Controversial plan is designed to capture funds for education up-front, but is it worth the gamble?
Democratic Illinois Governor Rod Blagojevich today will unveil an election-year school funding plan that calls for leasing the state lottery for the next decade to a private firm in return for $10 billion in upfront cash.
Schools would get at least $1 billion a year for the next four years from such a deal, with the remaining $6 billion going into an education trust fund governed by a board appointed by the four legislative leaders, governor, comptroller and treasurer, according to a Democratic source briefed on Blagojevich's proposal late Monday.
The complex schools plan, hatched in the heat of a campaign as Blagojevich sought to prevent a damaging third-party challenge from state Sen. James Meeks, likely will be controversial, criticized by Republicans and leave numerous questions to be answered in the coming months.
The governor's office, however, has tried to keep an uncharacteristically tight lid on details, declining several requests for comment ever since Meeks, the pastor of a large predominantly black South Side church, announced last Friday he would not run for governor because Blagojevich met his demand to find more money for schools.
Two of the looming questions essentially are math problems. The state figures to get at least $650 million from the lottery for the school fund next year even if it doesn't lease the lottery to a private company. So the net increase to schools would seem to be only $350 million a year for four years. It's possible, but unknown Monday, whether Blagojevich will propose other revenue-generating measures to boost the bottom-line figure.
The other math-centered question is what happens after four years, when the state no longer has the $1 billion per year earmarked for schools and also will no longer have the lottery money, since a private company would be reaping that cash through a lease.
Blagojevich's answer for that involves earning interest on the $6 billion trust fund, the source said. It's unclear, however, whether the state could earn enough in investments each year to make up the potential shortfall of $1 billion.
Blagojevich also plans to address long-held voter cynicism about the lottery, which was sold to the public as a way to pay for schools. In reality, lawmakers simply put the lottery money toward schools and transferred money they were spending on schools to other parts of the state budget, often criticized as the "lottery shell game."
Blagojevich is expected to argue that he will end that shell game by spending the lottery proceeds directly on general state aid to school districts and programs like special education that benefit the suburbs, the source said.
The campaign of Republican governor candidate Judy Baar Topinka put enough stock in the lottery lease rumblings that it sent out a news release Monday night highlighting problems at the lottery agency under Blagojevich's watch.
Topinka made it through the GOP primary without putting out a school funding or reform plan and has yet to do so in the general election campaign.
While Blagojevich has been mum so far, he will finally lift the lid on his school-funding puzzle — and his plan to reform the school system — when he speaks at 1:30 p.m. today at a South Side elementary school.
Believe me, this state will blow it or steal it. When the lottery first started here the lottery proceeds were supposed to be in addition to the current education budget. But it quickly changed to the lottery being the ONLY source of education funds. Where did that original budgeted money go to? A shoebox in someone's closet?
Last time I checked, private business was in it for itself, NOT for the school system or anyone else. Somebody should talk to Govenor Rod about his thought processes.
Maybe they could just cut the Dept of Education, give parents vouchers and privatize the schools while they are at it. The problem is that businesses have to make money otherwise they don't exist. Many private schools are ran as non-profits at least around here. The biggest problem is the levy system and very poor executive level management in schools. If they spent half the time they spend on percieved racism/sexism on financial planning it wouldn't be a problem.
How about doing what a private company would do? Get rid of the red tape admin costs, jack up the payout percentages, people will play more, and you will make more. This is why politicians are really useless. Companies should be lining up to buy this.
How about doing what a private company would do? Get rid of the red tape admin costs, jack up the payout percentages, people will play more, and you will make more. This is why politicians are really useless. Companies should be lining up to buy this.
Maybe if NY privatized its lottery (which Connecticut has done to at least some extent), its Rotto would have an acceptable payout return.
I'm not at all clear on the specific merits of the Governor's proposal...I have many of the same concerns expressed here on the proposed financial structure of the deal.
Clearly, if a firm puts up $10 billion they will look to make a minimum return on that upfront cost.
That said, some of the arguments against privatization in general are simply unsupported by facts or history. CT can hardly be said to be privatized - they are not a state agency but if you think they operate free of the state or state bureaucratic pressures I would invite you to actually work with them and observe them as I have.
For all of the claims that state agencies are more secure and "noble" the facts are that the privatized aspects of state lotteries uniformly perform better (better performance and accountability and lower cost) then their state-run counterparts. Vendor employees (like the sales reps in TX) are held strictly accountable for the quantity and quality of their assigned duties. Try telling that to a CA Lottery sales rep whose collective bargaining agreement specifically forbids holding him accountable for any aspect of his performance or even malfeasance. You'd be amazed at how many of them work about 20 hours a week, many of them have second jobs where they work during the week while collecting a state paycheck. Oh and by the way, almost all of them collect the full $12,000 per year "performance bonus" even in years that sales are flat are rise only very slightly. Not a bad $50,000 a year gig...especially if you can get it with state retirment & benefits, etc. Of course, someone has to pay for those very generous benefits in the future...
I would also not like to see the Security function outsourced - but I do agree that state lotteries should be sales and marketing organizations not run by constant vetoes of power hungry security officials. These are the same guys who stocked the CA Lottery "armory" with automatic weapons and grenade launchers...
The Chicago Tribune today had an article that said 3 cents of every dollar went towards admin. costs and 57 cents went to the prize pool. If that's accurate does Blogo (Governor Blagojevich) think a private firm can cut the admin costs to under 3 cents on a dollar?
The 33% now going to the school fund will then go to the "renter". They can lower operating costs by going to computer draws and not televising them. Perhaps they could even eliminate the independent auditing firm who currently oversees the integrity of the drawings. They could cut the prize pool and the vendors' cut by just a small percentage and they would be making a profit of 40 cents or more on the dollar. If they're crooked they could rig their computer and terminals like Indiana seems to and make a killing.
Since the purpose of a business is to make as much money as possible, there's a good chance we'll see some changes and I don't think the changes will be in favor of the players.
A bankrupt education fund. No lottery funds with which to further education financing. If the State decides to start a competing lottery to further funding no one is likely to play it, because, not having to worry about funding education, the private concern will offer a much higher payout percentage than any state could hope to do.
A classic case of a politician wanting to kill the goose that lays golden eggs. Screw the future, grab what you can now and run.
One should shudder just even at the thought of state lottery games changing hands over to the private sector.
Why should one trust a private group more than they would a government entity? Where does the depth of greed lie before the temptation of corruption takes place as it is morally, ethically, socially, and more, blinded by its desire to forever enhance its bottom line?
Whenever great financial gains are the underlying and primary motivating factors in any such agreement, there will always be many casualties left in its wake.
One should shudder just even at the thought of state lottery games changing hands over to the private sector.
Why should one trust a private group more than they would a government entity? Where does the depth of greed lie before the temptation of corruption takes place as it is morally, ethically, socially, and more, blinded by its desire to forever enhance its bottom line?
Whenever great financial gains are the underlying and primary motivating factors in any such agreement, there will always be many casualties left in its wake.
PayMeNow
Look at the Connecticut Lottery. No one (not even me, although they have a Lose for Life scratch with no cash option) complains about it.
How about doing what a private company would do? Get rid of the red tape admin costs, jack up the payout percentages, people will play more, and you will make more. This is why politicians are really useless. Companies should be lining up to buy this.
If you want to find the shoebox it's usually in the Secretary of State's closet.
Let's get that party started!
The way things are going here, if I found the shoebox, Gov. Rod would tax the livin' day;ights outta me Anyhow, I'll just have to wait and win to have that party...and then I'll let you know where the party is.
This looks like a major disaster waiting to happen. What a stupid solution.
The irony is that he's gambling with gambling. Kind of like having a full house poker hand and throwing your pair away hoping for the four of a kind.also its giving away a pretty guranteed $650 mill a year, for ever for schools, for $4 bill in next 4 years, then interest on $6 bill.
whats 5% of 6 bill? $300 mill thats assuming the trust can get %5 and not just blow it.
so 1 bil a year then $300 mill after 4 years. guess that guy wil be out of office , and new guys can try n fix up school finance.
Believe me, this state will blow it or steal it. When the lottery first started here the lottery proceeds were supposed to be in addition to the current education budget. But it quickly changed to the lottery being the ONLY source of education funds. Where did that original budgeted money go to? A shoebox in someone's closet?
one word for this. "stupid"
If you think the lottery is sometimes (Sorta Crooked) You haven't seen nothing until it's privitized.
I agree with every post following the OP. This is one lame idea.
When you can't really on the state itself to really put the funds from lotto into education there's no way a private firm would do it.
Last time I checked, private business was in it for itself, NOT for the school system or anyone else. Somebody should talk to Govenor Rod about his thought processes.
I'd like to find that shoebox myself.
the party would be awesome!!!
Maybe they could just cut the Dept of Education, give parents vouchers and privatize the schools while they are at it. The problem is that businesses have to make money otherwise they don't exist. Many private schools are ran as non-profits at least around here. The biggest problem is the levy system and very poor executive level management in schools. If they spent half the time they spend on percieved racism/sexism on financial planning it wouldn't be a problem.
Darimgdave,
If you want to find the shoebox it's usually in the Secretary of State's closet.
Let's get that party started!
How about doing what a private company would do? Get rid of the red tape admin costs, jack up the payout percentages, people will play more, and you will make more. This is why politicians are really useless. Companies should be lining up to buy this.
How about doing what a private company would do? Get rid of the red tape admin costs, jack up the payout percentages, people will play more, and you will make more. This is why politicians are really useless. Companies should be lining up to buy this.
Maybe if NY privatized its lottery (which Connecticut has done to at least some extent), its Rotto would have an acceptable payout return.
I'm not at all clear on the specific merits of the Governor's proposal...I have many of the same concerns expressed here on the proposed financial structure of the deal.
Clearly, if a firm puts up $10 billion they will look to make a minimum return on that upfront cost.
That said, some of the arguments against privatization in general are simply unsupported by facts or history. CT can hardly be said to be privatized - they are not a state agency but if you think they operate free of the state or state bureaucratic pressures I would invite you to actually work with them and observe them as I have.
For all of the claims that state agencies are more secure and "noble" the facts are that the privatized aspects of state lotteries uniformly perform better (better performance and accountability and lower cost) then their state-run counterparts. Vendor employees (like the sales reps in TX) are held strictly accountable for the quantity and quality of their assigned duties. Try telling that to a CA Lottery sales rep whose collective bargaining agreement specifically forbids holding him accountable for any aspect of his performance or even malfeasance. You'd be amazed at how many of them work about 20 hours a week, many of them have second jobs where they work during the week while collecting a state paycheck. Oh and by the way, almost all of them collect the full $12,000 per year "performance bonus" even in years that sales are flat are rise only very slightly. Not a bad $50,000 a year gig...especially if you can get it with state retirment & benefits, etc. Of course, someone has to pay for those very generous benefits in the future...
I would also not like to see the Security function outsourced - but I do agree that state lotteries should be sales and marketing organizations not run by constant vetoes of power hungry security officials. These are the same guys who stocked the CA Lottery "armory" with automatic weapons and grenade launchers...
The Chicago Tribune today had an article that said 3 cents of every dollar went towards admin. costs and 57 cents went to the prize pool. If that's accurate does Blogo (Governor Blagojevich) think a private firm can cut the admin costs to under 3 cents on a dollar?
Here's the breakdown:
Where each lottery dollar goes, fiscal year 2004:
57 cents - prizes awarded to winners
33 cents - common school fund
7 cents - to vendors and retailers
3 cents- operating expenses
have to wonder if that is valid or
Once upon a time....
isn't this what indiana did????
disaster.
Coin Toss...thanks for that breakdown.
The 33% now going to the school fund will then go to the "renter". They can lower operating costs by going to computer draws and not televising them. Perhaps they could even eliminate the independent auditing firm who currently oversees the integrity of the drawings. They could cut the prize pool and the vendors' cut by just a small percentage and they would be making a profit of 40 cents or more on the dollar. If they're crooked they could rig their computer and terminals like Indiana seems to and make a killing.
Since the purpose of a business is to make as much money as possible, there's a good chance we'll see some changes and I don't think the changes will be in favor of the players.
RickG
Wouldn't taking over a lottery and elimnating any independent auditing firm make them highly suspect?
RickG
Wouldn't taking over a lottery and elimnating any independent auditing firm make them highly suspect?
It would seem that way. But Illinois should go ahead with it.
DEAR MEMBERS:
It "L@@KS" like toooooooooooomeeeeeeeeeeeeeeeeit boils down to (2-THING$$$$)
"Who do youuuuuuu.PPPPPPPPPeeee"""""PPPPPPTRUST(Trust???)
"Jimmy Carter"<<OR........"Richard Nixon"<<
>>>>>>>>>>>>OR>>>>>>>>>>>>>>>>
LOTTERY POST>>>over >>!!!!!!
40,000...............Member$$$
LOL
PSYKOMO...............&&&&&&&&&&$$$$$$$$$$$>>>>>>>you too member$$$$$$$$$.
This looks like a major disaster waiting to happen. What a stupid solution.
The irony is that he's gambling with gambling. Kind of like having a full house poker hand and throwing your pair away hoping for the four of a kind."Thank$$$$$$$$.................Rick G!!!!!!!!!!!!!
LOL>>>>>>>>>>>>>>>>>>
>>>2006>>>$$$
LOL
PSYKOMO
Hmmmmm. So, in 2025 Illinois is left with:
A bankrupt education fund.
No lottery funds with which to further education financing.
If the State decides to start a competing lottery to further funding no one is likely to play it, because, not having to worry about funding education, the private concern will offer a much higher payout percentage than any state could hope to do.
A classic case of a politician wanting to kill the goose that lays golden eggs. Screw the future, grab what you can now and run.
DEAR MEMBERS:
It "L@@KS" like toooooooooooomeeeeeeeeeeeeeeeeit boils down to (2-THING$$$$)
"Who do youuuuuuu.PPPPPPPPPeeee"""""PPPPPPTRUST(Trust???)
"Jimmy Carter"<
>>>>>>>>>>>>OR>>>>>>>>>>>>>>>>
LOTTERY POST>>>over >>!!!!!!
40,000...............Member$$$
LOL
PSYKOMO...............&&&&&&&&&&$$$$$$$$$$$>>>>>>>you too member$$$$$$$$$.
Thank.............you ..........thank >>>>>>>>>>>>you <<<<<<<very....MUCCHHHHH!
Onley Jimmy Carter,,,,,,&,,,,,,Richard Nixon!!!!!!!
gave us the most perfect...................................................TIMES........praise........allow!!!!!!!!!!!!
LOL$$$$$$$$$$$$$.........&&&&&&&&&&&&&&........monetttttttttttttttyyyyyyy
"IFFFFFFFFFFF..................."YOU NEED___________TOO!!!!!!!!!!!!!!!!!ittttt$$$
praise...........JIMMY.............&.............pooorrrrrrrrrrrr"RICHARD"&......U....WIN$
LOL........................noproblems with over more than........$$$$$$$$40,000 !!!!!!!!!!
MEMBer"$$$$$$$$$$$$$$
One should shudder just even at the thought of state lottery games changing hands over to the private sector.
Why should one trust a private group more than they would a government entity? Where does the depth of greed lie before the temptation of corruption takes place as it is morally, ethically, socially, and more, blinded by its desire to forever enhance its bottom line?
Whenever great financial gains are the underlying and primary motivating factors in any such agreement, there will always be many casualties left in its wake.
PayMeNow
Coin Toss,
They would be suspect even if they KEPT the auditing firm. I like PayMeNow's post above.....we should shudder at the thought for obvious reasons.
One should shudder just even at the thought of state lottery games changing hands over to the private sector.
Why should one trust a private group more than they would a government entity? Where does the depth of greed lie before the temptation of corruption takes place as it is morally, ethically, socially, and more, blinded by its desire to forever enhance its bottom line?
Whenever great financial gains are the underlying and primary motivating factors in any such agreement, there will always be many casualties left in its wake.
PayMeNow
Look at the Connecticut Lottery. No one (not even me, although they have a Lose for Life scratch with no cash option) complains about it.
How about doing what a private company would do? Get rid of the red tape admin costs, jack up the payout percentages, people will play more, and you will make more. This is why politicians are really useless. Companies should be lining up to buy this.
qutgnt::::::::::::::You gottaaaaa.......bright idea$$$$$$$$$$$$
"RUNNING"..........it like a private company would be a better...............
"SOLUTION"........
otherwise,........we will have many states doing
"It"...................... and then some holding company to buy'um-out >>>>
and BANG>>>>>>BANG!!!!!!!!!!!!! one big lottery company, controled by
a very few who will answer to.......NO ONE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"So let's keep it in the individual states.......hands and "L@@K"
at trimming some expense frome the TOP>>>>>>>>>>>>>>>>DOWN!
Would like to know what some of these Lottery Commission chair people
make from each state.............with their bonus ball PERK$$$$$$$$$$$$$
THINK the one from this state take$$$$ over $3.5 million a year for?????
sweat'n their BALLssssssssssssOFF to run the lottery for ALL the children
and the "little People" who support the games with "REAL".....MONEY$$
lol
PSYKOMO
Darimgdave,
If you want to find the shoebox it's usually in the Secretary of State's closet.
Let's get that party started!
The way things are going here, if I found the shoebox, Gov. Rod would tax the livin' day;ights outta me
Anyhow, I'll just have to wait and win to have that party...and then I'll let you know where the party is.