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Lottery Money Little Help to Schools

By Clayton B. Reid   |   Friday, 18 Jan 2008 02:58 PM

Many state lotteries are built on the premise of helping local schools without raising taxes, but most provide scant funding for education.

Lottery proceeds are earmarked for education in 23 of the 42 states with gaming programs. But a recent New York Times study found that less that 5 percent of public school funding comes from the lotteries in those states.

The vast majority of the money gambled goes to support lottery administration and fund prizes, the Times found. The remainder is often pillaged by legislators who divert lottery funds into the general tax coffers.

Which states have the biggest lottery

gamblers? According to the North

American Association of State and

Provincial Lotteries, in 2006 sales

figures, out of $57,435.68 million

overall, New York leads the pack.

(all figures in millions)

  • New York - $6,803

  • Massachusetts - $4,534.12

  • Florida - $4,030

  • Texas - $3,774.69

  • California - $3,585

  • Georgia - $3,177.59

  • Pennsylvania - $3,070

  • New Jersey - $2,406.57

  • Ohio - $2,221

  • Michigan - $2,212.37

    The states spending the lowest

    amount on lottery gambling include:

  • North Dakota - $22.33

  • Montana - $39.92

  • Vermont - $104.88

  • Nebraska - $113.11

  • Idaho - $131.13

  • New Mexico - $154.71

  • Oklahoma - $204.84

  • North Carolina - $229.53

  • Maine - $229.69

  • Kansas - $236.05

  • Critics say the lotteries’ minor contribution to schools does more harm than good by convincing the public they don’t need to support education taxes at the polls.

    “Lottery revenue raised in the name of children’s education often is spent on other things,” Alicia Hansen, author of the Tax Foundation’s report, “Gambling With Tax Policy: States’ Growing Reliance on Lottery Tax Revenue,” tells Newsmax. “Basically, it’s dishonest, and there is no way to hold legislators to their promise, because there is no way to find out how they are shuffling funds.

    “It is impossible to know how much legislators would have given to education in the absence of a lottery,” Hansen says.

    Dr. Jon D. Wisman, professor of economics at American University, noted that lottery supporters claim income will go to education, but, “This is, itself, a shell game. Nothing prevents state funds previously earmarked for education from being reduced by the amount made available from lotteries. Indeed, in some instances, as lottery revenues rose, total state spending on education actually fell.”

    In all, the 23 states with earmarked education money have raised more than $222 billion between 1964 and 2005. However, the National Gambling Impact Study noted, “There is reason to doubt if earmarked lottery revenues, in fact, have the effect of increasing funds available for the specified purpose.”

    Michael Heberling, president of the Baker College Center for Graduate Studies, says that once lotteries became widespread, “Funds previously earmarked for education were diverted to meet an endless list of ‘worthy unmet needs.’”

    “In spite of all the rhetoric to the contrary, the states have been unable to deliver on their promise to increase spending on education by adopting the lottery,” Heberling says. “Ironically, states without lotteries actually maintain and increase their education spending more than states with lotteries.”

    Lotteries do little to keep state taxes low. In 2004, per capita state and local tax collections were higher in lottery states, at $3,525 per year, than in non-lottery states, at $2,841 per year, according to the Washington-based Tax Foundation.

    As lotteries compete for players, states often increase prizes, “further shrinking the percentage of each dollar going to education,” the National Center for Policy Analysis states.

    California Gov. Arnold Schwarzenegger plans to ask voters to let him lease the California lottery to private enterprise for 40 years, earning $37 billion to fund his health care proposals. The move is strongly opposed by the California Teachers Association, which fears that the annual $1 billion the lottery currently pays into the $66.8 billion school budget will disappear.

    Privatization in a dozen states is touted as the wave of lottery’s future, with bigger payouts, video lottery terminals and much more aggressive marketing likely, experts say, further reducing the portion of lottery money fed into education’s coffers.

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