North Carolina's Broken Promise on Education Lottery Funding

When North Carolina lawmakers approved a state education lottery back in 2005, their intention couldn't have been more clear. Lottery revenue was to be used to supplement existing education spending by funding additional services like college scholarships, pre-kindergarten programs, class-size reduction, and the construction of new schools -- without taking away from existing classroom funding.

But in the decade since the first Powerball tickets were sold in North Carolina, politicians have increasingly used lottery money to replace cuts in permanent education funding. This bait-and-switch represents a broken promise to voters and parents that shortchanges our children and betrays the public trust -- and North Carolina public schools are already suffering the consequences.

If this is the first you've heard about this issue, take a few minutes and watch John Oliver's brilliant exposé of education lottery scams across the country:

As the clip points out, North Carolina is one of the many states that now spends less per student on public education than before the lottery was first passed. As a result of this long-term starving of public education, combined with stagnating public school enrollment after lawmakers removed the cap on charter schools back in 2011, some districts are being forced to close schools altogether in order to make up for the cuts. The impending closure of Central Elementary School in Waynesville, a quaint mountain town just west of Asheville, exemplifies the consequences of lawmakers' broken promises to parents and students on education spending in general and lottery funding in particular.

The Haywood County School Board says closing Central Elementary would reduce their multimillion-dollar budget shortfall by about half a million dollars per year. Well it just so happens that back in 2011, the state cut Haywood County's lottery funding for school construction and other capital projects by $500,000. So would Central Elementary still need to be closed if the state hadn't cut lottery funding?

The way North Carolina spends lottery proceeds in the recently adopted state budget for fiscal year 2011‐12 represents a significant shift from how they were spent in the past. These changes show the state legislature is using lottery proceeds to replace funds rather than add to the funds provided by the traditional funding system.

Until this year (2011), the general breakdown of lottery proceeds has been 50% for class‐size reduction in early grades and pre‐kindergarten programs for at‐risk students, 40% for school construction, and 10% for scholarships for needy students. The 2011‐2012 budget allocates 66.8% for class‐size reduction, 23.5% for school construction, and 9.7% for scholarships to university students. In other words, the legislature cut funding for school construction, even as the population is growing and the need for new schools is increasing, in an attempt to mitigate the loss of teaching positions that will result from the cuts to K‐12 education funding.

In other words, the 2011 change -- along with the General Assembly's decision to use $26 million in lottery revenue to cover a Medicaid shortfall -- meant Haywood County schools lost half a million dollars in lottery funding between the 2010-11 and 2011-12 school years. This problem was only compounded in 2012, when state lawmakers reduced the percentage of overall lottery revenue that goes to education from 35% to 29%.

Unfortunately, this process of using lottery money to replace permanent education funding has only accelerated since then. In 2015-16, the percentage of lottery revenue going to school construction and other capital projects has dwindled to 19%. Instead of using lottery money to supplement existing funding, the majority of North Carolina's lottery revenue is now being used to fund permanent teaching positions that are now referred to as "school support personnel" instead of bonus positions aimed at reducing class sizes in early grades.

The bottom line is that because of this broken promise on lottery funding, public school districts across the state are losing more and more permanent funding as lawmakers refuse to keep pace with inflation. School districts are being forced into the lose-lose situation of either having to raise local taxes to make up the difference, or cutting services and closing schools like Central Elementary. And to add insult to injury, the state lawmakers who are most responsible for this situation get to sit back and blame it all on the districts! A lottery program that was supposed to provide more funding for education is now being used to siphon funding away from public schools, leaving parents with no other option but to hope Central Elementary doesn't become a canary in the coal mine for North Carolina's declining education system.

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