Lottery Chief Seeks to Divert Some School Funds

California Lottery Director Sharon Sharp said Monday she wants to withhold a portion of the contributions now going to schools so she can bolster game prizes in a quest to boost ticket sales and eventually increase the flow of funds to education.

“There’s no way the lottery can survive without bringing sales up,” Sharp said. “It is that bad. . . . The California Lottery, if it were a corporation, would be in Chapter 11 (bankruptcy) right now,” she said.

But Sharp said she was not proposing any reduction in the basic 34% of lottery revenues that goes to California schools. When she did so earlier, she said, “I stepped into it. I’ve pulled back. I will never, ever mention again getting into the 34%.”

Sharp told members of the Assembly Governmental Organization Committee she is proposing that about $7 million in lottery interest earnings, which under current rules would go to schools this year, be used instead to increase scratch-off ticket prizes by next spring. That would amount to a cut in school funds of more than $1 per student.

The director said she hopes eventually to use another $25 million in unclaimed prize money that would go to schools for scratch-off ticket prizes as well.

Representatives of education groups have said they do not oppose changes in the share formula as long as schools continue getting their 34% of lottery sales.

Sharp said her plan is based on the proven formula of investing money to make money. “California players are tired of not winning,” she said.

Any redistribution of lottery proceeds is subject to approval by the state Lottery Commission.

The recently appointed director said that as prizes increase, Californians will gamble more, boosting lottery sales and providing gains for schools that would more than offset the $1 per student decrease.

The 6-year-old lottery’s sales may be less than $1.5 billion in 1991-92, if the current pace continues, down from a high of $2.6 billion in 1988-89, state officials said. It would be the worst year since its first full year of operation in 1986-87, when the lottery logged $1.39 million in sales.

Education’s share, guaranteed by the 1984 lottery-authorizing ballot initiative, would drop to about $570 million from last year’s $804 million. That means support would drop to $88 per student from last year’s $128 per student.