Myth vs. Reality

Scientific Games, a Georgia company that manufactures lottery materials and equipment, spent several million dollars in 1984 to win approval of a state-operated lottery, using much of the money to tell California voters that schools would receive a big share of the lottery’s proceeds. The investment paid off, big-time, for Scientific Games—a subsidiary of the Bally gambling conglomerate—when the company almost immediately was awarded a $40 million– per–year contract to supply scratch-off tickets and other materials.

As the lottery cranked up, it adopted the Scientific Games campaign theme with an advertising slogan: “Our schools win, too.” And it thus fueled one of the more persistent myths about school financing in the state—that the lottery can take care of schools without more tax money.

The sobering fact is that the schools haven’t received an extra dime from the lottery. Lottery money simply goes into the school financing pot that also includes state aid and local property taxes. What the state kicks in, as a matter of fiscal and political reality, is adjusted for what the districts already receive from the lottery, local taxes and other sources. And the lottery money, contrary to popular belief, is a tiny share of the total.

These are the numbers: The lottery law requires that the schools get at least 34 percent of the lottery’s gross revenues, which are now about $3 billion a year. Thus, the schools’ share is $1 billion a year, give or take—compared to the nearly $40 billion that the state’s general fund contributes to K-12 schools and public colleges. When local revenues are thrown into the calculation, the lottery money accounts for less than 2 percent of the roughly $55 billion in state and local funds spent on public education each year.

Over the 18-year history of the lottery, it’s given about $14 billion to school districts, with the lion’s share going to K-12 schools. San Diego County has received nearly $1 billion, with San Diego Unified School District getting nearly a quarter of the county’s total.

The lottery stopped using its “Our schools win, too” slogan after a few years because the powerful California Teachers Association objected. Its polling found that one factor in voter opposition to new taxes for schools was the belief that education’s financial problems had been solved by the lottery. —D.W.

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