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Lottery Commission expresses concern with new law directing proceeds

Members of the N.C. Education Lottery Commission this week voiced concerns about recent legislative changes to the ways lottery proceeds are spent, the Insider's Pat Gannon reports.

While commissioners acknowledged at their quarterly meeting Tuesday that decisions about where the money goes are the General Assembly's to make, they questioned the changes, including the elimination of the original "50-40-10" formula for distribution of lottery dollars. The former law provided that 50 percent of proceeds would support class size reduction and pre-kindergarten programs, 40 percent would pay for school construction and 10 percent would fund college and university scholarships. When lawmakers eliminated the formula, they cited the fact that it had rarely been followed anyway. The new language states simply that net lottery revenues should be used for "education-related purposes."

During a lengthy discussion on Tuesday, members of the eight-member commission that oversees lottery operations questioned whether lawmakers were steering away from the original intent of the lottery law, which was approved in part because of how the revenue would be spent for education. Commissioners also asked whether lottery proceeds are supplementing or supplanting general fund education dollars, a longstanding question that hasn't been answered. "The lottery was sold to the world and sold to the state on the basis that this would create additional funding for North Carolina schools and improve North Carolina schools," said Commissioner David Kirby of Raleigh.

Commissioner Jody Tyson of Snow Hill said he believed the "greatest injustice" has been reductions in money for school construction. The new budget includes $100 million a year for school construction, about 21 percent of about $480 million in projected lottery revenues for education. Tyson said counties banked on the lottery dollars when they took out loans for school construction and now have to make up the difference with local funding. "As that formula has been reduced, it has affected every county in this state," he said. Tyson said he believes the commission should lobby for a new formula, which would require the state to put at least 40 percent of lottery proceeds toward school construction.

In addition to the school construction funding, the current budget provides, from lottery funds, about $221 million for classroom teachers, $76 million for pre-kindergarten programs, $30 million for scholarships, $11 million for UNC need-based financial aid, $33 million for a UNC need-based financial aid reserve fund and $12 million for digital learning. Commissioner Alice Underhill, a former House member from New Bern, said she believed it was important that the "integrity of the original intent of the law be preserved" and that no money gets diverted for other purposes. "Beware of legislators who find a pot of money," she said.


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