No Lottery Jackpot for N.Y. Schools, Critics Argue

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While a few lucky New Yorkers celebrated their winnings last month in the state's record $41-million lottery drawing, countless others with worthless tickets could at least take solace in knowing that their losses would help finance their children's education.

Or could they?

In the days following the multimillion-dollar drawing, several state officials, including the chairman of the Assembly’s Education Committee, charged that the public was being deceived and questioned whether lottery funds earmarked for education were in fact being spent for that purpose.

"The folks who buy the tickets believe the money is going for education. What I’m saying is that it goes to the treasury," said Jose E. Serrano, the education committee chairman. Mr. Serrano said there was no "proof' that lottery proceeds were being spent on schools.

Other officials concurred with Mr. Serrano's remarks, but the deputy state budget director termed them inaccurate and also claimed that state spending for education would not have risen by as much in recent years without the lottery.

Boon to the State

No one was disputing last week that the lottery benefits the state. All agreed that it provides extra revenues that ease the pressure on the state's general fund and help keep a lid on taxes.

Last year, for example, the lottery, a division of the state department of taxation and finance, raised $645 million, more than 10 percent of all state spending on education, according to Peter Lynch, the deputy budget director. This year, the lottery is projected to bring in $700 million, he said.

By statute, all net proceeds from the lottery--about 45 percent of ticket sales--are earmarked for education. Another 40 percent of sales is spent on winnings, with the remaining 15 percent set aside for administration.

Contrary to public perception, however, lottery proceeds do not supplement general-fund spending for education, they supplant it, officials said.

"If the legislature appropriates $6 billion for education and the lottery brings in $100 million, you don't get that on top," said Arnold Bloom, public-information officer for the state education department. "It just means there is that much less in taxation."

Doesn't Necessarily 'Enrich'

In effect, lottery proceeds free general-fund revenues for purposes other than education. "The money goes to education, but it doesn't enrich education, necessarily," Mr. Bloom said.

Mr. Lynch confirmed that even when the lottery raises more money than anticipated, as it did last year, general-fund revenues for education are simply reduced by a like amount.

But he said the growth in lottery revenues--some 350 million over the past three years--has had a direct, positive impact on education.

"In the last three years, state aid to education has gone up $2.1 billion," said Mr. Lynch. "I would submit to you that that is due in part to growth in the lottery."

But Mr. Bloom said there is "no way of knowing" whether the legislature would have spent less for education without the lottery. "It's pure speculation," he said.

'Do You Have Proof?’

Mr. Serrano also questioned whether the lottery supports education at all, even as funding that supplants other revenues. Merged into the general fund, lottery proceeds would be indistinguishable from other revenue sources and could be used to support other state services, such as roads and sewers, according to the lawmaker.

"Do you have any proof that it's set aside for education? I don't," he said.

But Mr. Lynch reacted angrily to Mr. Serrano's charge. He said school districts receive part of their state aid in separate checks charged to lottery proceeds. "It doesn't come from the general fund. It comes from the state lottery," he said.

"To suggest that education does not benefit from the lottery is absurd," he added. "It's a dedicated revenue stream, which you cannot touch."

William Knowlton, a public-relations associate with the lottery, also said school districts receive part of their state aid in checks drawn on lottery proceeds, which he said are maintained in a separate account in the general fund.

The state comptroller and the commissioner of the taxation and finance department control the fund, not the lottery, according to Mr. Knowlton, and the legislature decides how it is spent.

"Our responsibility is to raise the money and to turn it over to other authorities," he said. "It's purely a legislative responsibility to determine the mechanics of how the money is applied to education."

Marvin Nailor, press secretary for the state comptroller, gave a somewhat different account of how lottery proceeds are disbursed, but he agreed that part of the money districts receive is drawn on lottery accounts.

Until recently, however, lottery proceeds were apparently merged with the general fund, he said, where they would have been indistinguishable from other sources of state revenue.

Spokesmen for both the comptroller's office and the Assembly Education Committee said they were investigating further the disbursement of lottery funds.

The New York lottery, established in 1967, is the nation's second-oldest lottery in continuous service. Some 21 states and the District of Columbia are now in the lottery business, according to recent surveys.

Vol. 05, Issue 01, Page 5

Published in Print: September 4, 1985, as No Lottery Jackpot for N.Y. Schools, Critics Argue
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