Lottery Funding Shifts From Education
Special Report - September 30, 2010
The percentage of total revenue that the North Carolina Education Lottery actually sends to public schools has dropped from 35 percent of the annual lottery budget to 29 percent, according to a new report by N.C. Policy Watch. Released on September 24, “Scratch and Shift: Lottery Giving Education a Smaller Share,” is an investigative report written by N.C. Policy Watch reporter Sarah Ovaska, who based her findings on an analysis of the annual lottery budget.
While the original North Carolina lottery law required that 35 cents of every dollar spent on the lottery go to education, the report explains that the drop in the percentage that goes to schools is due a 2007 amendment to the law that “allowed lottery officials to hit the required 35 percent mark only ‘to the extent practicable.’” The report includes a comparison of the lottery’s 2009-10 and the 2006-07 budgets. In 2009-10, 59 percent of the lottery’s proceeds went to prizes, while only 29 percent when to the state’s education fund. By comparison, in 2006-7, 51 percent of the lottery’s earnings went to prizes, while 37 percent went to the education fund. “If the leaders of the state-run lottery had stuck to the old formula, that could have meant $80 million more last year for college scholarships, early education classes, school construction and teacher positions to reduce classroom size,” Ovaska writes.
Ovaska also reports that lottery proceeds are not just being used for education, as the name, N.C. Education Lottery, implies. She reports that in the most recent state budget, lawmakers took $35 million from the lottery fund “to help cover North Carolina’s share for Medicaid and other federal social service programs.”
In the report, Alicia Garland, acting director of the N.C. Education Lottery, is quoted as defending the increase in the percentage of lottery proceeds that go toward prizes by arguing that more prize money actually benefits education. She told N.C. Policy Watch that the total dollars the lottery gives to education has increased annually, from $325 million in the lottery’s first full year to $419 million last year. But Ovaska points out in the report that the increased payouts to education funding have not “kept pace with the corresponding jumps in sales.” For example, the report shows that during the 2009-10 fiscal year, the lottery spent $419 million to the state education fund, compared to just under $411 million the previous year (a two percent increase). By comparison, during the same time period, lottery sales increased by 10 percent, from $1.29 billion to 1.43 billion.
Bill Brooks, president of the North Carolina Family Policy Council, commented, “The lottery was sold to the public as an additional funding source to improve education in our state. But as we warned, and as this report from N.C. Policy Watch confirms, lawmakers are already reducing the percentage of lottery proceeds that go toward education, and they continue to dip into the lottery funds to fill other holes in the state budget.”
Brooks added, “As we have consistently stated, the lottery has nothing to do with education, and everything to do with the state making money off of enticing its citizens to gamble away their hard-earned money.”
Lottery Revenues Rise With Unemployment - February 2, 2010
Governor Seizes "Education" Lottery Funds - February 27, 2009
Lottery Revenue Fails to Make Significant Impact - September 25, 2007
Easley Recommends Increasing Lottery Prize Payouts - February 23, 2007
A Lottery Education: Dispelling the Education Lottery Myth - [PDF] - Findings - April 2004
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