Experts question NC's funding of public education through lottery

The North Carolina State Lottery has contributed $3.6 billion to the state’s public education system since its inception in 2006 — yet both sides of the aisle continue to criticize the seemingly lucrative program.

“The notion was not to supplant existing education funding but to add more funding for priority items within the education budget,” said Mitch Kokai, spokesman for the right-leaning John Locke Foundation.

Kokai said lottery funds were originally intended to supplement public education spending, but over time the General Assembly has replaced the education contribution from the N.C. General Fund — which covers most state sectors — with lottery-generated funds, to increase the government’s available budget for other priorities.

Matt Ellinwood, an education analyst at the left leaning N.C. Justice Center, said the division of spending within the education budget has also changed for the worse. Previously, half of the lottery-generated funds were intended to reduce class sizes, but today they are only maintaining teacher and teaching assistant salaries — while class sizes continue to increase.

Like Kokai, Ellinwood attributes the shortcomings of the education system to the legislature’s reallocation of the state's General Fund since the lottery’s inception.

“We have reduced the amount in the General Fund and started putting these expenses on the lottery,” Ellinwood said.

But Van Denton, spokesman for the N.C. Education Lottery, said the lottery is a valuable source of funding for many areas of public education. The system should be given more credit for its success through the Great Recession, he said.

“Without the lottery, there are about 14,000 kids who wouldn’t be able to go to the N.C. Pre-K program,” said Denton. “Where do folks think $3.6 billion of money would have come from in the last eight years if not for the lottery?”

In 2014, the lottery generated $503 million for public education in the state, and this year its target is $520 million — both relatively small amounts when compared to the state’s total two-year education budget of $23.1 billion.

The lottery funds also contribute to scholarships for college students, which provide financial assistance to students of higher education who are receiving Pell Grants. The scholarships' average payout was $1,120 last year, totaling $33.3 million.

“It is not a huge amount, but $1,100 is nothing to sneeze at either,” said Elizabeth McDuffie, executive director of the North Carolina State Education Assistance Authority. “It is a piece of the financial aid that they need.”

Despite the financial benefits the lottery provides, Kokai and Ellinwood oppose the lottery for different economic reasons.

Kokai said instead of the government having a monopoly over gambling in the state, the government should allow both the gambling industry and revenues to remain in the private sector.

“If it makes sense for North Carolina to have legal gambling then it would be better to have the private sector run gambling operations and have tax money flow from those private operations,” Kokai said.

Ellinwood said the lottery is bad for the state because it draws most of its revenue from low-income residents.

“It is almost like a regressive tax code,” Ellinwood said. “We are using money that is coming from low-income people to pay for the fundamentals of our education system.”

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