Education Funding

N.C. Backs Lottery to Fund School Projects

By Kathleen Kennedy Manzo — September 13, 2005 3 min read

After repeated failed attempts over more than two decades, North Carolina legislators came back from recess and narrowly passed a lottery bill, becoming the last state on the East Coast to endorse such a gaming measure.

Lt. Gov. Beverly E. Perdue, a Democrat, cast the deciding vote in the state Senate to approve the controversial bill, 25-24.

The lottery is expected to reap more than $400 million annually, money that is slated for college scholarships, school construction, needy school districts, class-size reduction, and the state’s preschool initiative.

“This is a win for our schoolchildren across the state,” Gov. Michael F. Easley, a Democrat, proclaimed in a statement.

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State Lotteries for Education

But opponents have long argued that a lottery preys on the dreams and pocketbooks of the poorest residents, puts pressure on the state to promote gambling, and provides an unreliable source of revenue that tends to supplant other education funding.

“One of the reasons the lottery is so popular is that people perceive of it as voluntary,” said David Mills, the executive director of the Common Sense Foundation, a think tank in Raleigh that opposes a lottery. “But it’s still a tax; it still results in revenues being taken from people that would have been spent on other consumer goods. The money does come from somewhere; it’s not magic.”

42nd State Lottery

The bill was passed Aug. 30. Several days after the legislature had announced the session would end lawmakers were called back to Raleigh by Senate President Pro Tempore Marc Basnight, a Democrat, to take up the measure. Two Republican opponents of the bill were absent.

North Carolina is the 42nd state to adopt a state lottery. Fewer than half the states allocate profits from lotteries for education. Only a dozen set the money aside exclusively for education, according to the North American Association of State and Provincial Lotteries, a trade group based in Willoughby Hills, Ohio.

Bills were also introduced in Alabama, Arkansas, and Wyoming this year to institute a lottery, but all failed to make it through their legislatures. Along with those states, only Alaska, Hawaii, Mississippi, Nevada, and Utah have none.

It is unlikely that the lottery will have an effect on school funding for a while, according to John N. Dornan, the executive director of the Public School Forum of North Carolina, a Raleigh-based policy-research organization.

State officials must first appoint a nine-member commission to oversee the operation of the lottery, hire workers, solicit bids from lottery contractors, and recruit vendors throughout the state to sell tickets. Moreover, voters in each county would have to approve a ballot measure to allow lottery sales in their jurisdiction.

The formula for distributing the money is still undecided, but the lottery proceeds are expected to have a significant impact eventually.

“There are so many question marks about how the money will be distributed,” Mr. Dornan said. “But the big thing will be the school construction impact.”

The state has an estimated $6 billion backlog in school construction needs.

Offsetting Regular Aid?

Mr. Mills and other opponents have argued that the seeming windfall for schools should be tempered by general trends in state lottery proceeds for education.

The foundation contends that there are no guarantees that lottery proceeds will not supplant regular education aid, as research suggests has happened in California, Florida, and Michigan. Concerns also abound that a lottery fund could lead to perceptions among voters that school bond referendums are unnecessary, Mr. Mills said.

While North Carolina lawmakers are not due back in the state capital until their regular short session begins next May, some are already discussing a change to the state constitution that would guarantee that the proceeds from the lottery would always benefit education, according to Mr. Dornan.

“I frankly am just glad that the vote is behind us, because it’s been a perennial issue for years,” Mr. Dornan said, a sentiment expressed by lawmakers in local news reports. “An awful lot of time and energy has already gone into this.”

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A version of this article appeared in the September 14, 2005 edition of Education Week as N.C. Backs Lottery to Fund School Projects

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