Eight public school districts aren't receiving any of the $75 million allocated to common education this year from Oklahoma's lottery and racetrack/tribal casino laws.
The reason: The schools are considered independently rich from local taxes on property and oil and gas production.
That means those districts must use local money exclusively to fund teacher pay raises and full-day kindergarten, the two main programs Gov. Brad Henry cited in lauding the state's gambling partnership.
Several other districts saw their state aid reduced this year, meaning their share of gambling proceeds is minimal, at best.
Sweetwater Superintendent Don Riley considers the pay raises a $60,000 unfunded mandate for his district in far western Oklahoma.
He admits he has little room to complain, however. Sweetwater makes so much money from the oil and gas industry, his district has offered full-day kindergarten for five years.
"Still, you'd think they could make it (lottery revenue) a line item and just give each district a share," Riley said.
More spent per student
Like the other seven districts, Riley's is tiny and in a rural county. Some benefit from power plants generating substantial tax revenue.
Each spends far more annually per student than the $6,094 state average.
"Most of them are way off the charts (in spending). You look at them and just think, 'Oh my gosh,'" state Finance Director Claudia San Pedro said.
In Pittsburg County, One Stop store owner Richard Campbell figured the lottery tickets he sells would directly aid the Kiowa School District.
Thanks largely to a gas-fired electrical plant, the district spends almost 50 percent more per student than the state average. Therefore, it gets no lottery money.
"As long as it still benefits the schools, if Kiowa doesn't need it because of the power plant, I have no problem with it," Campbell said.
He figures lottery-playing customers would agree.
Henry said he would prefer a lottery distribution for each school district. That way, he said, "School officials, teachers and parents would know exactly how much the lottery had raised for their classrooms."
Legal constraints prohibit that, he said.
More money expected
This story originated from a query by the Oklahoma City School District's finance director.
He wondered when the district would begin receiving its share of lottery proceeds.
Truth is, each district received its money before the school year began, even though the first lottery ticket wasn't sold until Oct. 12.
Legislators budgeted $28.2 million this fiscal year from anticipated lottery revenue and $46.5 million from the state's share of profits from tribal and racetrack casinos.
Projections for next year are $57 million from the lottery and $62.5 million from gaming.
That money goes into a general account that helps fund local schools. This year, that fund totaled $1.74 billion, said Shawn Hime, assistant state superintendent for financial services.
The money is distributed based on a multi-factored formula, primarily a district's local property tax receipts and its average daily enrollment.
In several districts, local funding increases caused them to receive less state aid this year than last year, despite the $75 million infusion from gambling.
Some of those districts are Elk City, Sayre, Olney, Bluejacket, Crutcho and Sasakwa.
Most Democrats and Republicans agree that while the formula may not seem fair, it is the best solution to ensure every student gets an adequate education.
Without such a formula, the state would open itself to lawsuits like those that have succeeded in other states, said Rep. Chris Benge, R-Tulsa, chairman of the House Appropriations and Budget Committee.
"Short of some other alternative that has yet to be created, the state aid formula ... is probably the best way to get money to the classroom," Benge said.
Hime said the formula makes it impossible to calculate how much each district is getting from the lottery or casinos.
Although Hime has explained the state-aid formula at 30 seminars this year, he said school officials still ask occasionally when their share of lottery proceeds is coming.
"I do know there's been a lot of confusion about it," he said. "It's people just not understanding that that money was already appropriated based on projections."
Gambling money below projections
While lottery projections are roughly on target, the state's share from casinos has been far below projections.
Tribal casinos contributed $933,073 a month through the first five months of the fiscal year. The state projection was $7.3 million a month during that period.
Racetrack casinos generated a total of $243,965 in state funding through Dec. 15. Finance officials expected to have $5.1 million by now.
Their calculations were based on two major assumptions:
New federal rules would force tribes to install gambling machines meeting the definitions of a state-tribal compact. By law, the state only receives a profit share from those machines and from card games.
Three pari-mutuel racetracks would open casinos by July 1.
Neither assumption came true. The proposed federal Indian casino rules never came about, and the first racetrack casino didn't open until mid-October.
Meanwhile, it costs $21.6 million to fund full-day kindergarten and $57.7 million to raise teachers' pay. The annual cost of funding the pay raises will increase each of the next three years until the pay reaches the regional average.
San Pedro, the state finance director, notes that this is the first year for both revenue streams. Once this year's uncertainties have passed, her office can devise more reliable, long-term projections, she said.
San Pedro also is hopeful about legislation proposed by the Justice Department concerning Indian casinos. The plan, to be introduced next year, would result in Oklahoma tribes using more compacted gambling machines.
Benge, however, thinks banking on the gambling industry is just that: a gamble.
"I think it's unreliable. It's going to be more like a one-time shot in the arm, I think, and then once the enthusiasm for the lottery subsides, you won't have any growth revenue from it," Benge said.
Because of that uncertainty, he thinks the money should be used only to fund capital improvements, not operational expenses like pay raises and full-day kindergarten.
The governor said he expects lottery revenue to grow.
While that money alone won't fund every desired education program, Henry said, "it is new money that schools would not have received otherwise."
"I guess the bottom line is, the jury's still out," Benge said.
Where Oklahoma lottery money goes
Fiscal Year 2006 projection: $65.5 million
Fiscal Year 2007 projection: $126.6 million
45 percent: K-12 education and early childhood programs
45 percent: Higher education
5 percent: School Consolidation Assistance Fund
5 percent: Teachers' retirement system
Where Oklahoma's casino money goes
Fiscal Year 2006 projection: $52.8 million
Fiscal Year 2007 projection: $71 million
88 percent: Common education
12 percent: College tuition program for students whose families make less than $50,000 a year.