Still Crazy After All These Years: About that Lottery Funding ...

(Reposted from The Virginian Pilot/Nov. 26, 2011.)

"Why isn't everybody jumping off the rooftops screaming?" 

by Elisabeth Hulette

Anyone who has bought a Virginia lottery ticket has seen it.

"Helping Virginia's Public Schools" reads the tagline printed on the backs of tickets. The lottery's website goes a step further, declaring: "More than $5 billion contributed to public education!"

Technically, it's true. All proceeds from the lottery do go to the state's public schools. Just not in the way many people think.

According to educators who have watched the lottery for years, much of the public believes the lottery money is extra funding, on top of what the state is required to give. They remember the lottery being pitched that way, as bonus funding, when Virginians voted on it 24 years ago.

Instead, educators say, the state is now using all of the lottery money - about $450 million a year - to meet its own obligations to the schools. None of it reaches local coffers as extra funding.

"They're using it instead of anteing up state aid in the general fund. That's been a slow and insidious movement that's been going on for a few years now," said Kitty Boitnott, president of the Virginia Education Association.

"It's a big ruse, and I don't believe Virginians, in general, are aware of it."

The swap has been causing budget headaches in Hampton Roads since 2009, the first year the bonus funds went from small to nonexistent. This year, as other pools of money dry up and school leaders reach into the furthest corners of their budgets to make cuts, anger over the lottery money's disappearance is growing.

"It means projects we were (planning) to do this year or next year are now three years out," said Dan Edwards, chairman of the Virginia Beach School Board. "I joke, when people are talking to me (about the lottery), that I used to buy lottery tickets because I really felt good about it. Now I don't feel as good because I know it's gotten lost in the wash."

The story of the lottery goes back to 1987, when Virginians voted to create one after a lengthy and polarizing public battle.

At the time, supporters pitched it, in part, as a boon for public education. The idea stuck in the minds of the public, though nowhere did the lottery law say the money would be used for that purpose.

Before long, the economy worsened and those dollars began being used to bolster the general fund. Eventually people caught on. Grassroots groups clamored that they had been misled, and in 2000, voters passed an amendment dedicating the lottery money entirely to education.

Sort of.

Immediately, about 60 percent ($191 million that year) was swapped out for the basic aid the state is supposed to give the schools anyway. That freed up $191 million for politicians to use elsewhere.

The remaining 40 percent, or $123 million, became the promised bonus funding. Divisions were directed to use half of it for nonrecurring expenses like construction, and for several years the money helped repair or replace many a crumbling public school.

That was then.

Today, the 60/40 split is gone, and none of that money is coming to the schools on top of the state's usual aid. Instead, it pays for programs - foster care, early reading intervention, the school breakfast program and others. Worthy programs, local school officials say, but ones state leaders should be supporting with general fund tax dollars so they can leave the lottery money alone.

Chesapeake Superintendent James Roberts is among the frustrated school officials. For years, he has pushed legislators and colleagues to look at what happened to the money.

"It has replaced state general fund revenue, so you could make the case that... that money either went to transportation, prisons, higher education or to balance the budget. Who knows?" he said. "Of course we know we went through a financial crisis, but it still is a concern that I don't think the public understands."

That financial crisis is exactly what state leaders point to when they talk about the lottery. Costs for education are going up while state revenues have plummeted in the recession, said Ric Brown, Virginia's secretary of finance. Lottery money is now being used to fund specific programs in part because those programs might not get funded otherwise.

There just isn't room in the budget to give schools the lottery money as a bonus, he said.

"You don't have the luxury to say there's money that doesn't really have a purpose anymore," Brown said.

Del. Bob Tata, R-Virginia Beach, said using the money for specific programs has made the lottery more transparent. There has always been controversy surrounding the lottery, he said, but now the public can see which programs it funds.

He also said the state's budget crunch is only going to get worse: The governor has already said he's going to have to make cuts to the public schools.

"I think probably this year (the schools) are going to be shocked at what they do get," Tata said. "We're really hurting. We're just not going to have the funds we've had in the past."

Educators, on the other hand, say it was bad enough that the lottery money was being used to supplant basic state aid, but using it for specific programs may be worse.

The programs that were picked for lottery funding, like preschool and foster care, are the ones that support poor children, said the Virginia Education Association's director of government relations and research, Rob Jones. He said he's already been in briefings where state officials say the number of poor children is rising, so the amount of money generated by the lottery is no longer enough to pay for those programs. If the state doesn't step up with more money from another source, the programs could end up underfunded.

"They took programs for poor children and pushed them into the lottery. Then the recession hit and you've got more poor kids," Jones said. "They're saying, 'Sorry, poor kids; the lottery isn't generating money for these programs, so we're going to cut them.' "

Even though the lottery money has never been sent to the schools entirely as supplemental funding, educators say the public still believes that's how it works.

One reason why may be the complexity of state education funding. Jones said when state officials make cuts, they do it in such a way that only a few people in the game even notice.

"You almost have to devote your life to it to understand it," he said.

Another reason could be the lottery's advertising campaign. In a ceremony at Maury High School in Norfolk in 2003, for example, lottery officials presented the year's proceeds as a giant check made out to "Virginia Public Schools." And then there's that tagline: "Supporting Virginia's Public Schools."

Paula Otto, executive director of the Virginia Lottery, said the tagline has been used for years. It's a reminder of where the lottery money is going, without getting into the details of decisions made in Richmond, she said.

Research on lottery players has shown they're glad the money goes toward public schools, Otto said. But do they know the money is being used to supplant, not supplement, state funding?

"I don't know if we've asked that specifically," she said. "I think most folks acknowledge there are budget challenges everywhere."

That's just what drives education leaders crazy. They look at what the lottery was supposed to do for public schools and at where the money has actually gone. Then they look at their own budget crunches.

Chesapeake, for example, used to receive $6 million a year from the lottery on top of regular state funding. Division leaders relied heavily on $3 million of it for school maintenance like HVAC systems and new roofs.

Now, as they stare down a maintenance backlog, they wonder why no one's noticed that the lottery money's gone.

"Why isn't everybody jumping off the rooftops screaming?" Roberts said. "That is the amazing thing about this."

Elisabeth Hulette, (757) 222-5216,