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Lottery isn't always a boon to schools

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"The fact that you vote for a lottery that's going to add $100 million to education doesn't mean that education will get $100 million," says John Augenblick, president of Augenblick, Paliach & Associates, a consulting firm in Denver that specializes in state education-policy finances.

"The government may take back $75 million in property taxes. There's probably a net gain, but it's not large."

Yet in Ohio, pouring lottery proceeds into education actually caused state spending on schools to shrink, according to a study by graduate student Thomas Garnett published by the Buckeye Institute in Dayton, Ohio.

The study demonstrated that, after Ohio's 1974 promise to devote all lottery winnings to public schools, state spending on education dropped from 42 percent of its total budget in 1973 to 29 percent in 1994.

More a question of funneling than of funds

Of course, not all lotteries are equal. Many policymakers praise Georgia's state lottery, which funnels all its proceeds into specific projects related to education.

Instead of pouring money into a general fund, the law in Georgia restricts lottery profits to financing college scholarships, universal prekindergarten, and technology grants for schools.

There is also a danger in such a system, however. Because some of these projects are funded solely through the lottery, if lottery proceeds ever dry up, important programs could find themselves high and dry.

But overall, if all state lotteries were designed like the Georgia model, says Father McGowan, education might receive a genuine benefit.

More states are leaning that way. Texas has already adopted a similar plan, while Tennessee and South Carolina have both approved lotteries based on the Georgia model. [Editor's note: The original version of this story incorrectly included North Carolina in a list of states with approved lotteries.]

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