A Gamble that Doesn’t pay Off

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Underfunding of North Carolina schools is not a new issue, no matter how fresh and exciting the topic may seem based on recent movements and the gubernatorial election. In 2006, the state ranked 45th out of 51 (including DC) for raising teacher salary, according to the National Education Association.

One possible solution was the NC Education Lottery, but how does the lottery affect NC schools today, and are there drawbacks?

At the lottery’s creation in 2006, proponents, including former governor Mike Easley, promised that the program would add an extra half a billion dollars every year towards education.  

As of June 2016, the lottery generated over $4.6 billion. Of that sum, Orange County was awarded $46,067,044 in total, including $7,285,302 last year. But today the state spends less per pupil than before the lottery was instated.

One possible reason for the decrease in spending, despite an increase in revenue, is that sometimes lottery money simply replaces other sources of revenue such as corporate income tax.  

In 2012, the General Assembly lowered corporate income tax after it was removed from the budget for the construction of new schools and replaced by lottery funds.

Further, critics believe the lottery to be its own kind of “tax” on the poor, because poor individuals are more likely to spend and lose money on tickets.

Business Insider reported that, across all states, when the economy goes down, lottery revenue goes up.  At the height of the 2008 recession, 22 states set record high lottery sales, and spending on the NC Education Lottery is highest in the poorest counties. Why? When individuals can’t afford traditional forms of investment, like stock, they see cheap lottery tickets as their own form of investment.  

A 2004 study by Garrick Blalock, David R. Just, and Daniel H. Simon reported that in California, around 75 percent of players who made less than $30,000 a year said they play the lottery for money instead of fun, while only percent of players making over this margin said the same to be true.

And although possible earnings are huge, an investment of this sort is not likely to pay out.  The chances of winning top prizes have been calculated as one in one million in some draws.

The lottery may not actually be responsible for lower spending on education compared to before the lottery began; these decreases could only be evidence of a larger, more deeply-rooted trend.

Spending on education in general has been steadily decreasing since the 1980s.   Education made up 43.7% of the state budget in 1984, 42% in 1994, 41.1% in 2004, and 37% in 2014.  

But whatever the reason for the budget cuts, many school districts are now forced to choose between raising taxes or working with limited resources.

While the lottery does claim to invest 95% of their profit back in the state in forms  of prizes and educational investments, the game is simply another form of income for the government. In 2011, the General Assembly covered a shortage in Medicaid funding by using $26 million of lottery winnings, inciting controversy.  

Both gubernatorial candidates, Pat McCrory (R) and Roy Cooper (D) show support for allocating more of the lottery’s revenue towards education.

Regardless of possible misuse of funds on the part of elected officials, some members of the public support the lottery and its attempt to strengthen public education.

“I appreciate what the lottery does for education and I think about it a lot. It means a lot that when people buy tickets, someone down the street could get an education from it,” said Michael Pepper, who won one million dollars playing Powerball, and whose quote is displayed on the Education Lottery’s home page.  

But this is a quote from someone who won big.  It’s harder to see or care about those who lose, because their losses are small in comparison to prizes that amount to more than many residents make in a year.  Yet no matter how spread out, across school districts serving thousands or poor communities home to tens or hundreds of thousands, these losses add up quickly.

Photo courtesy WXII News
 

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