Answer Man: What happens to Illinois lottery proceeds?

News-DemocratJune 17, 2013 

Q. Please explain where Illinois lottery proceeds really go. We keep hearing they are used for education. If so, why are schools in such financial trouble?

-- Sandy, of Belleville

A. Odds are that you are laboring under the misimpression that former Gov. James Thompson feared you might be when he initially nixed the lottery-education idea 30 years ago.

When Illinois residents began plunking money down on lottery tickets on July 1, 1974, the proceeds went to general revenue, where they could be used for just about anything.

Then, in 1984, legislators thought it would be nice if they could be dedicated to education, so they passed a law earmarking the money to schools. They probably thought it would be a good selling point: Even if they didn't win, players would feel warm and gushy inside that at least their money was helping children.

Thompson, however, first vetoed the plan. He said a bill earmarking proceeds to the Common School Fund would lead people to think that the lottery would be a cure-all for school funding problems. I'm betting that ever since the bill finally became law in 1985, taxpayers have thought exactly that. In fact, the lottery hardly makes a dent in the state's education budget. Let's just look at some recent numbers:

In fiscal year 2012, the lottery boasted sales of roughly $2.7 billion. Of this total, about 60 percent was returned to prize winners while another 10 percent went for retailer and vendor commissions and bonuses as well as other expenses such as salaries and advertising.

The remaining $708 million was awarded to three "good causes." A little over $65 million went to the Capital Projects Fund (CPF), which is used for job creation and infrastructure improvement. (These CPF contributions began in fiscal year 2010.)

Another $3.5 million went to four "specialty tickets" that are sold to support worthy benefits -- the Carolyn Adams Ticket for the Cure supports breast cancer research; the Red Ribbon Cash funds HIV/AIDS awareness; Veterans Cash funds a range of services for Illinois veterans; and the MS Project provides extra funding for the National Multiple Sclerosis Society and its Greater Illinois Chapter.

This left a smidgen under $640 million for the Common School Fund, which helps finance public schools from kindergarten through high school. To you and me, this would be a huge amount of cash. To the state's schools, it's little more than a drop in the bucket.

Do you have any idea what it costs to run nearly 3,100 primary and secondary schools throughout the state? In fiscal year 2011, the bill came to $28.1 billion, according to numbers by the Illinois Association of School Boards. So the lottery contribution that year ($632 million) made up just 2 percent of the total budget -- and just 7 percent of the $9.3 billion that the state of Illinois provided. Most of the money -- 55 percent or $15.3 billion -- came from your property taxes while another 12 percent ($3.5 billion) came from Washington, D.C.

Clearly, then, even $700 million isn't much in the scheme of things. But here's the kicker, say education experts like the school board association: Many still think that the lottery contribution is in addition to what the state normally would have put in the Common School Fund. But the 1985 law does not mandate this, so the state can substitute the lottery proceeds for money it otherwise would have budgeted.

Think of this way: Let's say you placed a certain percentage of your paycheck into a vacation fund. Then, your rich Aunt Bertha dies, leaving you a sizable inheritance. This unexpected windfall would allow you to keep funding your vacation fund while diverting the money from your paycheck back to other expenses.

That, in essence, is what the Illinois can do with the lottery. The gaming funds that go into education can free up general revenue money that would have gone to the schools had there been no lottery. The school board association calls this a zero-sum "smokescreen" that makes it look as if the state is providing more school funding than it really is.

Still, as even the school board folks point out, every cent counts even though it's no jackpot at the end of a rainbow.

"The lottery is a helpful source of income," they admit. "Without the lottery, the state would have two choices: raise other taxes or cut ($640 million) from its budget."

So, I suppose we have to hope people keep playing.

Today's trivia:

What famous TV personality once wrote a cookbook titled, in part, "Sweetie Pie"?

Answer to Sunday's trivia: When Leo was introduced in 1957 as the latest of the five MGM lions, the studio prepared two versions of their famous movie introduction -- a three-roar, 14-second version and a two-roar, eight-second version made by lopping off the first of the three roars. According to a studio historian's research, the three-roar version may have debuted, ironically, on the 1958 classic "Cat on a Hot Tin Roof."

Send your questions to Roger Schlueter, Belleville News-Democrat, 120 S. Illinois St., P.O. Box 427, Belleville, IL 62222-0427 or rschlueter@bnd.com or call 239-2465.

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