By David Loomis
INDIANA — At an April 8 state budget hearing in Harrisburg, Sen. Joe Pittman, R-Indiana, aimed a barb at Agriculture Secretary Russell C. Redding over revenues for the Pennsylvania Race Horse Development Trust Fund:
“I don’t know how you can expect us to eliminate and reduce a trust fund that was established for a given purpose without a full appreciation and understanding of what the impact will be on the business model,” the senator told the secretary. “This reminds me a little bit of the definition of insanity,” he added.
The secretary ducked the senator’s dig, possibly to avoid stating the obvious: If lawmakers approve the governor’s Senate Bill 377 to reduce (not eliminate) the quarter-billion-dollar-a-year subsidy of Pennsylvania’s private racehorse industry, then the private interest will be prone to stumble. And at the rate of its current decline, the industry may have to reconsider, redefine, reevaluate, reexamine, reimagine, reinvent and do what other Pennsylvania institutions in similar straits have been forced to do with their legislated “business models.”
A generation ago, Pennsylvania’s “business model” for higher education was a model of investment in knowledge and human capital. It paid most of the price of attending its 14 state-owned public universities. The investment paid off in higher lifetime earnings for educated citizens and tax revenues for the common good – public safety, public health, sturdy bridges, etc.
Now, however, Pennsylvania contributes a comparative pittance, ranking 48th of 50 states in per-capita spending for public universities. Middle-class students and families groan under the added burden, their futures mortgaged to mounting debt.
Enrollments have plunged, and more plunging is rumored. Administrators blame demographics; economic analyses fault administrators. Faculty members report declines in academic rigor. More faculty furloughs are forecast.
Starved of the legislature’s public investment, the State System of Higher Education has resorted to reimagining its “business model” by cutting quality, reducing workforce and raising prices. Some campus sources are imagining IUP’s 2020-2021 academic-year enrollment of around 10,000 may sink to 7,000 by September. That may be speculation. But as a member of the local business community observed this week, “Saying that this topic is ‘on our radar’ would be an understatement.”
Thus, the “business model” Pennsylvania lawmakers have thrust on public higher ed should offer Mr. Pittman his full appreciation and understanding of the harsh impact on the business model of the racehorse industry when – if — the governor’s Nellie Bly Scholarship Program is adopted by the legislature. It is likely to hurt the private racehorse industry (which calls the scholarship initiative a “raid” on its trust fund). But it will help public university students and, ultimately, the commonwealth. (Racehorse interests say they are confident they can kill the governor’s initiative for the second year in a row.)
WHY DOES MR. PITTMAN embrace the private racehorse industry at the expense of public higher education and an important campus constituency? He did not respond to a June 22 email request for comment. But the tape tells a tale:
— Since lawmakers authorized 14 slot parlors to open in 2006, Pennsylvania gamblers have paid state revenues of at least $29 billion, reflecting Pennsylvania’s ranking as second only to Nevada in gambling activity. Pennsylvania’s support of its gambling industry is second only to New York.
—- The horse racing industry injects $527 million into the Pennsylvania economy each year, according to the Pennsylvania Horse Racing Association – a return of roughly $300 million on its roughly $239 million annual state subsidy. (By comparison, the State System of Higher Education’s annual subsidy amounts to $477 million. In 2015, the system calculated that the economic and employment benefits generated reached $6.7 billion, a 14-fold return on investment.)
—- The state’s Race Horse Development Fund is the state’s single largest economic development expenditure. In 2019, the fund received a subsidy of $238 million, five times the amount wagered by Pennsylvanians on races run on Pennsylvania tracks.
— Despite the state’s largesse, racetrack attendance is small and shrinking. One recent study reported, “Average attendance for the Williamsport Crosscutters minor league baseball team is greater than the average attendance at any of the state’s six horse tracks!” (Which prompted one commentator to suggest that state lawmakers should consolidate race tracks, not college campuses.)
—- The industry creates about 1,700 full-time track jobs, and 7,385 direct jobs overall. By comparison, PASSHE employs 11,048 overall, including unionized faculty and staff on 14 university campuses. The figure reflects employment after recent cuts of 14 percent in PASSHE’s overall workforce.
—- A recent study calculated that Pennsylvania bets way more on racehorses than on its college students. In 2019, the state subsidy amounted to $15,271 per horse. The amount per-student was $5,739.
—- Recent scrutiny of the public support for the private horse race industry has turned attention to its treatment of its own. In March, for example, The Philadelphia Inquirer reported that since 2010 the industry has been responsible for the deaths of more than 1,400 thoroughbreds in Pennsylvania – most due to illegal doping. (The industry veteran hired by the state to oversee the industry does not speak to the media, his staff told The Inquirer.)
As for Sen. Pittman, his campaign contributors may explain his support for the gambling and racehorse industry. For his 2020 re-election campaign, gambling and racehorse interests were among his largest donors – contributing at least $34,000 of his campaign’s $817,379 total war chest.
Donors included the Pennsylvania Thoroughbred Horsemen’s Association PAC, the Standardbred Breeders Association of PA, The Meadows Standardbred Owners Association, and Operators for Skill PAC. For his 2022 election, the donors already have ponied up $8,500.
WHAT DO HIS CONSTITUENTS SAY about subsidies for racehorse interests? A June 7 survey by the Center for Opinion Research at Franklin & Marshall College in Lancaster reported a majority of respondents – 83 percent — want the subsidies repurposed for such educational programs as the Nellie Bly Scholarship Fund for PASSHE students. In other words, Pennsylvanians support the governor’s initiative.
In February, the governor himself indirectly answered Mr. Pittman’s “insanity” question when he re-introduced his Nellie Bly initiative at the expense of the racehorse subsidy fund:
“The fund has provided more than $3 billion over 16 years to subsidize the single private industry,” said the businessman-governor, “which should be ready to support itself in a free-market capitalist economy.”
“Policymakers have to ask themselves what the better investment is in Pennsylvania’s future: horses that race for four years or students whose education lasts a lifetime.”
David Loomis, Ph.D., emeritus professor of journalism at Indiana University of Pennsylvania, is editor of The HawkEye.
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