Lottery Commissioner Tells WITN Changes To Lottery Funding Formula Are Problematic

North Carolina Education Lottery Commissioner Jody Tyson of Snow Hill says changes state lawmakers made to where lottery proceeds go for education are problematic and will cost taxpayers.

The NC Education Lottery Act approved by lawmakers in 2005 established a specific formula for where the lottery proceeds would go: 50% to reduce class size/pre-k, 40% for school construction, and 10% for needs based scholarships.

In recent years lawmakers have shifted lottery dollars to other areas in education. This fall, Tyson says they essentially eliminated the formula.

Lawmakers have now divided the lottery proceeds into seven different areas, with the largest portion, 45.8-percent funding teachers. School construction dropped by nearly half from 40-percent down to 20.8 percent.

Lawmakers who changed the formula say it was done in the best interest of education. They say it puts the dollars where they are most needed at any given time, and that lottery money has likely saved teacher positions in recent years.

Tyson says he understands that, but his concern is that money in the general budget earmarked for education is being reduced and replaced with lottery dollars.

Tyson also says the big reduction in construction dollars is going to cost counties like Greene that opened its first new school in 21-years just last year.

Tyson says, "We were hoping for $400,000 annually from the lottery based on the historical numbers up through 2010. Now we're getting $220,000, so you're looking at $180,000 to $200,000 that the county taxpayers now have to make up to make that annual payment on the new building."

Reducing those construction dollars is of particular concern in places like Onslow County where student population is exploding.

Jeff Hollamon is Chief Financial Officer for Onslow County Schools. He says, "The amount of funds that we receive through the lottery is inadequate to meet our needs. We average less than 2-million dollars a year in school construction lottery funds and at that rate it would take 13-years to build one school. Over that same time we would require 5 to 6 schools to meet student growth."

Construction needs are so great in Onslow County that a 75-million dollar capital improvements bond is on the ballot next week. And while the lottery dollars for construction, in comparison, may only be a drop in the bucket, Hollaman says fewer of them means more of the burden falls on taxpayers. "There's no appropriation from the state outside of the lottery for school construction, and therefore, it makes those funds all that more important."

Hollaman is also concerned that the change in formula leaves districts wondering from year to year what the lottery dollars might and might not fund, leaving their budget process up in the air.

Tyson says the lottery commission hasn't taken a formal vote on what it thinks about the changes, but believes eventually, they'll move to request the original formula be restored.