Recently, Gov. Mitch Daniels put forth a proposal to privatize the Hoosier Lottery. As envisioned by the governor, a private contractor would give the state an upfront payment of at least $1 billion and pay the state a guaranteed $200 million per year for the life of the contract.
Daniels has proposed two uses for the upfront payment. Dollars would be split between a) scholarships for Indiana high school students attending Indiana universities and colleges and b) funding programs to attract leading academic researchers to Indiana’s universities.
Indiana has a long history of using lottery proceeds to benefit education. Unfortunately, while Indiana governors and legislators have continued to spend more on education, in particular primary and secondary education, Indiana students continue to lag the nation in educational attainment. Not only do many Indiana students perform poorly, a surprising number of them fail to graduate from high school. Failing to graduate deprives students of the educational and personal skills necessary to succeed in life and, absent an individual awakening to their own shortcomings, propels them into a lifetime of disappointment-low skills, low-wage jobs and societal marginalization.
With such large numbers of Indiana students failing to graduate or graduating without the necessary educational skills to function as productive employees, perhaps policymakers should also consider investing any lottery privatization proceeds in programs that have proven results in equipping high school students and dropouts with the skills needed to succeed, starting with functional literacy.
Today, tens of thousands of adults in Marion County are functionally illiterate, meaning they are unable to address an envelope, read a prescription, fill out a job application, review their children’s homework, or vote. Clearly, adult illiteracy costs Hoosier families and businesses. Studies have consistently proven that a parent’s literacy is the biggest factor in determining the academic and economic success of his children.
Illiteracy also affects Hoosier businesses. Nationally, adult illiteracy costs businesses more than $60 billion each year in lost productivity and employee training for remedial reading, writing and math.
Conversely, the benefits of higher proportions of the population’s being literate are equally clear. By investing in programs and services that improve Hoosier literacy rates, more Indiana high school students will have an opportunity to avail themselves of the scholarship programs the governor wishes to establish and have an opportunity to learn from the eminent scholars we hope to attract.
For 22 years, volunteers with Indy Reads have been providing one-on-one and small-group tutoring for adults who read at or below the sixthgrade level. Annually, Indy Reads works with about 400 pairs of students and tutors. With a $260,000 annual budget for staff, training and materials, Indy Reads is an efficient steward of its resources and provides compound results on each dollar it invests.
A small investment of lottery privatization dollars in programs like Indy Reads statewide would ensure that all counties are at world-leading levels of literacy attainment. National studies have estimated that, if literacy levels in the United States were the same as in Sweden, the U.S. gross domestic product would increase by $463 billion. Extrapolating Indiana’s share, this would mean billions of additional value created by the Hoosier economy. Those dollars would benefit business owners as well as their employees. That kind of value would attract companies and entrepreneurs to Indiana and create more Indiana entrepreneurs.
Perhaps our most powerful economicdevelopment tool with proven results lies in the words right in front of us.
Williams is regional venture partner of Hopewell Ventures, a Midwest-focused private-equity firm. His column appears monthly. To comment on this column, send e-mail to firstname.lastname@example.org.