with all but seven states now operating a lottery to benefit a range of community and social programs with Education being the most common beneficiary (Novarro, 2002). Since the Nebraska lottery’s inception in 1993, about $400 million has been raised for these primary beneficiaries and other beneficiaries on a smaller scale. Legislative and Constitutional changes have left the education funds vulnerable to being used to fix state budget shortfalls instead of being used for the original purpose of adding extra funds to K-12 education (Appendix B). In fact, during fiscal years 2001-02 through 2006-07, the state Legislature passed bills that diverted 86% of the education funds to the General Fund, amounting to more than $48 million, or diverting $8 million of the $9.4 million of the annual average available during that six-year period (Appendix E). The environmental fund, however, was not left as vulnerable and has been able to successfully withstand recent legislative challenges (Appendix B).

Why wasn’t the environmental fund equally at risk? This study takes a first-cut attempt at explaining why one fund was protected from future legislatures looking for money to relieve budget shortfalls, and why the other fund was better positioned for sustainability. In order to describe and explain this phenomenon, the two groups of stakeholders of the primary lottery beneficiary funds in Nebraska were qualitatively researched to explain how one fund was provided greater protection from legislative fund diversions in an era of perceived lottery windfalls that were initially meant to supplement funding to schools.

Adviser: Kevin B. Smith