Why didn’t the lottery solve Oklahoma’s education funding problems?

Photo by Lisa Brewster used under Creative Commons License.

Photo by Lisa Brewster used under Creative Commons License.

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.

 

lottery-contributionsSince 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.

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ABOUT THE AUTHOR

Gene Perry joined OK Policy in January 2011. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism. Gene also serves on the board of the Oklahoma Sustainability Network, is a trustee of the Oklahoma Foundation for Excellence, is a member of Investigative Reporters and Editors, and has chaired the communications advisory committee for the State Priorities Partnership, a nationwide network of state fiscal policy think tanks. He lives in Tulsa with his wife Kara Joy McKee, who is a Tulsa City Councilor.

50 thoughts on “Why didn’t the lottery solve Oklahoma’s education funding problems?

  1. It is important to recognize that school districts began receiving lottery dollars at the same time that the $3,000 teacher raise was approved by lawmakers. In essence the lottery dollars funded a large portion of that raise, and due to the fact that this pay increase is a recurring annual cost, these funds were basically permanently obligated from the very beginning. The teacher pay raise was absolutely needed but the fact is that it was never available to be used for any other purpose by local school districts.

  2. The percentage of the state budget spent for common education (pre-k/12 schools) has gone down since the lottery was implemented. So, yes, Oklahoma legislators have supplanted their obligations with lottery money. They gleefully report that schools are getting more dollars most years than the year before. However, we have many, many more students each year, and face increasing costs in insurance (all kinds), supplies and all the things families also see increasing in costs. Per student, we are below 2008-09; well below. If, per student, payments had remained just at the 2009 level, my district (a suburban one) would have had some $20 million dollars more over the span of the last 6 years. We could have done a lot of things for a lot of student learning needs with that.

  3. Yet they keep finding millions upon millions to restore their precious capitol building,,,if our lawmakers were serious they would halt all construction on the capitol and do their work in the downtown library,,,,same story 15 years ago when they just had to have the indian put on top of the capitol,,all we heard was how there was no money for anything but they find money to put a indian on top the capitol building,,are we seeing a picture here, no money for anything except their pet projects and of course they will never cut their own pay,,,,they (our politicians) get us into the mess, but they will never consider cutting their own pay they get for life. DID WE NOT LEARN ANYTHING FROM PUTTING ALL YOUR EGGS IN 1 BASKET FROM THE OIL CRASH OF THE EARLY 80s,,,,,Colorado and Washington are making money hand over fist and Oklahoma wont even consider it and go so far as to spend money we don’t have to sue them because they don’t like it,,,,,,Oklahoma is almost dead last in every category, yet out leaders just keep be bopping along business as usual pointing fingers ar the other side and posturing themselves that it couldn’t possibly be the side of the one speaking. its a disgrace and its sickening,,,,both sides of the aisle got us into this mess

  4. This last paragraph pretty much tells the whole story in a nutshell:

    “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.””

  5. I agree, Teigh. Why can’t we mimick what other states are doing? We were almost last in education before the lottery. And we still are. How are 47 other states able to figure this out better than us?

    We preach to the nation that our economy is strong. And that Oklahoma is a safe place to move. But, if people move their kids here, they’ll receive a horrible education.

  6. I’ve been teaching in Oklahoma for 20 years and I do not recall ever getting a $3,000 raise as someone commented on this post.

  7. James, please check your math! $70 million would pay 1,750 teachers $40,000. $70 million would pay 1,750,000 teachers $40.

  8. The legislature has reduced the amount that they allocate for education, using the money from the lottery that was suppose to augment the educational funds, not replace them. Many of those in the legislature were NOT supporters of the lottery and have tried to make it look like the funding was not working.

  9. Every State Agency has been cut to the bare bones. Every State employee or contracted provider has received salary or reimbursement rate cuts. If we started by reducing how we compensate politicians that would be a healthy start. Second legalize marijuana. It’s not the demon we were once led to believe it is. Regardless of its potential as a valid medical option or simply recreational it would stop the waste of putting people in prison. The incarcerated person who might have been gainfully employed and paying taxes is now being 100% provided for. His/her family are at a much higher risk of needing State Assistance in every form. The children are at a higher risk for committing crimes since they at least one parent who is already a Felon. The incarcerated individual will be released with a felony conviction and employment will be significantly more difficult and high paying jobs “nearly” out of the question. We need to stop trying to legislate morality. It would seem the only negative impact since Colorado legalized marijuana use is to the States that refuse to do the same. Marijuana has existed for thousands of years and used throughout history. Do we continue to sit back as our citizens go out of state to spend their spendable income only to return home to be put in prison. Our prisons would shrink and the lost jobs from dwindling prisons would be replaced with the new businesses legalizing marijuana would create Or do we wait and do nothing proactive. Do we continue to waste money as others have already described. Last thought do we really need 77 counties with separate expenses. Could we do some consolidation of duties and responsibilities and offices????

  10. James, please tell me that you were trying to show our legislators why education is so important. Unfortunately, I would expect that some of our legislators are not as astute as Marie. I am of the opinion that some of our school boards are more focused on buildings, busses, and breakfast than educating our children. If their funds were spent on educators and the classroom our children would be much better equipped for the future.

  11. Don Griffin, school boards have separate sources of money, for separate uses, as required by law. Bond funds, allowed by community votes, (at 60%, rather than 50% for everyone else in government) are for non-expendable things. Those buildings, and big repairs for old buildings, and buses you apparently think are not important. That money can NOT be used to pay salaries. It can be stretched to pay for textbooks and educational technology; that shift frees up some funds in the general fund–which is from county property taxes, in percentages also set by law, and state funds. It is a somewhat complicated formula, balancing local funding against state funding to get some shot at equity across districts. So, general fund money is what is spent for teacher salaries, school supplies, utilities, insurance for the buildings, vehicles, unemployment, paper towels, and all the other things required for providing an education to students (payroll clerks, curriculum coordinators and, yes, all those pesky administrators who keep the whole thing together and running). In some districts, general fund money does subsidize breakfast and lunch, without which some kids would not have much of a shot at learning, while other districts manage to run a self-supporting food program. To complicate the funding picture even more, districts have building funds, also provided by a variety of sources. Those funds are really for building upkeep, but it is allowed that some general fund expenses can be shifted to the building fund–custodial care and utilities can be shifted or shared, but only up to the point that the building fund can do its main job in maintaining buildings, repairing heat and air, plumbing, changing light bulbs and other sorts of general maintenance. What I am really trying to say is that general funds for education are far, far short of what it takes to provide a good education–even when we “borrow from Peter to pay Paul,” until Peter and Paul can’t lend us anymore.

  12. Hypothetical questions:

    Since Oklahoma is in a revenue failure, could the lottery commission even be able to make good on prize winnings?

    I worry that the proposed voucher idea could end up privatizing schools, to take education out of the budget for legislators.

    Is the lottery even worth having since it does logically appear to be supplanting the education responsibility from legislators?

    How many Oklahoma legislators have their children in public school? That would show some motives clearly regarding agendas.

    Can this state seriously ever pull itself out of the canyon it has dug itself into?

    Everyone has shared great thoughts and information.

  13. It seems to me that now would be a good time to raise the tax on gasoline, to be used for education, road and bridge repairs.

  14. Talks cheap. I would love to see a complete breakdown of the lottery income and expenses made public. If it already is where could we see it?

  15. The cost to buy a lottery ticket has doubled since the lottery started, yet funding for schools has continued to decrease. Where is that extra dollar going! Bottom line, something, somewhere, doesn’t add up. We need to find out which elected officials are responsible and get rid of them! And when they are gone, there salary stops. None of this lifetime salary stuff, put that money in to our schools. If a road needs to be repaired then great. But stop building and repairing roads that don’t really need it and put that money in to our schools. Yes, I know, the road fund is separate from the education fund. Guess what, I don’t care. Use it anyway and fix our education crisis! I’d rather see that money reallocated to schools than to drive through ridiculous road construction sites just because the money is there for it. My son’s school apparently can’t even afford to simply buy paper towels! This is unacceptable!!!

  16. One specific area that needs to be eliminated from lottery funding is higher education— (see above:$27.6 million for higher education). Higher education is able to raise funds through alumni associations, endowments, and, of course, raising the cost of a college class and yet, they are allocated nearly the same amount as PK-12 grade public schools?

    It’s time to stop allowing our legislators fund their “pet projects”– their Alma Maters! While our universities and colleges continue to build, update, and expand their instructional curriculum, PK-12 grade public schools are falling apart along with their textbooks and the lives of our children. Higher education does NOT need lottery funding and should be immediately removed from the Lottery’s funding allocations.

  17. As a teacher in higher ed, I want to respond to Shonda who says that higher ed funding needs to be eliminated from the lottery funding. While it is true that some schools have endless sources of revenue in terms of alumni, that is an extremely small percentage of schools in the state. I am at a community college. Our tuition is very low compared to larger universities. We have a huge number of students who are not prepared for college and come to our school and need remedial courses because of the poor state of education in general in Oklahoma. In order to keep costs low and to provide access to higher education for everyone–not just to those who want to take on massive amounts of debt or who have family members paying for their education–we need funding just like elementary and secondary education. Teachers and staff in higher education have also not had a raise in years (it has been seven years for many of us, and most college professors in Oklahoma make less than high school teachers in other states). It takes all of us in education to solve the problems.

  18. I have read the above comments. I am also concerned about the state of education in Oklahoma. I have read a lot of comments about budget cuts, tax cuts and tax breaks. I read the possible solutions such as legalizing marijuana, cutting legislators salaries and such.

    I believe that in order to “fix” this system there is first going to have to be more accountability on all sides. Everyone is going to have to put things on the table. Are teachers willing to give up tenure so that we can eliminate teachers who aren’t doing their job? It’s all a give and take. I understand the frustration of not getting pay raises, etc. But we have to work to find solutions.

    In the Oklahoma budget for 2015 the education department received over 50% of the entire state budget. That leaves less than 50% for all other agencies. Only second to education was Health and Human Services. Can someone in education tell me where the 50%+ is going in education?

    How about someone address the 90k+ salaries of some principals and principal/superintendents in Oklahoma. There are problems obviously on all sides. Until we audit the education department and all of the individual districts to see where the money is going, we are going to continue to have the same problems, regardless of how much money is thrown into the mix.

  19. Legalizing marijuana would solve all of our states budget problems. over 900 million a year!!!! Wake up Oklahoma it’s not rocket science it’s survival. We are a laughing stock of the nation. Sure hope $250 million in state capitol improvements makes our political leaders happy… Our children are suffering

  20. I wonder if the legislators have considered if any of their children or grandchildren who are in PUBLIC schools really though this through. I also wonder if there is any graft, personal agendas, waste, fraud, etc. involved.

  21. I don’t believe it for a minute. This is a huge funding sourse and I think our corrupt and decietful leaders have been blowing smoke up our …. I think they have spemt every dime like it was their own penny bank. Those schools havent seen a dime.
    IF THEY WANT TO RIDE THIS PONY THEN I SAY PROVE IT,,,
    SHYSTERS. IMPEACH MARY FALLIN

  22. What are you people bitching about first you let gov henry dupe you into voting for the lottery and then you go to the poles and vote the same people back in office then you sit around and bitch about what is happening.

  23. There is great irony in citizens believing that shortfalls in education funding could be made up by exercising bad math, betting on the probability of picking winning lottery numbers. They have been buying that trickle down theory for years, and now they can bet on frackquakes almost daily.

  24. Do the other states have 520 school districts, while only having 502 high schools. How many of those administrator are making more than our teachers. Why does Florida, with over twice as many students, only have 78 school districts?

    Quit wasting our money and spend appreciately.

  25. Had I been aware that any part of the lottery dollar’s would be allocated to colleges…… I would have voted ” NO.”

    That needs to be stopped.

  26. Our state GOP party hates the lottery and do everything they can to see it a failure. Experts have studied this issue and given informed and reasonable suggestions to help remedy part of our budget problems using lottery funds. The GOP leadership has refused adopt any of the suggestions, they simply want it to fail very publicly so they can say “SEE WE TOLD YOU”. Their inaction on this proves they are trying to destroy
    our public school system in favor of ESA (a business of private schools).

  27. Governor Marry Fallon and her cronies have continued the practice of siphoning rhe lottery money into their very pockets. When she retires not only will she be a muti millionaire but she signed a bill that guarantees she will collect more money on retirement than she made as governor.I can’t believe she was voted a second term. Sad.

  28. The lottery proceeds went to colleges not the lower schools. They should alternate the funds between the different schools. They should also increase sales tax of 1 cent or higher to go to education and start paying teachers a decent salary to attract more and better teachers. Oklahoma should also look at the top 10 states of education and borrow from their ideas. Since education is the key to everything, why not sacrifice lesser things for it? Right now we pay $8 for $100 dollars we spend 1 more cent won’t hurt us to help education. So vote wisely.

  29. I’m not sure we should take the opinion of the Lottery Commision on supplanting.
    The Oklahoma Constitution requires the legislature to fund common schools in an adequate manner so that all children can have a quality education. This is clearly not being accomplished by this current elected body. Lottery money has supplanted revenues that are required to fund our education system in an adequate manner.
    Incompetence and the belief that tax cuts generate more revenue are major faults in their decision making.

  30. I’m against the penny tax bill, we are taxed to death as it is! We can’t trust where the money is actually going when 51% of our state budget is already going to education. The education system needs an overhaul. They are entirely too top heavy!!! We have too many Superintendents in OK, there is no need for as many as we have in a state our size. I’ll probably get blasted for this but I also disagree on raises for teachers. They work 9 months, and of that 9 months they have fall break, Christmas break, Spring break, which means they actually work only about 8 mos. I can’t think of any other profession that works apx 8 mos and makes over $40,000. Teachers choose that profession as a calling, they know the pay is low going into it.

  31. Why were video games pulled from the bill? What would be the effect of including them? If the lottery isn’t doing what it was expected for education, can it be eliminated or at least have the operating costs and payouts evaluated?

  32. The Education system in Oklahoma is an embarrassment.

    Shame on the government (both sides).

    Lies..

    What’s the breakdown of the $27.6 million for “higher education”? What foolishness is it being spent on?

    I am leaning toward vote no on 779 due to the fact
    of the past, present and future LIES….

    smh

  33. TO GAYLE: Yes, we as teachers chose our profession because it is a calling. Our breaks are are not paid vacation days!!!! We educate the future of our country. Without a teacher then there wouldn’t be doctors, lawyers, businessmen, politicians, Presidents etc…. so being an educator should be valued by Everyone!!!!! Do you really think we only work 181 days? Those are our contracted days but we work several days prior to the start of a new school year getting our rooms ready for the first day of school . Those days are not part of the 181 contracted days. Many teachers work on Saturdays to get ready for the next week of learning. If you’ve ever driven by a school before and after school you will see a full parking lot of teacher’s cars because we do not get ample planning time during the school day to work on all the state mandates that we are required to meet. Then most take work home every night. We are not paid overtime. I welcome you to spend one day in a classroom and maybe you’t value of an educator may change.
    It’s simple “Do not judge other’s until you’ve walked a mile in his shoes”

  34. I believe that everyone who is disappointed in where the lottery money is going should call into the RANT and voice their opinion and concerns. Let Mary Fallon and the other lawmakers tell us what they are doing with all that money

  35. Gayle – You seem to be saying “but look how much of the pie (chart) schools get!” when the question you need to be asking is “How big is the entire pie?” Everything has gotten slashed to barely-operative levels. Half of very little is still not a lot!

    As for your argument that teachers get paid “over 40k” to work “half the year” – hahaha! You can look at teacher salaries online, you know. They publish that. Over 40k? HA. Show me!

    Also, you claim BOTH that teachers earn 40k+ AND that they ‘know the pay will be low going into it’ – these are mutually exclusive. You can’t have both. Which do you want to commit to? Under-paying the people responsible for your kids’ future, or claiming that they live a life of luxury and only work half the year?

    (Jeff Palmer describes the life of ‘luxury,’ involving long days and weekends, much better than I could. My mother taught, and you better believe she worked every single day of the week when school was in session.)

    I mean, I would HOPE that most people would consider their children’s future worth investing in, and therefore worth paying for skilled labor to achieve. But I could be wrong. Oklahoma is bleeding its best teachers to other states because the pay is not competitive. Simple as that.

  36. Billions, If not trillions of dollars, have been spent by the US to explore outer space, fight wars and support political agendas. We brag and boast about being a “rich nation” but we are the poorest when it comes to education. A single atheist, without God, wanted to have prayer removed from school and succeeded. Let us, who know God, succeed in pumping money into schools. We all need to fight for our children–their future. Btw… Also, stop getting mad at countries like China and India for taking US jobs. They obviously place a higher value on education. Hypocrisy must end!

  37. We want to be like other successful sstates education.
    Try looking at how Top heavy our education people are. We have 77 counties with 500 school Districts, thats our Top Heavy, too many top heavy Administers.
    For instance Florida has 74 counties,and 64 school districts, and many more students, with small classrooms, because they are not top heavy. We need to look at looking at less School Disticts, with MUCH LESS Administrators. We need to look at what we can Change in our School System, instead of JUST looking at Taxes, Etc. All tbe administration people can be teachers. Lets look at other states and look at the ones who have much dmaller number School Districts to comparison to State Counties,

  38. Responsible governance should always have funding in place for any new expenditures. Why didn’t our governors and state legislators (Democrats originally; now Republicans) begin decades ago forming a commission, with the authority to mandate cuts and consolidations in State government where they found redundancy and waste? We know there are probably hundreds of millions of dollars wasted in Oklahoma government every year.

    I thought there was supposed to be such a commission already. Where are they? Do they have the authority to make the needed changes. As a conservative-minded voter, myself, I would suggest starting with school-district consolidation. Maybe on per County. I am tiring of People screaming for higher taxes before demanding responsible spending, first.

  39. Well, the entertainment value of a number of comments in this thread have made it worth my while to read. Otherwise, I haven’t learned a blessed thing.

    One of the most important and relevant issues with regard to average teacher pay in Oklahoma relative to other States (and that no interested party dare mention – hmmm!) is the fact that in order to properly make such comparisons/contrasts, one must take into consideration numerous factors instead of merely citing raw numbers. If you know what to search for and enter the correct terms, google is your friend.

    E.g., Oklahoma is one of the top five States in the nation for the *per capita* number of her citizens she employs in state and local government jobs, at a whopping 18% plus. Compare that percentage to Texas at only 11%. That’s one factor that *must* be taken into consideration *if* you want to form a proper perspective on this question.

    Here is another: Cost of living in Oklahoma is among the lowest in the nation (#3). Additionally, purchasing power (which overlaps with the former, but is nevertheless not the same thing) ranks right at the top among the states. Meanwhile, the median annual household income in Oklahoma is right at $50K.

    Now, to do it right you’d have to factor in *dozens* of variables relevant to the question before you could form a good opinion on this, but those areas combine to form a good starting point.

    I can’t address every instance of false reasoning up thread, but one of the huge problems with people these days is that they tend to believe money actually grows on trees (in a manner of speaking). It rarely occurs to the common man that doubling the price of lottery tickets, for example, *does not mean* the lottery will, in turn, produce twice as much in revenues. Far from it! Anyone who believes such nonsense has no business even attempting to reason correctly on this issue.

    This is why revenue raising schemes like legalizing class C gaming *always* fail to meet the wild initial projections of the advocate-prognosticators. No one is pocketing the money, it simply is not being generated because there is only so much *real wealth* to go around. But if you don’t believe me, put it to the test: go out and find a market for some trinket or other you can manufacture and sell for a dollar, and then, all of a sudden, double the price, and see whether it results in doubling your sales or income. …

  40. When will you people going to learn Republicans dont care about public education most goto private school. Which are not needing anything cuz they are funding by the rich and they still think they are better than you.

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