Education funding doesn't see expected boon; officials cite low prize payouts as root cause
With sales floundering compared to projections, Oklahoma Lottery officials are scrambling to bring in more money.
State officials are saying the lottery hasn't been the boon to educational funding it was touted to be.
To increase lottery sales, Lottery Commission Executive Director Jim Scroggins is advocating putting more of the lottery sales into prize money, saying people play to win.
The fewer winning experiences they have, the less they play, Scroggins said.
The Oklahoma Lottery reports it has the lowest instant prize payout in the nation.
"Research indicates that as we increase the amount of funding we put into prizes, it should increase sales," said Lottery Commission Director of Administration Rollo Redburn.
He provided statistics from Missouri, Georgia and Texas that bear that out. Missouri records show that in 2001, instant sales were $272.658 million and the payout was 60.68 percent. By 2005, the payout was increased to 66.85 percent and instant sales increased 44 percent to $467.686 million. Missouri's unaudited instant sales in 2006 were $551.9 million, an increase of 18.01 percent over 2005.
Lottery fails to meet expectations
Despite the Oklahoma Lottery supplementing educational funding — it hasn't been the boon expected, according to state officials.
"We're disappointed our balance of funding has not gone up since the lottery," State Superintendent of Public Instruction Sandy Garrett said.
"It [lottery money] was to be in addition to our portion of the general fund money. Our money amount is more because the state budget has grown, but our percentage [of the state budget] has gone down to 35 percent. Pre-K through 12 used to be about 37 percent of the budget."
The state budget is $7.1 billion and used to be $5 billion, Garrett said.
"Most people are under the assumption education funding would go up along with the budget and the lottery would be on top of that," Garrett said.
It could be looked at as if the lottery money is supplanted — when it was supposed to be supplemental, Garrett said.
"It's disappointing that the lottery hasn't put more money into education."
By law, the Legislature is not to use funds from the Oklahoma Education Lottery Trust Fund to supplant or replace other state funds supporting common education, higher education and career and technology education.
State Rep. Jerry McPeak, D-Warner, said Garrett is correct in saying education is getting less of the state budget and the lottery money is supplanting — not supplementing, as the law mandates.
When the Legislature voted $3,000 teacher pay raises, the additional insurance and other teacher benefits were not funded, leaving the schools in limbo, according to McPeak.
The Oklahoma Lottery reported lottery funds provided $1,169 of the $3,000 teacher pay raise for fiscal year 2007.
The Legislature used lottery money to help fund the raises, McPeak said. And although the law told schools to give every teacher the $3,000 raise, it didn't provide the funding for the raise to teachers on federal programs out of the general fund, McPeak said.
So, some education expenses funded by lottery money aren't supplemental at all but unfunded mandates of the Legislature that should have come out of the general fund, McPeak said.
Assistant State Superintendent for Financial Services Shawn Hime said lottery funds are to be spent as follows:
- 45 percent — Prize Money.
- 30 percent — Education Trust (35 percent after first two full years).
- 25 percent — Administration/Advertising.
The lottery money given to education, by law, is to be above and beyond normal education appropriations, Hime echoed.
"It is not to supplant money that would normally go to education ...," Hime said. "Some argue that if they hadn't had that money [lottery], they might not have given teachers that big a raise."
Hime said there is no way of knowing whether the Legislature would have given education the funds from another source.
But the Legislature appropriates the lottery money that goes to education. For example, in 2007 the Legislature appropriated a total of $250,000 for capital improvement needs of the School for the Blind and the School for the Deaf. The are not budgeted to receive any lottery money this year, Hime said.
He said that in 2008, the lottery money is to be divided:
- 45 percent — Common education (Pre-K through 12)*
- 39.5 percent — Higher education.
- 5 percent — Teachers' retirement.
- 5 percent — School consolidation fund.
- 5.5 percent — Career Tech.
*Appropriated to the State Aid Formula for FY2008
Lottery officials projected in May 2006 a possible $413 million in lottery sales. In December 2006 that projection was lowered to $243.6 million.
Sales for 2008, which began July 1, are projected to reach $227 million, with the state expected to receive $75.2 million.
Education's share is 30 percent of sales during the first two years and 35 percent after that. The Oklahoma Lottery has been in existence for 21 months.