Site hosted by Angelfire.com: Build your free website today!

Measuring the Impact of Casino Revenue On Per Pupil Expenditures In Mississippi

 

 

 

 

 

 

Rodney E. Stanley

Institute of Government

Tennessee State University

330 10th Avenue North

Nashville, TN 37203

615-963-7249

Rstanley34@hotmail.com

 

 

 

 

 

 

 

 

Paper Presented at the Western Social Science Conference in Albuquerque, New Mexico, April 12, 2002

 

Abstract

The Mississippi Legislature adopted casino gaming in 1990 for the purpose of curing financial ills that have traditionally plagued the Magnolia state.  Local policy makers were given the opportunity to tax the casino industry at 3.2 percent, with an additional 0.8 percent if these local government stakeholders deemed it necessary to extract additional supplemental revenue.  One program designated as a beneficiary of this revenue-generating source was education.  This paper concludes that school districts receiving casino proceeds for education are significantly benefiting from this supplemental source of revenue.

 

INTRODUCTION

The revitalization of Mississippi’s economy occurred in 1990 with the passage of the Mississippi Gaming Control Act, which authorized casino gaming in local communities that chose to adopt this revenue-generating device (Rivenbark, 1997).  During the 1980s, Mississippi was faced with severe budgetary hardships, due to the collapse of the oil industry.  Operating a mere budget $2 billion, policy makers in Mississippi were forced to slash many governmental programs and reduce the number of many other services.  The one program that received the largest cut was education. Because of Mississippi’s traditional lag in per pupil expenditures compared to other states, policy makers viewed additional supplemental revenue from casinos as a possible panacea for alleviating this legendary funding problem (Oliver, 1995).  This research fills a gap in the existing literature because no other quantitative empirical study deals specifically with the impact of casino dollars on education.  The following question is addressed by this research: Do revenue and spending patterns differ in school districts with casino tax revenue, compared to matching school districts without casino revenue?

Literature Review

State Supported Gaming In America

Public administrators and political functionaries, in Mississippi and other American states, experienced a most intense and challenging decade during the 1990s.  State governments witnessed a tremendous increase in demands on their governmental services, and an unprecedented number of un-funded mandates from the federal government, along with a tax- payer revolt (Ryen, 1992).  As the demand for social intervention programs increased, and the amount of available resources for funding these programs decreased, governmental officials used their ingenuity in generating revenue to offset the cost of running government. “Games of chance,” in one variation or another were the revenue generating mechanisms chosen by many state governments as their “economic savior” (Rivenbark and Rounsaville, 1995: p.3). 

One of the primary arguments used to rally support for legalized gambling is spending more revenue on per pupil expenditures.  In theory, these government officials asked the populace to invest in the future of their community and country by using gambling dollars to educate the younger generations. 

State Operated Lotteries

            Lotteries have proven to be appealing mechanisms for producing supplemental government revenue because they are considered a voluntary tax: individuals pay the tax because they want to, instead of having to pay the tax because the government demands it (Mikesell, 2001).  The voluntary aspects of lotteries are extremely appealing to governors and legislators because resources for social intervention programs are generated without unpopular tax increases.  In other words, legalized gambling intends to raise revenues without increasing the tax burdens of the lower class (Mikesell, 1989).     

            The most popular gambling device today is by far the lottery (Mikesell and Zorn, 1986).  The allure of lotteries and other forms of gambling as a source of revenue enhancement for state and local governments ascribes amply to the continued emergence of legalized gambling over the past two decades.  Currently, thirty-eight states and the District of Columbia operate lotteries (National Gambling Impact Study, 2000).  From 1982 to 1990, expenditures on legalized gaming increased at almost two times the rate of income; and by 1992, revenues from state sanctioned gambling operations averaged approximately $30 billion a year (Gross, 1998). 

            While lotteries are touted by many as a means of increasing funds for needy state programs, opponents contend that lotteries are not the economic savior that policy makers and voters originally thought (Jones and Amalfitano, 1995).   Miller and Pierce (1997) examined the financial aspects of education lottery’s short-term and long-term effects.  They found that state-sponsored lotteries increased spending on education per capita during the early years of the lottery, but as time passed, these same states witnessed an overall decrease in spending for education. 

            The second major problem with lotteries funding education is the idea of fungibility.  Spindler (1995) reinforces the notion of fungibility in reference to lottery dollars for education.  Spindler examines the lotteries of New York, New Hampshire, Ohio, Michigan, California, and Montana to determine their impact on educational revenue enhancement of public education expenditures.  Spindler attributes the issue of fungibility to the “politics of the budgetary process” because education expenditures are highly visible to the public, and are plagued with fiscal and political restraints (p. 60).  Spindler contends that in states where lottery revenues are earmarked for education, revenues actually substitute for general fund expenditures.  Hence, Spindler concludes by postulating that state lotteries “are robbing Peter to pay Paul” (p.61).  

            Fields (1996) supports Spindler’s notion, and contends that the failure of Florida’s lottery in meeting everyone’s expectations of success expounds on the limitations of this revenue enhancing device.  He points out that even though Florida’s educational system has received billions of dollars from lottery proceeds, the state legislature has taken non-lottery monies previously designated for education, and used them for funding other state commitments.  Public education’s share of the state budget in Florida has decreased more than 5 percent over the past decade since the lottery began in 1986 (National Education Association, 1997).  Even though revenues from lottery sales were intended to enhance the state’s educational system, the legislature was not legally bound to boost education with these proceeds. As a result, the earmarking of revenues from lotteries to replace regular, budgeted educational funds, instead of enhancing education, depicts Florida’s education policy. 

A third major problem with lotteries occurs when the proceeds are used to finance a tax cut.  Lotteries have proven to be appealing mechanisms for producing revenue because they are considered a voluntary tax. The voluntary aspects of lotteries are extremely appealing to governors and legislators because resources for social intervention programs are generated without unpopular tax increases, and in some cases tax cuts occur because a surplus of revenue exists from the lottery (Rubin, 1993). 

This is quite appealing to governors and legislators in their reelection bids for office.  Rodgers and Stuart (1995) stipulate that “the revival of lotteries,” despite immoral concerns and “negative distributional effects,” has occurred because of the belief that lotteries, instead of other tax instruments, raise additional revenue by generating smaller efficiency losses than other taxes; therefore, lotteries are less painful to voters (p. 244).  In turn, political leaders will endorse tax cuts and replace the lost revenue with lottery dollars.  Tax cuts are highly favorable political platforms used by incumbents for being reelected.  Unfortunately, many times social intervention programs, such as education, will be the first to suffer so politically ambitious individuals can maintain their tenure in politics (Jones and Amalfitano, 1994). 

Casino Gaming

A second type of gambling device that is receiving attention among governmental policy makers as a supplemental source of revenue is casino gaming.  Since the precursor to casino gaming is state-sponsored lotteries, and lotteries are receiving mixed emotions towards their impact on education, casinos must also be addressed and evaluated to determine if they are having the financial impacts on education as originally envisioned by policymakers. 

            According to Franckiewicz (1993), ten states have supported casino gaming as a supplemental revenue-generating device.  They are: Colorado, Illinois, Iowa, Louisiana, Mississippi, Missouri, Montana, Nevada, New Jersey, and South Dakota.  Recently, the states of Michigan and Indiana have also adopted casino gambling bringing the total of twelve states utilizing this revenue generating device to pay the expense of operating government (National Gambling Impact Study, 2000).  Recent scholarly endeavors measuring the economic impacts of casino gaming include: economic development (Oliver, 1995; Perniciaro, 1995 Mason and Stranahan, 1996) marketing and tourism (Denise von Herrman, Ingram, and Smith, 2000) municipal revenues (Clynch and Rivenbark, 1995; Clynch and Kaatz, 1999) and taxation (Rivenbark and Rounsville, 1996; Rivenbark, 1998). 

Casino Gaming In Mississippi

            Due to the collapse of the oil industry in Mississippi, concerned citizens in Vicksburg, Mississippi consulted their state Senator (Bob Dearing) about the possibility of bringing casino gaming to the Magnolia state.  Despite the rejection of lottery legislation just a few months earlier casino legislation was authored by Representative Montgomery in the House of Representatives while Senators Dearing and Gallot co-authored a similar bill in the Senate.  The House bill passed with limited resistance, but after heated debate among policymakers in the Senate, the upper house ratified the legislation by a vote of 22 – 20 (eight Senators reframed from voting on the legislative bill).  Casino gaming in Mississippi was passed with the stipulation that only counties bordering waters ways (the Gulf Coast and Mississippi River) were allowed to vote to adopt this revenue-generating device.  Once the county had adopted casino legislation, each municipality located in the county would have the opportunity to vote on the casino bill.  Originally fourteen counties voted on the bill and eight of those counties chose to bring casino gaming to their respected community.  Currently, 30 casinos are housed in eight counties throughout the Magnolia state (the Choctaw casino in Philadelphia, MS was excluded from this figure because it is on federal land and cannot be taxed by the state) (Mississippi Code: Sections 75-76-100; 75-76-195). 

Mississippi essentially followed the Nevada approach on taxation, which included a maximum of 8 percent of gross revenues for the state, with an additional 3.2 and .8 percent of gross revenues for local governments.   Towns and municipalities may levy a .8 percent gaming tax on casinos residing within the entity’s corporate limits, and counties are allowed to collect taxes from facilities operating in unincorporated areas.  Taxes paid by gaming facilities located in municipalities are divided between the city and the county, with the city’s share equivalent to the percentage of the county residents living within the city limits.  The statute does not require county governments to share revenues with cities that have casinos residing in unincorporated areas. Overall, the casino industry is taxed at 12 percent by state and local governmental entities. The states portion of the proceeds (8%), is placed into the general operating fund, while local communities are given the opportunity to disburse the proceeds in the manner they deem fit (Mississippi Gaming Control Act, 1990). 

Overall, practitioners throughout Mississippi attribute Mississippi’s recent economic success to the gaming industry (Stanley, 2001).  For example, from 1992 to 1997, the assessed value of property in Tunica County rose from $16.1 million to $566.1 million.  As a result, the school millage rate declined from 11.4 cents per $1,000 assessed value to 4.2 cents per $1,000.  In other words, the tax bill on an $80,000 home dropped from $912.08 to $338.40 in five years (Mississippi Gaming Commission, 2000).  However, the literature has yet to produce any empirical studies measuring the impact of casino gaming on education in Mississippi.

The Rationale For A Casino Study

            In theory, Scholars such as Mikesell (1989), Spindler (1995), Miller and Pierce (1997), have measured the impact of state operated lotteries on funding education in the American states.  The conclusions reported by all of these scholars indicate that lotteries are an enormous hoax because hardly any of the proceeds from taxes received from lotteries are ever used to enhance education.  Operating state lotteries is expensive, and usually much of the tax revenue generated by lotteries is used to cover administrative costs.  Despite these empirical results, 38 states now operate lotteries with a large portion of the proceeds earmarked for education.  The growth of casino gaming in American is related to the perception that this gaming device will also provide additional revenue for such programs as education.       

            As the literature suggests, earmarking lottery and casino gaming funds for education is popular among policy makers because almost everyone supports better education, despite the empirical support for such an accusation.  However, policy makers in Mississippi sold the idea of casinos in many municipalities and counties by earmarking casino funds for education (Rivenbark, 1995).  If casino revenue is impacting per pupil expenditures in Mississippi school districts with casinos, in theory, casino school districts should be spending more on per pupil expenditures, compared to matching noncasino school districts. This research intends to fill the literary gap by addressing the following research question:

rESEARCH qUESTION & HYPOTHESIS:

 

Do revenue and spending patterns differ in school districts with casino tax revenue from similar school districts without casino revenue? 

 

H1: School districts receiving casino tax revenue tend to spend the same per pupil on education, compared to matching school districts without casinos.

 

DATA & METHODOLOGY

The statistical method chosen to measure the data is an independent samples t-test.  The variables used to explain the data in this research project are as follows:

Conceptual Definition:

Total Spending Per Pupil by School District (Dependent Variable) – the amount

of spending per pupil by state, local and federal governments.

 

Casino Tax Revenue - the amount of revenue casino school districts in Mississippi

receive from the gaming tax placed on casinos.

 

Per Pupil Assessment Value – Average Per Pupil Assessment Value based on Average

Daily Student Attendance (measured in $100 thousand).

 

Number of Students - the number of students in each Mississippi school district.

 

Millage Rates – the percentage of taxable income levied on real and personal property in

each Mississippi school district.

 

Casino Presence Variable – Dummy variable coded 0 = casino school districts, 1 =

noncasino school districts.

 

Operational Definitions:

 

Total Spending Per Pupil by School District – Mississippi State Superintendent’s Report on Education

 

Casino Tax Revenue – Mississippi Department of Education

 

Per Pupil Assessment Values – Mississippi Report Card on Education, Mississippi

Department of Education

 

Number of Students – Mississippi Statistical Abstracts, Mississippi State University

 

Millage Rates - Mississippi State Superintendent’s Report on Education

 

Casino Presence Variable – Mississippi Gaming Commission

 

Units of Analysis

According to the Mississippi Gaming Commission (2000), 1993 was the first year that casinos began contributing revenues to state and local governments.  However, according to the Mississippi Department of Education (2000) the first casino dollars used to fund education did not come until 1995. Thirteen school districts currently benefit from casino gaming in Mississippi.  However, to measure the impact of casino dollars on education a comparable comparison group was established.  Twenty-six school districts were chosen as the units of analysis in this project (thirteen casino school districts compared to thirteen matching non-casino school districts). 

The comparison groups were chosen premised on previous studies conducted by the Mississippi Department of Education.[1]  These studies utilized a process for choosing comparison groups based on approximation ranges in the number of students in each school district, spending on education per pupil, and per pupil assessment values by each school district.  The range categories used in selecting the comparison groups were as follows: 1000 – 15,000 for number of students, $2,500 to $5,000 for per pupil expenditures, and $10,000 – $50,000 for the assessment value of each school district.  The following table displays the school districts used in this study.  The casino school districts are in bold.

TABLE ONE

COMPARISON SCHOOL DISTRICT DATA FOR 1989 -1995 SCHOOL YEAR

 

 

School District

Number of Students

Spending On Education $

$ Per Pupil Assessment Values

Bay St. Louis

2448

3782

27843

Benton County

1429

3902

14329

Biloxi

6798

4069

22370

Carroll County

1240

3994

27499

Clarksdale City

4492

3464

10876

Coahoma County

2320

4136

20661

Greenville City

8448

3621

15882

Gulfport City

6529

4557

28426

Hancock County

3122

3736

35636

Harrison County

11354

3466

22737

Hattiesburg Municipal

5555

4462

28559

Jackson County

7309

4789

28248

Lee County

5479

3541

20511

Leland City

1759

4199

16438

Moss Point Municipal

5338

4091

18324

Natchez-Adams County

5768

4367

27207

Ocean Springs

4340

3510

18279

Oxford Municipal

2762

4064

23806

Pascagoula City

7828

4342

38623

Rankin County

13360

3125

24095

Tunica County

1999

4115

17082

Tupelo City

7019

4285

34636

Vicksburg City

9586

3990

27196

Webster County

2072

3385

16644

Western Line

2355

3463

36387

Yazoo City

3593

4339

40223

 

Note: Casino school districts are in bold

 

            Once the comparison groups were established an independent samples t-test was conducted on the two groups to determine the mean differences.  The independent samples t-test was conducted for school years 1989 - 1994, the years prior to the allocation of tax revenue to casino school districts in Mississippi.     

TABLE TWO

Preliminary INDEPENDENT T-Test On Per Pupil Spending For Education: 1989 – 1994

 

Group Statistics

 

                                                 Dummy Mean                      St.D.                       T – Score              p.>

 

(0 = Casino School Districts Before Casino Gaming)

(1 = Non-Casino School Districts Before Casino Gaming)

______________________________________________________________________________________

                                               

Total Spending Edu.            .00                          3651                        396.08                     .905                    .367

                                                1.00                         3588                        465.31                    

Number of Students            .00                           5117                        3120.43                   .016                    .987

                                                1.00                         5110                        3106.38

Assessment Value               .00                           24355                      8727.492 -.307                   .760

                                                1.00                         24753                      7469.109

 

            The above table is a preliminary test establishing the comparability of casino school districts with matching non-casino school districts in Mississippi.  The variables reported in the table suggest that virtually no difference between the two groups exist in spending before casino gaming came to Mississippi.  Therefore, this table indicates that the comparison groups are comparable and this study should continue.

According to Johnson and Joslyn (1995), a pre-test/post-test experimental test provides for statistical measures of the dependent variable before the actual stimulus occurs, while also accounting for the maturation of the dependent variable over time, along with the possibility of extraneous factors, that may cause the dependent variable to change during the time period cover in this analysis.  Since the comparison groups are comparable, this study continues by utilizing an independent samples t-test as the methodological choice for measuring the pretest/posttest research design.  The following tables are the statistical results of the independent samples t-tests. [2]

                                                                                                                      

FINDINGS

 

            Each table represents specific groupings analyzed in statistical test.  The headings of each table indicate the groups tested by each test.  The overall results are listed at the conclusion of this section of the paper.  The independent sample t-test tables are as follows:

Total Impact =

(Casino School Districts Before - Casino School Districts After)

(Non-Casino School Districts Before - Non-Casino School Districts After)

(Casino School Districts Before – Non-Casino School Districts Before)

(Casino School Districts After – Non-Casino School Districts After)[3]


TABLE THREE

 

Independent Sample t-test:  Casino School Districts Versus Casino School Districts Before and After The Adoption of Casino Gaming 1989 – 2000

 

                                     Dummy          Mean              St.D.                T – Score        p.>

(0 = Casino School Districts Before Casino Gaming)

(1 = Casino School Districts After Casino Gaming)

_____________________________________________________________________

Total Spending Edu.     .00                  3656                396.128           -15.759            .001

                                    1.00                 5334                833.035                      

Casino Tax Revenue     .00                  .0000               .0000               -5.200              .001

                                    1.00                 879182            1494464

Number of Students      .00                   5154                3123                .166                 0.869

                                    1.00                 5067                3148

Millage Rate                 .00                   43.3904           9.2919             -.214                0.831

                                    1.00                 43.7633           11.4546

Assessment Value         .00                   24300              8769                -5.097              .001

                                    1.00                 36367              18544

 

            This table reports an Independent Sample t-test assessing the difference between casino school districts before and after the adoption of casino gaming in Mississippi school districts.  The above table indicates that there is a difference between casino tax revenue and assessment value.  This table also reports that a significant difference exists between the two school districts in the amount of per pupil spending allotted for education.


TABLE FOUR

 

Independent Sample t-test: NON-Casino SCHOOL DISTRICTS before casino gaming VERSUS NON-Casino School Districts after casino gaming 1989 - 2000

 

                                     Dummy          Mean              St.D.                T – Score        p.>

(0 = Non-Casino School Districts Before Casino Gaming)

(1 = Non-Casino School Districts After Casino Gaming)

_____________________________________________________________________

Total Spending Edu.     .00                  3588                465.314           -14.768            .001

                                    1.00                 5019                6870.868                    

Number of Students      .00                   5110                3106.38           -.262                .794

                                    1.00                 5253                3452.75

Millage Rate                 .00                   48.6832           14.3307           -.506                .614

                                    1.00                 49.9183           14.7874

Assessment Value         .00                   24753              7469.10           -4.564              .001

                                    1.00                 31456              10070.71

 

 

            This chart is an Independent Sample t-test assessing the difference between non-casino school districts before and after the adoption of casino gaming in Mississippi.  The per pupil assessment value variable suggests that a significant difference exists before and after casino gaming.  The statistical inferences suggested by this table indicate that a statistically significant difference exists in per pupil spending on education among matching non-casino school districts before, and after casino gaming in Mississippi.  Since the casino tax revenue variable is not a factor in this Independent Sample t-test an interesting finding is reported by this table.  Since the time frame used in this statistical test was1989 to 1994 (before casino tax revenue started impacting education) and 1995 to 2000 (after casino tax revenue started impacting education), a significant difference occurred in the amount of per pupil spending on education in non-casino school districts used in this study. One explanation for this impact may be the booming economy that Mississippi experienced during the 1990’s.  With the unprecedented economic growth that occurred in Mississippi during the 1990’s, more revenue was available for education, especially during the mid to late 90’s, which may have impacted the results of this statistical test.  Were there any differences between casino school districts and matching non-casino school districts before the adoption of casino gaming?

TABLE FIVE

 

Independent Sample t-test: Casino SCHOOL DISTRICTS before casino gaming VERSUS NON-Casino School Districts BEFORE casino gaming 1989 - 1994

 

                                     Dummy          Mean              St.D.                T – Score        p.>

(0 = Casino School Districts Before Casino Gaming)

(1 = Non-Casino School Districts Before Casino Gaming)

_____________________________________________________________________

Total Spending Edu.     .00                  3651                396.08             .905                 .367

                                    1.00                 3588                465.31            

Casino Tax Revenue     .00                  .0000               .0000               XXXX              XX

                                    1.00                 .0000               .0000

Number of Students      .00                   5117                3120.43           .016                 .987

                                    1.00                 5110                3106.38

Millage Rate                 .00                   43.47               9.2616             -2.709              .008

                                    1.00                 48.68               14.3307

Assessment Value         .00                   24355              8727.492         -.307                .760

                                    1.00                 24753              7469.109

 

            This table is an important statistical test because it compares differences between casino school districts and matching non-casino school districts before the adoption of casino gaming in Mississippi.  One statistically significant finding worth noting is the impact that millage rate is reporting in the analysis.  The millage rate variable, with a p>. value of .008, indicates a substantial difference in millage rates between the comparison school districts before casino gaming began to impact education in Mississippi.  This statistical analysis suggests that both casino school districts and matching non-casino school districts were virtually the same in the amount of fiscal resources each group of school districts spent on per pupil education expenditures. 

            One explanation for this difference in millage rates may be due to the amount of industrial development in the comparison school districts.  For instance, the Ocean Springs School District is located in a residential community, and borders the Biloxi City School District.  When these two school districts are compared, the millage rates between them are quite different.  The Biloxi City School District has been able to maintain a steady millage rate over the time period in this study compared to Ocean Springs.  Because of the Ocean Springs School District’s residential location, in order to generate enough revenue to pay for its education expense, the Ocean Springs School District must maintain a higher millage rate than the Biloxi City School District.  The Biloxi City School District can maintain a much lower millage rate due to the large amount of industrial and residential development that existed in the school district before the adoption of casino gaming in Mississippi.  Therefore, with the introduction of casino gaming by school districts such as Biloxi, they have been able to maintain a relatively table millage rate compared to non-casino school districts, such as Ocean Springs.


TABLE SIX

 

Independent Sample t-test: Casino SCHOOL DISTRICTS after casino gaming VERSUS NON-Casino School Districts after casino gaming 1995 - 2000

 

                                     Dummy          Mean              St.D.                T – Score        p.>

(0 = Casino School Districts After Casino Gaming)

(1 = Non-Casino School Districts After Casino Gaming)

_____________________________________________________________________

                                   

Total Spending Edu.     .00                  5334                833.03             2.337               .021

                                    1.00                 5019                6870.86                      

Casino Tax Revenue     .00                  879182            1494464          4.743               .001

                                    1.00                 .0000               .0000

Number of Students      .00                   5067                3148.12           -.320                .749

                                    1.00                 5253                3452.75

Millage Rate                 .00                   43.76               11.4546           -2.640              .009

                                    1.00                 49.91               14.7874

Assessment Value         .00                   36367              18544.40         10.873             .063

                                    1.00                 31456              10070.71

 

 

            This table is the final Independent Sample t-test that reports the actual differences that have occurred between casino school districts in Mississippi, as compared to matching non-casino school districts on per pupil spending for education.  Since the

casino tax revenue began impacting per pupil education expenditures in Mississippi, a noticeable difference has occurred between the two comparison groups.  The reported means of total spending on education indicates that since 1995, casino school districts have out-spent matching non-casino school districts in per pupil expenditures on education.  The casino tax variable, with a statistically significant p value, seems to be one indicator that is influential in this spending discrepancy between casino school districts and matching non-casino school districts.  Although the p value reported by per pupil assessment values fails to be statistically significant, the high T – score lends itself to suggest that the variable may have had some impact on the statistical model. 

discussion of Independent sample t-tests

            When all of the Independent Sample t-tests are examined (excluding the summary table), what has occurred between casino school districts, and matching non-casino school districts in Mississippi, in total spending for education is displayed as following:

Total Impact =

(Casino School Districts Before - Casino School Districts After) = 1678 (Difference)

(Non-Casino School Districts Before - Non-Casino School Districts After) = 1431

(Casino School Districts Before – Non-Casino School Districts Before) = 63

(Casino School Districts After – Non-Casino School Districts After) = 315

 

            The inferences extrapolated from the total impact of casino gaming on education spending in Mississippi suggest that per pupil expenditures have increased between the comparison groups.  The difference in per pupil expenditures for casino school districts before the adoption of gaming, minus per pupil expenditures after casino gaming reveal a difference of $1,678 per pupil between the two groups.  A $1,431 difference on per pupil expenditures for education exists between non-casino school districts before and after casino gaming. The per pupil expenditures of the two groups, before casino gaming was adopted, indicates that a $63 difference existed between casino schools districts and the matching non-casino school districts.  Since the adoption of gaming, casino school districts have outspent matching non-casino school districts by $315 per pupil.  Following is an independent samples t-test assessing the impact of casino dollars on per pupil expenditures from the 1989-1990 school year to the 1999-2000 school year.


TABLE SEVEN

 

Independent Sample t-test:  Casino SCHOOL DISTRICTS VERSUS Non-Casino School Districts 1989 - 2000

 

                                     Dummy          Mean              St.D.                T – Score        p.>

(0 = Casino School Districts)

(1 = Non-Casino School Districts)

_____________________________________________________________________

Per Pupil Sp. Edu.        .00                  4404                1048                1.416               .158

(Total Spending)           1.00                 4239                917                 

Casino Tax Revenue     .00                  393480            1087817          4.325               .001

                                    1.00                 .0000               .0000

Number of Students      .00                   5095                3121                -.212                0.832

                                    1.00                 5175                3257

Millage Rate                 .00                   43.6031           10.2640           -3.797              .001

                                    1.00                 49.2446           14.5016

Assessment Value         .00                   29731              15176              1.296               .196

                                    1.00                 27800              9337

 

 

            The above chart is a summary table of an independent samples t-test assessing the difference between the means of casino school districts and matching non-casino school districts in Mississippi between the 1989 and 2000 fiscal school years.  The casino revenue variable is reporting a difference between casino and matching noncasino school districts over the eleven-year period.  Also, the millage rate variable displays a significance value that is accepted by statistical standards, meaning that the increase in this variable has an impact on total per pupil spending for education.  The statistical analysis reported between the two school districts suggests that per pupil spending differences, over the eleven-year period, were $165 (4404 – 4239).  The statistical analysis suggests that students in casino school districts are benefiting from casino proceeds when compared to students from matching non-casino school districts.  The following table lists the total tax dollars that the casino industry has contributed to education in Mississippi.

TABLE EIGHT

 

per pupil spending ON education by casino and matching noncasino school districts: 1989 – 2000

 

Note:

Line with boxes represents casino school districts.

Lines with Xs represents non-casino school districts.

Horizontal line on bottom represents years.

Vertical line represents per pupil expenditures among Mississippi school districts.

 

            In this chart of the casino school districts in Mississippi are represented on the top line in the graph, while the second line identifies matching non-casino school districts.  The bottom line of the graph (1-11) is the year of the data points on the line.  Between the data points of 7 and 8 (year 1994 and 1995), the graph begins to show a gradual increase among casino school districts, in per pupil expenditures for education, compared to non-casino school districts.  From 1995 until 2000, the gap between the lines on the graph suggests that casino school districts have continuously out-spent non-casino school districts on per pupil expenditures for education. 


TABLE NINE

 

TOTAL SUPPLEMENTAL CASINO TAX REVENUE FOR PER PUPIL EXPENDITURES ON EDUCATION: 1995-00 TOTALS

 

School                                    Governmental                                       Casino                                   % From Total

District                                  Sources of Revenue                           Revenue                 Revenue

________________________________________________________________________

1995-96                                   332,775,821                                            7,815,703                                               2.35%

1996-97                              310,395,286                                8,864,904                                 2.86%

1997-98                              332,907,685                                10,010,289                                               3.00%

1998-99                              352,009,274                                 17,012,303                                              4.83%

1999-00                              391,420,743                              15,611,400                                 3.87%

TOTALS                               1,719,508,809                                      59,314,603                                           3.50%

 

            Again, these are simply aggregate estimations of the casino industry’s contribution to education in Mississippi, but the figures suggest that gaming proceeds have impacted per pupil expenditures significantly. Therefore, the null hypothesis: H1: School districts receiving casino tax revenue tend to spend the same per pupil on education, compared to matching school districts without casinos, is rejected by the findings of this study.

            Despite the suggested findings suggested by the independent sample means tests, further advanced statistical analysis is needed that attempts to measure causal relationships that exists among the variables.  Furthermore, empirical analysis measuring the impact of casino revenues on student test scores would address the literature that questions whether more spending for education actually results into higher test scores, among students receiving supplemental sources of revenue such as casino gaming tax dollars for education.  Qualitative studies measuring how and why school districts are spending the casino money may assist in explaining variations in test scores among school districts in states disbursing casino revenue for education.  This study serves as a catalyst for other studies measuring the impact of casino dollars on per pupil expenditures because it suggests that Mississippi school districts with casinos, compared to matching non-casino school districts, spend more money for per pupil expenditures on education.


APPENDIX

 

2 Unfortunately, the independent sample t-tests is limited when trying to explain why a relationship has occurred between exogenous and endogenous variables.  The independent sample t-tests is useful in telling the researcher what relationships exist, but is quite limited when trying to explain why an affiliation has occurred between variables (O’Sullivan and Rassel, 1999).  Problems associated with the use of a pretest/posttest research design include assigning a comparable comparison groups to the experimental group in the study.  Although this study chooses its comparison groups in accordance to previous studies conducted by the Mississippi Department of Education, comparability is always in question as to whether or not the groups are similar “enough” to use in the study.  For instance, can rural and municipal school districts be comparable?  This study relies on the comparability of the preliminary statistical test to suggest that the experimental and control groups are of similar magnitude in the study.

 


REFERENCES

 

Alexander, Kern; Salmon, Richard G. 1995.  Public School Finance.  Boston:  Allyn and Bacon Publishing.

 

Beck, Nathaniel; Katz, Jonathan N.  1996.  “Nuisance Vs. Substance: Specifying and Estimating Time Series Cross Section Models.”  Political Analysis.  4: 1-37.

 

________.  1995.  “What To Do (and not to do) With Times Series Cross Section Models.”  American Political Science Review.  89: 634-47.

 

Clynch, Ed J.; Kaatz, James B. 1999.  “The Impact of Casino Gambling On Municipal Revenue, Expenditures, and Fiscal Health.”  Midwest Political Science Association.  April 16 Chicago, Illinois.

 

Clynch, Ed J.; Rivenbark, William C. 1995.  “Need Money?  Roll the Dice.”  International Journal of Public Administration.

 

Durbin, John 1970.  “Testing for Serial Correlation in Least-Squares Regression When Some of the Regressors Are Lagged Dependent Variables,” Econometrica 38:  410-412.

 

Fields, Greg.  1996.  “Lottery No Education Panacea, Florida Finds.”  Knight-Rider.  p. 1-2.

 

Fox, John. 1991.  Regression Diagnostics:  Quantitative Applications In The Social Sciences.  California:  Sage Publication.

 

Franchkiewicz, Vic. 1993, The States Ante Up:  An Analysis of Casino Gaming Statutes.  Loyola Law Review.  Vol. 38, p. 1123-1157.

 

Gross, Meir.  1998.  “Legal Gambling as a Strategy for Economic Development.”  Economic Development Quarterly.  12: 203-211.

 

Johnson, Janet B.; Joslyn, Richard A. 1995.  Political Science Research Methods.  Washington, D.C.: Congressional Quarterly Press.

 

Jones, Paul; Holmes, Elizabeth; Garner, Larry; Perkins, William.  1999.  Tables Of Fortune:  Lost Hope… Lost Lives, Gambling In America.  Mississippi:  Thistle, LLC.

 

Jones, Thomas; Amalfitano, John. 1995. Public School Finance and State Lotteries.  Lancaster, PA.:  Technomic.

 

Mason, Paul M.; Stranahan, Harriet 1996.  “The Effects of Casino Gambling on State Tax Revenue.”  Atlantic Economic Journal.  (Dec.), Vol. 24, p. 336.

 

Mikesell, John L.; Zorn, Kurt C.  1986.  “State Lotteries as Fiscal Savior or Fiscal Fraud:  A Look at the Evidence.”  Public Administration Review.  (July/August), p. 311-320.

 

Mikesell, John L 1989.  “A Note on the Changing Incidence of State Lottery Finance.”  Social Science Quarterly.  70: 513-521.

 

Miller, Donald E.; Pierce, Patrick A. 1997.  “Lotteries for Education:  Windfall or Hoax?”  State and Local Government Review.  29: 34-42.

 

Mississippi Department of Education.  2000.  Official Homepage. (http://www.mde.k12.ms.us.account.2000report-99).

 

Mississippi Gaming Commission 2000.  Official Homepage. (http://www.msgaming.com/).

 

Mississippi Gaming Control Act, 1990.  Mississippi Code Sections 75-76-100; 75-76-195..

 

National Education Association.  1997.  “In Florida, The Bet’s OFF: If Your State Lawmakers Think A Lottery Alone Can Fund Schools, Pack’em Off To The Sunshine State.”  NEA Today.  16: 10-11.

 

National Gambling Impact Study 2000.  Official Website. (http://www.ngisc.gov/).

 

Oliver, Michael J. 1995.  “Casino Gaming on the Mississippi Gulf Coast.”  Economic Development Review.  Vol. 13, #4, p. 34-42.

 

Ostrom, Charles W. Jr.  1978.  Time Series Analysis: Regression Techniques.  California: Sage Publication.

 

Perniciaro, Richard C.  1995.  “Casino Gambling in Atlantic City:  Lessons for Economic Developers”.  Economic Development Review.

 

Rivenbark, William C.; Rounsaville, Bradley B. 1995.  “The Incidence of Casino Gaming Taxes in Mississippi:  Setting the stage”.  Public Administration Quarterly.

 

Rivenbark, William C.  1997. “Taxation and Revenue Generation”.  Public Administration Quarterly.  Vol. 24, Issue, 2, p. 267.

 

________1995.  “The Tax Incidence From Casino Gaming In Mississippi:  The Impact of Accessibility.”  Dissertation, Mississippi State University.

 

Rodgers, William M.; Stuart, Charles.  1995.  “The Efficiency of a Lottery as A Source of Public Revenue.”  Public Finance Quarterly.  23:242-255.

 

Rubin, Irene 1993.  The Politics of Public Budgeting.  New Jersey:  Prentice-Hall Publishers.

 

Ryen, Dag 1992.  “The State Agenda for the Coming Years”.  The Journal of State Government. (April/June), p. 53-57.

 

Sayers, Lois W. 1989.  Pooled Time Series Analysis.  California: Sage Publication.

 

Spindler, Charles J. 1995.  “The Lottery and Education: Robbing Peter to Pay Paul?”  Public Budgeting and Finance.  3: 54-62.

 

Stanley, Rodney E. 2001.  The Effect of Casino Gaming on Financing Education In Mississippi: An Impact Assessment.  Dissertation , published by Mississippi State University.  

 

Stimson, James A.  1985.  “Regression in Space and Time: A Statistical Essay.”  American Journal of Political Science.  4: 915-947.

 

Von Herrman, Denise; Ingram, Robert; Smith William C.  2000.  “Gaming In the Mississippi Economy.”  Published by the University of Southern Mississippi.

 



[1] Charles Shivers, Director of Financial Accountability, Mississippi Department of Education and Dr. Gary Johnson professor of Educational Leadership at Mississippi State University stipulate that the Mississippi Department of Education has used the following indicators in the past to determine comparative school districts in various educational finance studies: average daily attendance, 1st month enrollment, property per pupil assessment values, whether the districts have 16th section trust lands, whether they are municipal or county districts, or rural or urban, per pupil spending, and total federal spending.  Mr. Shivers endorses the indicators (population, per pupil assessment value and spending per pupil) utilized in this study for generating the comparative school districts that were studied (Charles L. Shivers, CPA, Tuesday, January 9, 2001, 3:28 p.m.; Dr. Gary Johnson, January 8, 2001, 2:08 p.m.).  See the Mississippi Department of Education’s official Homepage for such studies.  Available at: (http://www.mde.k12.ms.us.account.2000report-99).

 

[2] See appendix for limitations in using a pretest/post design and short falls of an independent samples t-test.

[3] A summary table assessing the impact of the casino industries impact on education follows the previously listed statistical analyses.