Lottery isn't always a boon to schools
The selling point for state lotteries was that they would steer money to education. The actual results are a bit more mixed.
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All these states plan to donate their full proceeds to educational programs.Skip to next paragraph
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But the overall financial success of state lotteries is uneven as well. Massachusetts, which permits no advertising for its lottery and devotes all its profits to spending on local schools and cities, is sometimes called the most efficient of all state lotteries.
California, on the other hand, is sometimes criticized as an inefficient lottery hampered by poorly conceived restrictions.
Some states spend so heavily on lottery prizes and related advertising that their proceeds are thin and may vary dramatically from year to year.
Of course, even when lotteries are not most profitably managed, there are certain residual benefits to linking state lotteries to spending for schools, says Mr. Augenblick.
One is that politicians sell lotteries to the public by stressing the paramount need to fund public education. If nothing else, Augenblick says, their campaigning serves to reenforce the message that spending on schools is both important and taken seriously.
"They get the issue in front of people that there ought to be more money for education," he says. "And then the support of the people tells politicians that this does matter to voters."
There are also those who argue that, however marginal the financial contribution of the lotteries may be, those few extra dollars may make a difference.
Last year in Illinois, where all lottery proceeds go to education, lottery earnings accounted for 3 percent of the total $18.61 billion the state spent on education.
"If you believe that 1 percent is critical - and some people do," says Augenblick, "then all of these lotteries are important. But you're not talking about the bulk of anything."
The idea of raising money for schools through lotteries has been an American tradition since Colonial times, McGowan says.
Both Harvard and Columbia Universities, he points out, helped finance some of their earliest buildings through lotteries.
"It was a tradition," McGowan says.
But today, he adds, state lotteries have become a type of institution. "I don't think they can be cut now," he says. "Once it gets in there, the state becomes pretty dependent on this for revenue."
What's likely for the future is more state involvement in lotteries and other forms of gambling as well, McGowan forecasts.
Games of chance will continue to be frequently pegged to education because it's an effective way to overcome public qualms about legal gambling.
That's not necessarily a bad thing for school financing, says Augenblick - but neither is it a tremendously good thing.
"The state lotteries are good," he says. "They're better than nothing. But they're not nearly as good as they're sold to people to be."
The amount of lottery money that goes to schools varies by year and by state. During a recession, lotteries take in less money, and states often must make up the difference by raising taxes.
* Total US lottery profits for fiscal year 2002 were $13.7 billion.
* 39 states, plus the District of Columbia, have state-sponsored lotteries.
* 22 states earmark lottery proceeds* for education funding.
* 13 states and the District of Columbia earmark lottery proceeds for general funds, which may or may not fund education.
* States that earmark 100% of lottery proceeds to education* are: Georgia, Illinois, Michigan, Missouri, New Mexico, New York, Ohio, Texas, Vermont, and Virginia.
* Note: Some states use lottery money instead of, not in addition to, state money set aside for education.
Source: 2003 Education Commission of the States