Dollars For Education From NY Lottery? Not Quite!
The idea behind the New York Lottery was that revenues would be used to fund educational initiatives. The belief held by most New Yorkers is that money raised by the Lottery goes to education, exclusively.
In fact, The New York Lottery folks themselves tell us, via the official website, that, for fiscal year 2004-05, some $2.063 billion was earmarked as "aid to education."
Why, Lottery officials will even show you how much money has gone to schools county-by-county, school district-by-school district.
Sure, $2.063 billion sounds like alot of money, but it pales when compared to the $18.42 billion that had to be raised (in 2003-04) through local tax levies (read as, PROPERTY TAXES).
The New York Constitution, as amended in 1966, mandates that revenues raised through the lottery be used in support of education. The official website of New York State government confirms this, and tells us as well that the Lottery's contribution "represents 59% of the total Aid to Education budget." [An odd statement passed off as fact, given the Lottery officials' claim that, for 2003-04, State sources of Aid to Education, "other than the Lottery," amounted to $15.46 billion. Somehow, the Lottery's contribution of $2.063 billion to the State Aid pie doesn't seem to jive with the percentage proffered by the State. Must be the magic of creative accounting!]
There is, you should know, a special fund, maintained by the New York State Comptroller, into which Lottery revenues flow. So what the fellas in Albany are telling us about Lottery revenues funding education must be true, right? Lottery revenues are earmarked for education, and those monies boost State Aid to local school districts.
Well, not exactly.
In 1998, then NYS Comptroller H. Carl McCall issued a report entitled, The New York Lottery Role in Financing Education.
In this report, Mr. McCall said:
By dedicating it to education, there is an implied promise that the lottery will increase school aid. This has never happened in New York. The legislative debates on the lottery in the early 1960s consistently described the lottery as being dedicated to education, but promises that it would actually increase the aid that schools would have received anyway were not generally made.
Efforts to ensure that the lottery would serve as a supplement were not visible until after the voters had approved the lottery. Over the years, governors have consistently contributed to the popular perception that the lottery provided additional funding. The lottery was approved during a period when state government spending and public school enrollment were both increasing rapidly. Short-sighted budget actions resulted in the need to raise revenues substantially; the lottery was approved by the Legislature after it acted to increase taxes -- including imposition of a 2 percent sales tax -- by nineteen percent.
State budgets and Lottery Division marketing materials have consistently referred to the lottery as being used "in support of education." However, there has never been a real effort in the state's school aid formula to provide that lottery funds would be a supplement, although such "maintenance of effort" provisions have been employed for other dedicated revenue sources. In fact, an examination of the aid formula demonstrates that the lottery does not affect total aid received by schools.
The evidence that the lottery is no different from other revenue sources is bolstered by examining past instances when the lottery was used to close budget gaps. These actions have been taken by at least three governors, starting in the year that the lottery was implemented.
Mr. McCall went on to tell us -- as if anyone was listening, then or now -- what many of us already know, and have been clamoring about for years -- "it's not the revenues, it's those complex and inequitable State Aid formulae."
In New York, state aid is apportioned to school districts through a complex web of formulas. In all, there are more than 40 formula and grant programs, many of which are altered annually in the budget enacted by the Legislature. Each year the aid allocation is driven by negotiations about the size of the increase overall and regional shares of aid. The legislators themselves and the Executive typically only focus on the broad figures, and the annual alterations to the formulas are carried out by a small group of technicians who are conversant with the mechanics of the aid distribution. Although the lottery revenues partially support each year's aid, there is no direct relationship between these revenues and either the overall amount of aid allocated, or its distribution among individual school districts. . .
The preponderance of the lottery funds are funneled through an obscure "lottery formula" which theoretically calculates the aid amounts going to school districts based on an aid ratio, the number of pupils in each district and the lottery funds appropriated overall. In actuality, however, this formula has no impact on aid received because the amounts calculated through it are literally deducted from the amounts calculated under other aid formulas. In every case, this aid calculation equals an amount less than the sum of the other aid formulas, and the lottery aid calculation thus has absolutely no impact on the annual aid allocation each district receives. . .
[Are you still with us, folks?]
Truth is, while technically "dedicated" to education, Lottery revenues are as much a part of the General Fund (under the Lottery Aid to Education account) as are your State income tax dollars, subject to the will -- and, apparently, the whim -- of the Governor and the Legislature, and at the mercy -- as the often lopsided distribution among the various school districts throughout New York demonstrates -- of the State Aid formulae.
Paul Feiner, then a Westchester County Legislator, and now the Supervisor for the Town of Greenburgh, opined in 1991:
New Yorkers are misled into thinking that an increase in lottery purchases translates into more funds for school districts, as this year's state budget process makes clear. For years we have been told by our state legislators that revenue from the lottery goes directly to our schools. We have been advised that if we purchase more lottery tickets, our schools will receive more state aid. This promise has not been kept.
A call to the New York State Division of the Lottery showed that the lottery raised over $4 million more in ticket purchases than last year. Yet, school districts in Westchester County and elsewhere in New York State are receiving substantially less from the state than they received last year. The Central 7 School District in Greenburgh, for example, will have a 31.4 percent decrease from 1990-91. School districts in Putnam and Westchester counties alone will lose $52 million in state aid.
The reduction in state aid for education has nothing to do with lottery revenues. It is obvious that lottery purchases do not have an impact on the amount the state gives our school districts. State legislators should not continue to mislead lottery purchasers into thinking that every ticket purchased is helping local schools.
One solution to this consumer misrepresentation would be for state lawmakers to give local school districts a certain percentage from lottery tickets purchased at stores in their districts. This suggestion would help school districts from all over the state, and encourage people to purchase lottery tickets in their hometowns.
A more useful, if not practical suggestion might be to identify net lottery revenues honestly as going to the State's general fund. Despite the hype that they support education, lottery revenues are really included with the stream of income that the State gathers to finance everything from State Troopers to member items slated for the refurbishing of a local Son's of Italy hall.
How to finance education equitably is still, all these years since the Lottery was established in New York back in the 60s, an open question -- directives of the courts and opinions of experts in the field notwithstanding. It requires comprehensive solutions the foundation of which mandates the State to recognize that there are rich and poor school districts, and that revenue sources -- such as personal income, property and sales taxes, fees, and, yes, Lottery revenues -- have to be allocated for education purposes with justification and evenhandedness. Moreover it is encumbent upon our State Legislature, at long last, to scrap the existing State Aid formulae, with the method and means of revenue raising for our schools left neither to caprice nor to arcane formulations that would spin the head of Pythagoras.
Meanwhile, the New York Lotto Jackpot is now 35 million dollars. That's 35 million dollars. . .
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Click HERE to read, Money, Money, Who Has The Money?, a report on how New York State gets its money, as prepared by the League of Women Voters of New York State.
Click HERE to read, The Lottery Racket.
Click HERE to read, Funding A Sound Basic Education For All New York's Children, as prepared by the Fiscal Policy Institute.