GREENSBORO, N.C. (WGHP) – The question is as perennial as robins, lilies and Santa Claus: “With all the money the NC lottery brings in, why is it necessary to ‘stuff the bus’? Where does all the lottery money go?”

This reader’s question is about FOX8’s initiative to provide school supplies to underprivileged children in the Piedmont Triad. It’s similar to Backpack Beginnings and a variety of similar groups as an avenue to donate all the extras that teachers/schools require students to buy for themselves, such as pencils, paper, rulers, glue sticks, calculators – and even the backpack to carry them to schools. Although that has nothing to do with the sort of funding that the state government provides for education – think per-pupil contributions of about $11,000 or so to pay for teachers, administrators, equipment, transportation and facilities.

Wild Cash Multiplier (NC Education Lottery)
Wild Cash Multiplier lottery tickets. (NC Education Lottery)

The North Carolina Education Lottery is part of a complex funding model for education that includes federal programs, the allocation of state tax revenue and the contributions to local governments from their taxable income.

That is what a county’s Board of Commissioners reviews and approves/rejects on the ask from the board of education.

There are also bonds to generate funds to replace and build school facilities, such as the $1.7 billion voters in Guilford County recently approved.

In North Carolina, too, that process is confused further by the “Leandro ruling” that continues to be mired in courts. That judgment found that the state was under-allocating resources to schools. There was a court order to require the state to spend $1.7 billion additionally on education. Republicans in the General Assembly don’t want to do that, and last spring the judge that ordered lawmakers to pony up was removed. The debate continues.

And that takes us back to the lottery, where the dollars you pay for your tickets – win or lose – were designed to supplement all the tax money the state already was providing for public schools.

That’s what was sold in the 1990s when this idea first emerged. Many states were embracing the lottery, if they hadn’t already, but North Carolina was slow on the uptick. But in 2005 the argument to use the lottery to supplement educational spending barely carried the day. Then-Lt. Gov. Bev Perdue cast the tie-breaking vote in the General Assembly to get the idea approved.

Every state goes through this, telling the public that a lottery provides “additional” funds for education. It’s a noble idea that seldom sees fruition. In reality, the chunk of lottery money that goes to education may not be extra at all.

The percentage

Here’s how the lottery is supposed to work in North Carolina and what it has done. Much of this is fact-gathering is based on the analysis of EdNC, a nonpartisan nonprofit that evaluates and reinforces educational trends in North Carolina. Many answers also can be found in a report produced in 2017 by the General Assembly’s oversight committee.

Lottery sales and revenue to the state have taken a steady upward trend in North Carolina since 2007, the first year that ticket sales were recorded. As of 2021, the NC Lottery Commission reports $30.5 billion in sales, with $8.3 billion provided to education.

If you are doing the math, that’s a little more than 27 cents on every dollar spent on the lottery that actually went to education. That’s not chump change, although it doesn’t feel like a match for what the marketing of the lottery promised.

In reality, it’s not far removed from the formulas the state created for handling this pool of revenue. If that feels low, it is and isn’t. Funding expectations and processes have changed.

How it began

The state’s original legislation: “The net revenues generated by the lottery shall not supplant revenues already expended or projected to be expended for those public purposes, and lottery net revenues shall supplement rather than be used as substitute funds for the total amount of money allocated for those public purposes.”

For an understanding, EdNC found that the lottery dollars have been regulated in different ways over their 17 years of existence. When the lottery was created in 2005, the law specified that 35% of revenue would go to education – 50% was for prize money, as you would expect, and the rest was for promotion, retailers’ cut, staffing and other fixed expenses – but that changed in 2007, just when the cash was starting to flow, to a “guideline.”

And EdNC reports that “during the recession, Gov. Perdue diverted $50 million in lottery proceeds to the General Fund to make up for a budget shortfall, earning criticism and highlighting the fact that North Carolina has no legislation safeguarding lottery funds for strictly educational purposes. Gov. Perdue argued it was a justified use of the lottery funds because over half the General Fund went to education.”

We will let you mull that for a bit to see how that tastes before we take this analysis even a few steps beyond.

More lottery lore

When legislators in 2005 created the lottery, the bill also specified how the educational slice would be divided: 50% of the allocated funds would be spent on class-size reduction (think more teachers and classrooms), 40% on school construction and 10% on scholarships. But in 2013 lawmakers adjusted the law to give them control of precisely how the money is spent each year, if you can imagine that.

So in 2018 57% went to non-instructional support personnel, 19% to school construction, 12% to pre-kindergarten, 6% to LEA transportation, 4% to need-based scholarships and 2% to the University of North Carolina for need-based scholarships.

In 2018 the lottery commission produced a spreadsheet to show distribution by county. For instance, Guilford County had received just less than $300 million – the third most behind Wake and Mecklenburg counties – with more than $33 million of that in 2018. Forsyth County, by comparison, had received just more than $192 million.

Total lottery distributions in Piedmont Triad counties
Through 2018
Alamance$82,653,225
Alleghany$6,506,164
Caswell$10,811,325
Davidson$87,837,911
Davie$25,484,601
Forsyth$192,105,024
Guilford$299,616,731
Montgomery$18,779,985
Randolph$78,289,725
Rockingham$49,845,604
Stokes$26,990,696
Surry$43,485,081
Wilkes$44,236,815
Yadkin$22,525,600
TRIAD TOTAL$989,168,487

There are similar spreadsheets for prior years that allow you to inspect how the revenue has been distributed in your county, but the report showed that as of 2018, the 14 counties in the Piedmont Triad had received, collectively, just less than $1 billion since the data started to be recorded.

The average is nearly $71 million per-county, ranging from Guilford County’s near $300 million down to $6.5 million in Alleghany County.