All That Glitters . . . : Lottery’s Bright Promise Dims as Local School Districts Grapple With Revenue Drop in Face of State Budget Cuts

When the first checks from the California Lottery were sent out a year ago, local school districts saw a chance to play catch-up on unmet needs and to enhance educational programs.

The money was put toward everything from creating drug abuse programs and hiring more teachers to repairing facilities and buying classroom furniture.

Some districts boosted teacher salaries or gave bonuses to staff members. Most school boards in Southeast Los Angeles County also gave money directly to schools for individually tailored programs.

School districts get 34% of total lottery revenues, but those revenues have dropped since the first flush of excitement when the games began in October, 1985. Payments to school districts have decreased from $51 per ADA (average daily attendance, a funding formula based roughly on enrollment) to $20 per ADA in the last quarterly payment.

Although school revenue from the lottery is expected to remain at a steady level, according to Robert Taylor, a spokesman for the California Lottery, school officials say the sharp drop has jeopardized their short- and long-term programs.

The decline in lottery revenues coincides with Gov. George Deukmejian’s proposed 1987-88 budget, which includes a reduction in schools’ cost-of-living adjustment from an anticipated 2.2% to a 1.1% increase.

Because of the governor’s proposed cuts, some area educators say future lottery funds may be needed just to maintain basic programs. Depending on fluctuating lottery money, educators say, is risky business.

“Our worst fears are coming to pass: The lottery is going to supplant other funding,” said Ted D. Kimbrough, superintendent of the Compton Unified School District. “They (state legislators) should clearly fund education and not use gimmicks like the lottery. This uncertainty erodes the stability of school districts. We might be better off without the lottery.”

Lottery revenue accounted for an average of about 2% to 3% of most school district budgets the first year, according to Bruce Zentil, director of school financial services for the Los Angeles County Office of Education.

Payments to the districts in the first year, which included only three quarters due to the October start of the lottery, came to $128 per ADA for the fiscal year, which ended June 30. The projection for the 1986-87 fiscal year is $87 per ADA over four quarters.

Kimbrough and others believe that dwindling lottery funds won’t even cover the reductions proposed in the Deukmejian budget. Kimbrough said that under the proposed budget, his district will have $29 less per student than it had this year, even with lottery money. Lottery revenues, he said, will be put into the general fund.

Norman B. Eisen, superintendent of the Whittier Union High School District, said the lottery “is hurting more than helping. We have lost ground since the start of the lottery.” Eisen said he would like to see the lottery repealed.

These educators and others say the public and politicians believe that lottery revenue is greater than it is, and that schools’ financial problems have been solved by the gambling revenue.

“I’m sure no one in Sacramento will say, ‘We’re cutting funding because of the lottery.’ But first the lottery was passed, followed by cuts in other funding. The effect is the same,” said Stephen Phillips, business manager of the Montebello School District.

ABC, Bellflower, Downey, East Whittier, Little Lake, Long Beach, Montebello, Norwalk-La Mirada and Whittier Union school districts initiated ongoing projects with first-year lottery funds. With the fall in revenue, these new programs may either have to be cut or cause other programs to be dropped.

ABC waited until it had received its full first year’s income before allocating the money, then instituted a $1-million guidance counseling program and $240,000 worth of elementary school music courses.

Bellflower spent half of its first year’s funds for a one-time stipend for teachers, and has committed half of the current year’s lottery income to another lump-sum bonus, said Michael O’Bric, assistant superintendent of financial services.

Another 25% of the Bellflower district’s first-year payment of $1.2 million was put toward hiring additional staff, such as teachers for children with special behavior problems. The rest has not been allocated, O’Bric said, while the district tries to determine where cuts will be made for next year.

Salaries Increased

Downey committed half of its first year’s projected income for a 3.2% raise to “bring salaries to competitive levels,” said Supt. Edward Sussman. Downey teachers’ salaries had been in the lower 20th percentile of state school districts and it was difficult to attract teachers, he said. The salary increase will have to be paid out of general funds in the future, Sussman said, which will mean other programs may have to be cut.

The East Whittier School District drew up a priority list of new programs in six phases, and implemented each phase as the money became available, business manager Kent McClish said.

The first priority was a one-time increase in classroom supplies. The second is transportation for all kindergarten to fifth-grade students traveling one mile or more, and for all sixth- to eighth-grade students traveling two miles or more, which will require yearly funding and is being reconsidered by the school board, McClish said. The district also hired four crossing guards, which also requires continuous funding.

The school board of the Little Lake district in Santa Fe Springs voted Feb. 10 to pull back lottery funds committed to individual schools for discretionary use because of the uncertainty of the total year’s lottery revenue and the threat of cuts in state funding. Supt. John V. Pulice called the board’s decision “a distasteful action.”

“Our board has been a strong advocate of the money going directly to the kids (through discretionary funding to the schools),” Pulice said. “But if the worst possible case comes true (and the budget cuts occur), the lottery funds would help us just to survive.”

Little Lake purchased books, implemented programs for drug abuse and science and hired three teachers in music and art with its first-year lottery income.

“This is a heck of a way to run a business,” Pulice said. “You can’t do any long-range planning. Now the planning is all negative. All you can do is plan where to cut. You’re almost in Never-Never Land. You don’t know if the figures in your budget are real or not.”

Long Beach, the largest school district in the Southeast area and the fourth largest in the state, committed itself to a one-time 3 1/2% bonus for teachers, payable in three yearly installments.

Bonus No. 1 Priority

The bonus is payable “contingent on receipt of sufficient lottery funds” to cover the second and third payments, said Richard G. Van Der Laan, public affairs director. But the bonus will take precedence over any other use of lottery money.

The bonus accounted for close to 20% of the district’s revenue. Another 40% went directly to the schools and 17% went to purchase text and library books. The balance of the revenue went for purchases ranging from typewriters to driver education cars.

Van Der Laan said that with the prohibition against using lottery revenue for construction, the Long Beach district’s “greatest need isn’t addressed by the lottery.”

“Our district is growing by 1,300 to 1,500 new students per year,” he said. “A child born today will find schools on double sessions and larger class sizes” when he or she starts kindergarten in five years.

The Montebello district has hired teachers to reduce intermediate school class sizes from 33 to 31 pupils. The hirings accounted for 30% of its first-year lottery income.

Phillips, Montebello’s business manager, said the balance of the first year’s revenue, all of which has not been allocated, may have to go toward these new salaries.

“I think the lottery money will be used less and less for discretionary funding in schools, and more and more for basic expenses,” Phillips said. “We’re anticipating a very hard year.”

The Norwalk-La Mirada School District spent one-third of its first year’s funds for a 2% one-time salary bonus for staff members. The remainder was used by schools as discretionary income and for programs such as a master teacher course and elementary school counseling.

“I hope there will be sufficient funds to continue these programs,” Supt. Bruce C. Newlin said. “A counseling program wouldn’t do much good for just one year.”

The Whittier Union School District hired one counselor for each school and “restructured salaries” by taking money from other projects such as compensatory education and “social and cultural enrichment” programs. The district then funded these programs with lottery revenues.

‘Shuffling Money Around’

“When you get an additional $1 million in your budget, you can say you’re using it for whatever you want, but you’re just shuffling money around unless you’re talking about a brand new program,” said Eisen, the superintendent. “I believe that most districts are using the money to maintain mandated programs.”

Some Southeast area districts haven’t created any projects with the lottery money, including Compton, Lowell, Los Nietos, El Rancho, Paramount, South Whittier and Whittier City. Still, officials in those districts say the declining lottery revenues coupled with proposed budget cuts present problems.

For instance, the El Rancho district in Pico Rivera spent all its first year’s income on items directly affecting students, including new classroom furniture, computers and textbooks.

But Supt. Thomas Sakalis said that while the lottery afforded the district the opportunity to improve education, it “in no way has . . . resolved the educational goals of the school districts. We are still in great need.”

South Whittier Supt. Richard Graves agreed. “We’re very grateful for the additional money, but we’re also fearful. We’re still without a solution for our long-term problems. We’re afraid that lottery money will get smaller and smaller and smaller.”