Lottery Comes up Short for Schools : Board’s Vote for Reserve Fund Seen as Needed to Protect Pupils, Programs

There were a lot of questioning faces in the audience last week at an important budget hearing of the San Diego Unified School District.

Why did the school board need to set aside $2.5 million for a so-called “lottery reserve” in a budget already inadequate to cover educational programs? Moreover, whatever happened to all the lottery proceeds promised the educational system and why are schools complaining about a lack of money?

The answer from school officials both in San Diego County and statewide is that the lottery is anything but a panacea for school funding problems, and that the “schools win too!” advertising theme of the lottery commission has created a false impression among too many Californians that schools are now out of the woods financially.

The situation with the lottery is such that Kay Davis, president of the unified district school board, said in an interview that she would not support the lottery initiative if given the chance to do so again.

Davis ‘Disappointed

“It’s been extremely disappointing to me because I voted for the lottery (in November, 1984),” Davis said. “The public has imagined greatly inflated numbers coming our way, forgetting that 50% of the lottery dollars go out in prizes to entice others to keep on playing, and that the 36% or so that can come to us fluctuates, and even in the best of times it has been less than 3% of our budget.

“I also think the lottery has led the public astray in believing that the megabucks are there to support education and I can understand their frustration when we say we still do not have enough money.

“It has confused the public and possibly has even undermined some of the support we had in the past in lobbying Sacramento (legislators) for more money.”

In San Diego County, initial lottery proceeds for the 43 school districts matched the hoopla over the fast start by the statewide gambling system. The districts received a cumulative $33.9 million between September, 1985, when the lottery began, and June, 1986, the end of the first fiscal year. That worked out to about $104 per student, with the money to be used to add special programs to the basic educational curriculum.

But for the past fiscal year, from July, 1986, to June of this year, the county received only about $29 million. And with about 10,000 additional students in districts countywide compared to the previous year, the per-student payoff dropped to about $86, according to figures from the San Diego County Office of Education. Total spending on education in the county was $1.1 billion during the 1986-87 fiscal year.

Estimates Appear Overstated

School officials are finding, however, that despite the drop in lottery revenues, the state lottery commission continues to estimate revenues for the new fiscal year at higher per-pupil amounts than local districts believe realistic.

“They continue estimating that we will receive at about the same level,” said Henry Hurley, who oversees budget preparation for the San Diego Unified district, the state’s second largest with almost 116,000 students.

But because receipts have gone steadily downward, Hurley and schools Superintendent Thomas Payzant felt obligated to set aside reserves in their budget in case actual lottery receipts, which come quarterly, fall short of the estimates. Since lottery funds must now be obligated ahead of their being received in order to keep regular programs going at acceptable levels, the district needs a reserve to cover the situation where the receipts come up short.

Hurley said that even when lottery sales were increasing, they were not increasing as fast as the student population statewide, which meant that per-pupil amounts kept going down each quarter. And when actual lottery sales decrease from the previous quarter, school districts wind up receiving even less than estimated.

“We tell districts to be very careful and very prudent in how they budget for lottery receipts,” said Owen Sweeney, head of business services for the county schools office, which advises smaller districts concerning administrative and educational services.

“But some districts must spend (the money based on estimates) before they actually get it,” Sweeney said.

Pupil Rise Unmatched

Sweeney said that districts at first spent the lottery funds on book purchases and other one-time expenditures but that they have had to use them recently to keep ongoing programs, including salaries, afloat because of the small increases in state general funding approved by Gov. George Deukmejian. School officials statewide have said the general fund increases do not match the growth in student population.

“I guess that I’m bothered that the lottery receipts, even though such a small part of our budget ($10 million out of almost $440 million), are now projected as part of our general revenues even though they were supposed to be supplemental (to general revenues),” San Diego city schools board member Susan Davis said.

“I would rather see something else than a lottery, like good continued stable funding for schools at the state level. I realize that at the time (the lottery started) there was not such a choice, but the lottery has made it seem that somehow the schools are now being taken care of.”

The city district’s legislative analyst said that several legislators have introduced bills to prohibit the lottery commission from pushing the “schools win too!” theme as aggressively as it has.