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Lottery ticket sales do help California schools, but a lot less than people think

Lottery hopefuls line up to purchase Powerball tickets at Al's Market liquor store in Westminster, Calif. on Jan. 12.

Lottery hopefuls line up to purchase Powerball tickets at Al’s Market liquor store in Westminster, Calif. on Jan. 12.

(EUGENE GARCIA / EPA)
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Year after year, political consultant Gale Kaufman has gathered focus groups to talk about education funding in California.

And every time, within minutes, the registered voters seem to zero in on the lottery.

“We used to have a bet,” Kaufman said of her staffers, “about how long it would take before someone said: ‘What about the lottery? Wasn’t that supposed to raise enough money to fund the schools?’”

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Kaufman, a veteran campaign strategist for the California Teachers Assn., said few political narratives in the Golden State are as steady, or stubborn, as the assumption that the 31-year-old lottery has been a bonanza for education.

In reality, it’s little more than the budgetary equivalent of loose change.

Although the numbers fluctuate slightly, over time the California Lottery has provided slightly less than 2 cents of every dollar spent to operate K-12 schools.

In fact, two pennies of every dollar is the high-water mark. Data compiled by the independent legislative analyst’s office shows that for most of the last decade, the lottery has accounted for about 1% of school funding.

In the 2016-17 budget proposed by Gov. Jerry Brown last week, K-12 education is slated to receive $86.5 billion from all sources; the lottery’s share is about $1.1 billion.

The reason is pretty simple: In order to entice Californians to buy a ticket, most of the cash has to go toward the jackpot.

“It’s a fine line,” lottery spokesman Alex Traverso said of giving money to schools while also boosting ticket sales.

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Rules require that 50% of sales from Mega Millions, Powerball and other random-draw games go to the jackpot and 40% to K-12 education — with the remaining share covering operational costs.

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Instant-winner Scratchers games, however, accounted for almost three-quarters of the California Lottery’s $5.5 billion in sales for the most recent fiscal year. And Scratchers aren’t subject to the same rules — almost 80% of ticket sales go to prizes.

“The amount of money you have to pay in prizes is significant,” Traverso said.

The notion of the lottery coming to the rescue of California schools may have its roots in the ballot arguments made when the initiative was placed before voters in 1984.

“Lotteries in other states provide a stable and growing source of income,” wrote backers from local and state school groups. “The lottery won’t solve all of education’s financial problems. But it will be a big help!”

Not surprisingly, there was vocal opposition.

“Neither schools nor the public will get rich from this scheme,” critics — including former Atty. Gen. John Van de Kamp — said in their appeal to voters. “In successive years, just as now, increased educational funding will continue to be the responsibility of the Legislature and the governor.”

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Four years later, voters approved a set of mandatory school spending formulas that have come to dominate the annual crafting of a state budget. The lottery, in contrast, was only a small tinkering to education finance.

One reason education officials like the lottery subsidies is that they’re mostly discretionary dollars. School districts may use them practically any way they want — unlike the complex rules placed on funding from state, federal and local taxes.

Wednesday night’s Powerball drawing, if there is a winner, has good odds of being the biggest single source of next year’s payment to schools. But it also could fuel the dreams of aspiring billionaires, who continue to think they’re coming to the rescue of schoolchildren across California.

In fact, that belief may play a role in shaping the 2016 campaign — by Democrats, labor and healthcare groups — in support of a ballot measure to extend California’s soon-to-expire income tax rates on the most wealthy. A sizable portion of that money would go to schools.

“It’s a hurdle,” Kaufman said of the lingering lottery misperception. “While voters seem to not remember too many other things, for some reason they remember that.”

john.myers@latimes.com

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Twitter: @johnmyers

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