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Is the lottery shortchanging schools?

Sep 19, 2007, 12:38 pm

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According to the North American Assoc. of State and Provincial Lotteries, 42 states and the District of Columbia run lotteries, and more than half claim the games boost funding for education.  But CBS News chief investigative correspondent Armen Keteyian found that lotteries aren't exactly providing a windfall for schools.

If you listen to state lottery ads, we're supposed to believe that all the numbers are supposedly adding up to more and more money for education.

Lotteries help, but not nearly as much at you may think.  A CBS News investigation has found lotteries generally cover only a fraction of state education spending.  For example, in Illinois, where the state spends $6.5 billion a year on education, only $619 million comes from the lottery.  In California, with an $84 billion education budget, the lottery funds only about $1.2 billion.

"We thought that it would be a windfall" says Michael Johnson, executive director of the Illinois Association of School Boards. He says the idea that lottery money adds to education funding is a myth.

"The general public — they were fooled by this," he says. "The belief that that's additional money, above and beyond what we would normally get, that's the part that's not true."

"Well, it's certainly one of the worst votes I ever made," says former Illinois State Rep. Dawn Netsch.

Netsch, whose vote helped pass the Illinois lottery in the 1970s, says lottery money simply replaces tax dollars legislators might spend on education, but instead spend on other projects.

"The lottery becomes part of the big pot of money that funds the basic functions of state government," Netsch said.

In fact, Keteyian's investigation of government spending in the 24 states that dedicate lottery funds for education, yields a stunningly bad report card: The percentage of state spending on education is down or flat in 21 of those states from coast to coast.

Down, for example, in the following states: Washington (-6 percent), New York (-5 percent), Missouri (-4 percent). It's down 3 percent in Florida, Illinois, Ohio, and Michigan; Montana (-2 percent) and Texas (-1 percent).

It's up in only three states -- New Hampshire (+4 percent), Georgia (+ 4 percent) and Tennessee (+2 percent).

"Lottery dollars are revenues that the states would not have otherwise," says Tennessee Lottery president Rebecca Hargrove.

Hargrove has run the lottery in Illinois, Florida, Georgia, and now, Tennessee. She argues things would be even worse without lotteries, and that they are more popular than raising taxes as a way to increase the education budget.

"In many of these states that we've looked at, it's gone down or it's flat," says Keteyian.

"What you'd have to know, which is impossible for you to know, is how many dollars education would have gotten if there weren't lottery dollars," says Hargrove.

"Lawton Childs, the former governor of Florida, [had] a quote you're familiar with... He called the lottery 'A great hoax on the people,'" says Keteyian.

"The lottery's job is to raise as many dollars as possible, as responsibly as possible," says Hargrove.

"Many people, at least, still think of the lottery as being sort of an add-on, a supplement," says Netsch, who now works at Northwestern Law School. "It never was that. It was a shell game from the beginning."

A game, it appears, in which the big winners are not in the classroom.

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