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Education lottery falls short for schools
In Charlotte recently, Tom Shaheen, executive director of the state’s lottery, said that despite falling short of estimated projections, he deemed the lottery “a success.” “We had a lot of lofty projections for $1.2 billion in sales the first year, but the lottery is not failing,” Shaheen said, addressing a group of business owners at a recent meeting of the Hood Hargett Breakfast Club in SouthPark. “We have transferred more than $220 million for education, and I think we have been tremendously successful.” Mecklenburg County has received about $4 million, all of which has been used to pay current debt. “It doesn’t actually come to the schools for operational expenses; it comes for capital debt and for paying off current debt,” said Peter Gorman, Charlotte-Mecklenburg Schools superintendent, who attended Shaheen’s Jan. 30 address and asked if he could clarify how lottery education funds are distributed locally. “The funds first go to the county board of commissioners, and they decide how the money is to be used.” State lottery officials had originally forecast about $1.2 billion in sales during the lottery’s first full year, which would bring $425 million to state education coffers. Last summer, the lottery commission shifted that prediction to about $1.1 billion in sales. Now Shaheen says the lottery “could” do $1 billion by the end of the fiscal year, June 30. That projection would provide $350 million for education, $75 million less than lawmakers budgeted. Statistics from the N.C. Department of Public Instruction, which handles lottery fund disbursements to counties, show that the lottery has raised $220 million for education since the games began in March 2006. In January, the lottery transferred $75 million to the N.C. Education Lottery Fund. Two more transfers will be made to the fund before June 30. The transfers represent 35 percent of total quarterly revenues because, Shaheen noted, 35 cents of every dollar spent on lottery tickets or games is allocated for education. Despite a promising start, lottery sales have slid considerably since the first scratch-and-win games cranked into high gear last year. Sales of scratch-off tickets shrank to $38 million in November from $52 million in July. However, sales of numbers games – Powerball and Cash 5 – have gained ground. But compare these figures with successful lotteries in other Southern states and the numbers look bleak: In North Carolina, per capita sales of scratch-off instant tickets – the sales leader for any lottery – are less than half of those sales in South Carolina and Georgia, for example. Shaheen admits that overall sales have declined and in the past has attributed the slump to high gas prices, bordering states with successful established lotteries and consumers’ increasing discrimination with disposable income. He noted that the state’s lottery came quickly once approval legislation was passed. “Once the lottery passed, everyone wanted to play it,” he said, noting that his office managed to have games running less than four months after state legislation passed. N.C. Gov. Mike Easley pushed for the lottery even before he took office. He looked to its revenues to fund educational projects, including an existing day-care program for at-risk 4-year-olds (More at Four), aid for school construction and increased teacher salaries. By law, 5 percent of lottery revenues go to the Education Lottery Reserve Fund to be used when lottery proceeds fall short. The reserve fund may not exceed $50 million. The remaining net revenue is allocated in this way: • 50 percent of the total remainder is to be used to reduce class size ratios in early grades to 18 children per teacher and for prekindergarten programs for at-risk 4-year-olds. • 40 percent must be used for school construction. Roughly 65 percent of this total will be distributed to each county based on total school enrollment. The other 35 percent of the total will be distributed to each county with average effective county property tax rates above the state average based on total school enrollment. • 10 percent will be used for college scholarships for students who qualify for the federal Pell Grant. These scholarships can be used at state public and private universities and community colleges and are administered by the N.C. State Education Assistance Authority. Shaheen unveiled a few games for the spring that he said hopes will motivate state lottery sales. Among them is a new NASCAR scratch-off game, and a Powerball multiplier. For an extra dollar, players in North Carolina and other Powerball states can get an extra number that would multiply many prizes by that figure. Currently, the highest multiplier is 5; for a few weeks this spring, it will be 10.
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