Expert Sees It as ‘Peanuts’ : Lottery Money: Will It Be a Windfall for Schools?

Visions of lottery bucks are dancing in the heads of many of California’s public school officials, while others are viewing the expected windfall with caution.

At the same time, one legislative fiscal expert insists that lottery funds earmarked for education by last November’s lottery initiative will amount to “peanuts in the scheme of things.”

Will the expected money from the state lottery bring new school buildings to Los Angeles? Will it buy state-of-the-art computers for San Diego schoolchildren? Give raises for teachers? Provide a microscope for the one-room school up in tiny Emigrant Gap?

Or is it all much ado about nothing?

Regardless, the expectation that hundreds of millions of lottery dollars will soon be flowing to public education--as specified in the initiative adopted by voters last year--has prompted infighting over who will control the funds and has inspired educators up and down the state to compile wish lists:

- Officials of the community colleges, California State University and the University of California plan to use much of the money to buy equipment such as computers.

They are less excited about the lottery funds than educators in the elementary and high school districts, because higher education’s portion of the money will be much smaller. Even so, officials of the universities are opposing efforts by Gov. George Deukmejian and some legislators to stipulate how the universities’ share of the money is to be budgeted. The educators argue that the lottery initiative gives them--not the governor or the Legislature--the authority to decide how to use the funds.

- The state Department of Education would like to see local elementary and high school districts, which will get the lion’s share of the lottery money, use the funds for “starved” programs such as teacher training--but not for teacher salaries.

Funds Called Too Unstable

Despite an outpouring of resolutions from school districts all over California urging state legislators not to put restrictions on lottery funds, the Department of Education is backing a bill to forbid school districts to use the money for recurring expenses such as salaries.

Lottery funds are too unstable to be used for ongoing costs, argues Joe Holsinger, a deputy superintendent with the state Department of Education. Local districts, he contends, are resisting legislation designed to help them.

“They don’t want any restrictions,” he said, “but they don’t realize that that leaves them at the mercy of bargaining. They will come to us at the last minute . . . for help with labor negotiations after having told us for most of the year that they don’t want any part of us. Then they get in trouble and come to us for help.”

- The California Teachers Assn. would like to see the money used to buy teaching equipment such as computers and, indirectly, for salary raises.

“I don’t want to be coy about it,” said Ned Hopkins, CTA director of communications. “If the money is used for computers, that would free up money to be used for salaries.”

- The sprawling Los Angeles Unified School District, the largest in the state with more than half a million students, would like to use its expected multimillion-dollar first year share of lottery money for construction of new classrooms to cope with inner-city overcrowding, but there are legal obstacles.

Assemblywoman Maxine Waters (D-Los Angeles) has introduced legislation to allow lottery funds to be spent for construction of schools, but the bill, if enacted, would be of doubtful constitutionality because the state lottery initiative specifically forbids such use.

Switching Funds

John Greenwood, president of the Los Angeles Board of Education, said overcrowded conditions are becoming so serious that, if Waters’ bill does not go through, district officials will consider using general education funds for construction and then replacing those funds with lottery money.

“We’re not going to break the law,” he said, “but if there’s any way to legally use the discretionary funds we get from the state and then use lottery funds for direct educational purposes, we’ll do it. . . . We’ve got to build the schools, and it’s going to come from one pocket or another.”

- The 107,000-student San Diego Unified School District and some medium-sized districts, such as those in Santa Barbara and Riverside, plan to use the funds to buy computers, replace worn-out equipment or to catch up on maintenance.

The head of the tiny Emigrant Gap School District in Placer County would be happy if she could buy a table-sized science kit with the several hundred dollars expected as her district’s share.

“It (the kit) might include a microscope, which would be very exciting for us,” said Connie Strand, the superintendent, principal and sole teacher at Emigrant Gap, where the district’s 11 children are taught in a one-room schoolhouse high in the Sierras.

But, wishful thinking about spending lottery funds is dampened somewhat by uncertainty over how much money will be provided and by concern that state legislators will tie strings to the money or that the Legislature will use the funds to replace money normally budgeted for education.

Realms of Uncertainty

No one knows just how much money public education will receive from the state lottery because no one knows how many tickets will be sold or even, with any certainty, whether the lottery will begin in the fall, as now scheduled.

Administrators of Orange County’s Garden Grove Unified School District, with 36,500 students, are taking a wait-and-see attitude toward lottery funds:

“We are going to be well into the fiscal year before any money is going to be forthcoming and . . . we don’t know how much it will be,” observed Elmer Clute, assistant superintendent for the district’s business office. “To my knowledge we haven’t discussed it (plans to use lottery money) because we don’t see it coming in time for it to do us much good this next (school) year.”

The state lottery initiative requires that at least 34% of gross ticket sales go to public schools for “education of . . . students.” It forbids use of the funds for purchase of real estate, construction, research “or any other non-instructional purpose.” The initiative stipulates that the funds are to be supplemental and are not to be used to replace state money that normally goes to education.

The initiative calls for 50% of lottery gross sales to be paid out in prizes. It also sets a ceiling of 16% for operating costs of the lottery and requires that unclaimed prizes be turned over to public education. In other words, education’s share could be more than 34% of the gross, depending on how much it costs to run the lottery and how many prizes go unclaimed. Again, no one knows what those figures will be.

Estimate Called Conservative

Gov. Deukmejian’s proposed state budget for the coming fiscal year makes what some observers view as a conservative estimate of $300 million as public education’s share of the first year’s lottery sales.

The money is to be divided based on student enrollment figures:

- 81%, or $243 million, to elementary and secondary school districts.

- 12%, or $36 million, to community college districts.

- 4.5%, or $13.5, million to the California State University system.

- 2.5%, or $7.5 million, to the University of California system.

The $300-million estimate represents less than 2% of the $20 billion to be spent on public education in California for the next fiscal year.

It amounts to $55 per year for each of the state’s 5.5 million students expected to attend kindergarten through the university level next fall.

“Today, $55 a student is a (mathematical) rounding error,” snorted Paul Holmes, consultant to the state Senate Budget and Fiscal Review Committee.

Holmes drafted a bill for Sen. Ralph C. Dills (D-Gardena) that would provide a mechanism to prevent lottery education funds from being used to replace funds normally budgeted for schools.

SB 333, which is pending in the Legislature along with a similar bill authored by Assemblywoman Teresa P. Hughes (D-Los Angeles), would require that lottery funds be allocated on top of a base amount already budgeted for education, Holmes said.

But, he cautioned that legislators could override such a safeguard during an economic crisis.

“When we get into a fiscal crunch, it’s all going to unravel,” he said. “I don’t think there is any ironclad way to make it (lottery money) supplemental.”

In New York, it did unravel to some extent. As in California, the lottery in that state, which began in 1967, was supposed to provide supplemental funds for education, according to John D. Quinn, New York lottery director.

“The very first year that there was a stiff financial crisis, the Legislature came out with a special provision that for that year only the money would be used to balance the budget rather than go to education,” Quinn recalled.

Some lottery funds were again diverted from New York public education to help with the costs of the 1980 Winter Olympics, Quinn said.

Lottery funds in New York now are used as part of the total budget for public education, rather than as special supplemental funds, he said.

But, Quinn contends, supplemental or not, lottery money is an important aid to education and helps ease the taxpayers’ burden.

“The $615 million, for example, that we gave last year didn’t materialize from thin air,” he argued.

Still, in California, Senate consultant Holmes questions the worth of all the effort spent haggling over lottery legislation.

‘Talking About Peanuts’

“We’re talking about peanuts in the scheme of things. And that’s what amuses me in all the interest in the lottery money,” he said. “If you can convey the fact that we’re all spending a lot of time over nothing, you’ll be performing a major service. I can’t believe the amount of time being spent on this.”

In the Los Angeles Unified School District with its expected enrollment next fall of 579,000 students, the first year’s share of lottery funds could be more than $30 million, based on Gov. Deukmejian’s estimate of sales.

“We could probably build the equivalent of four to five elementary schools (with the funds),” said Bill Rivera, assistant to the superintendent.

All in all, the effect of lottery funds on public education in California is likely to be modest. Unless legal restrictions are lifted or circumvented, the funds probably will not be used for anything as ambitious or dramatic as new school buildings.

But, in the long run, if the money isn’t somehow diverted by the Legislature, the funds could provide a lot of students throughout the state with some new books and better equipment. And maybe even a microscope for the children up at Emigrant Gap.