Almost without fail, any news story related to money for Oklahoma schools will attract commenters bitterly pointing out they thought the lottery was supposed to solve our education funding problems. So why hasn’t the lottery gotten Oklahoma out of the bottom rungs for education funding? The short answer is that the lottery helps some, but the boost it provides is far less than what has been cut from other revenue sources in recent years. For the long answer, read on.
In 2003, the Oklahoma Legislature sent two lottery measures to a vote of the people. SQ 705 created the State Lottery Commission, which was empowered to operate a statewide lottery, with 35 percent of ticket proceeds going to education. SQ 706 created the Oklahoma Education Lottery Trust Fund. It also required the State Board of Equalization to annually make sure the lottery is adding to education funding rather than replacing it, to prevent a situation in which the lottery gives with one hand and lawmakers take away with the other. If the Equalization Board finds that lottery is replacing education funds (also know as “supplanting”), then the Legislature is prohibited from making any appropriations until the amount of replaced funding is returned to the trust fund. Both state questions passed with about two-thirds majority support.
The contribution of the lottery to the Oklahoma Education Lottery Trust Fund has been steady since 2006 at about $70 million per year. That’s lower than the initial projections by lottery backers. Before video lottery machines were removed from the list of permitted games, former Governor Brad Henry had said a lottery could bring in $300 million per year for education.
The legislature appropriates money from the Lottery Trust Fund as part of the overall state budget bill. This year’s general appropriations bill (SB 2127) divides the lottery revenue for education as follows:
- $31.4 million for the K-12 school funding formula
- $3.5 million for the School Consolidation Assistance Fund
- $3.5 million for the Teachers’ Retirement System
- $3.8 million for Career Tech
- $27.6 million for higher education
In a time of cash-strapped budgets, these contributions from the lottery are certainly needed. However, they are a small piece in the context of Oklahoma’s overall school funding needs. The $31.4 million that the lottery provided to the school funding formula this year makes up just 1.7 percent of the formula. It works out to just $46 per student. Meanwhile overall state funding for the education formula is still down $172 million compared to fiscal year 2008, more than five times as much as the funding from the lottery.
Since overall funding is down by more than the lottery added, does that mean lottery funds are supplanting education revenue? The Board of Equalization doesn’t see it that way. In normal years, the Board has found that if education funding without the Lottery is increasing, then that’s enough to show the lottery is not supplanting funding. In a year like FY 2010, when a severe funding shortfall caused education and almost every other area of state government to be slashed, the Board still found that the Lottery was not supplanting funding. They wrote:
Education funding in FY-2010 was affected negatively by the economic downturn and reduced funds available by 4.2%. As this reduction in funding is less than the overall reduction in authority for state revenues (6.4% as shown), education funding was not disproportionately adjusted. Additionally, authorized lottery funds were fully appropriated and only reflect the effects of the economic downturn. Therefore, the Oklahoma Education Lottery Trust Fund did not supplant funding for education.
In other words, education was not cut more than other government services, which shows that lawmakers did not take funding from schools because they knew the lottery would make up the difference.
In the big picture, the lottery is a small funding source that doesn’t come close to covering our responsibility to pay for the education of young Oklahomans. This year, lawmakers extended a tax break for horizontal drilling that cost 3.6 times more than the lottery collects for education. The year before, they approved income tax cuts projected to cost 3.4 times more than the lottery brings in. The lottery grows state revenue by inches, while lawmakers have been pruning off yards.