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IUP president commends bill applying gambling revenue to tuition relief

| Friday, May 8, 2009

Indiana University of Pennsylvania President Dr. Tony Atwater said beyond the financial crisis gripping the country, there is another crisis that will affect generations to come if it's not fixed now.

"It is a crisis of our college students and our potential students in terms of access, affordability and indebtedness of higher education," Atwater said.

Atwater was one of 11 people to testify on the proposed Tuition Relief Act before the state House Gaming Oversight Committee during a public hearing Thursday at Westmoreland County Community College near Youngwood.

The bill would legalize video lottery machines — such as video poker and video keno — at bars, restaurants and private clubs licensed by the state Liquor Control Board.

Revenue from the machines would provide tuition relief for students attending community colleges and the 14 universities in the State System of Higher Education.

Atwater said IUP students face an average of more than $22,000 in debt when they graduate.

Under the act, students would pay only what they could afford, said Kathleen M. Shaw, deputy secretary for the state Department of Education.

Many families earning less than $32,000 would pay $1,000 a year, while various levels of relief would be available to families earning less than $100,000 a year.

"In Pennsylvania, a college education has become increasingly out of reach for too many families," Shaw said. "In fact, Pennsylvania is the sixth most expensive state in the union in which to go to college."

The program would cost $20 million to get started, testified Department of Revenue Secretary Stephen H. Stetler. Half of the revenue would go to the relief fund, 25 percent to the businesses with the machines and the final quarter to program costs.

An estimated $550 million for tuition relief would be generated annually when the law is fully implemented.

But Rep. Mike Reese, R-Mt. Pleasant Township, asked Stetler and Shaw what would happen if the projected revenues fell short.

Stetler said the money would come from the general fund, and Shaw said student awards would be decreased.

"This program potentially could be drawing down more general fund dollars if the revenues aren't there," Reese said.

Major John Lutz, director of the state police Bureau of Liquor Control Enforcement, estimated more than 17,000 illegal video gambling machines are operating in the state. He said the proposal provides for more severe penalties and makes it easier for police to crack down on illegal machines.

Rep. Ted Harhai, D-Monessen, said the law calls for a single vendor to provide all gaming machines — eliminating revenue for businesses already providing video games, pool tables and other amusement machines.

Stetler said a single-vendor process gives the state more control over the machines, which is critical to the integrity of the gaming system.

But John P. Milliron, legislative counsel to the Pennsylvania Tavern Association and the Pennsylvania Amusement and Music Machine Association, said the state should open the program to more vendors.

In four states with multiple vendor-based video systems, 78 percent to 85 percent of licensed establishments operate machines. In Oregon, where the state owns the machines bought from a single vendor, the participation rate is 36 percent, Milliron said.

Tom Scott, owner of McGrath's Pub in Harrisburg, said the bill provides little incentive for bar owners to get involved.

Scott said the estimated $7,500-per-machine a tavern owner would earn annually would be reduced to about $2,500 when state fees, local taxes and other costs are considered.

"I just don't know if it's worth the aggravation," Scott said.

Stephen Drachler, executive director of A United Methodist Witness in Pennsylvania, doesn't think much of the program. His group is part of a coalition of faith and civic groups, Stop Video Poker PA, opposing the bill.

"Gambling encourages the belief that work is unimportant, that money can solve all our problems, and that greed is the norm for achievement," Drachler said. "It serves as a regressive tax on those with lower incomes."

Drachler said he was "disappointed" that Rendell held a video conference with high school students to get support for the proposal.

"We strongly disagree that this is about scholarships so more of Pennsylvania's young people can attend college," Drachler said. "Students and their parents are being used as pawns in this false choice."

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