WRAL Investigates

NC lottery money an education lifeline, not a jackpot

Posted July 16, 2012
Updated July 21, 2012

— Since its inception, the North Carolina Education Lottery has brought in $2.45 billion for the state, including $457 million this year. However, $2.45 billion is not even a third of this year's education budget. While the lottery is having an impact, it has become more of an education lifeline than a jackpot.

The WRAL Investigates team went through six state budgets to examine pre-kindergarten through high school spending and scholarships, both from the general fund and lottery revenue.

Ben Matthews, director of school support for the North Carolina Department of Public Instruction, says there's a misconception about the lottery's impact on the classroom. It's just a fraction – between 4 and 5 percent – of the overall school budget this year, he said.

“There was never any conversation that the lottery would completely fund or totally solve the education needs in North Carolina,” Matthews said.

While the vast majority of lottery money goes toward education, WRAL News found evidence that lawmakers have replaced or supplanted lottery dollars over time to help balance the state budget. Language prohibiting supplanting was included in the Lottery Act passed in 2005. However, a budget bill that same year eliminated the language, giving the General Assembly the freedom to move dollars.

In four of the years since the lottery passed in 2005, the percentage increase for the overall state budget was more than education spending. In 2010, state education funding went down, while the overall state budget went up. Federal dollars helped fill some of the education spending holes.



$457 million$7.5 billion$20.2 billion
2011$424 million$7.5 billion$19.7 billion
2010$441 million$7.2 billion$19.3 billion
2009$368 million$7.5 billion$19 billion
2008$385 million$7.8 billion$21.2 billion
2007$350 million$7.7 billion$20.4 billion
2006$425 million$6.7 billion$18.6 billion

“It concerns me greatly, because I think public education is the baseline for society to move forward. And when we erode the foundation for public education, which public funding provides, then we're putting ourselves in a rather precarious position,” Matthews said.

Lawmakers continue to tinker with the lottery formula. When it first passed, 50 percent of sales went to prizes, 35 percent to education, 8 percent for administrative costs and 7 percent for retailer compensation.

Earlier this year, the formula changed. Now, 60 percent goes to prizes, 29 percent goes to education and 4 percent goes to administration. Retailer compensation has stayed the same.

“Once a quarter, we transfer the money we've made to the state … and that's where our role ends,” said lottery spokesman Van Denton. “Everything after that, in terms of where it goes and how it's spent, is a decision made by the legislature.”

While the percentage for education dropped, the actual money going into the pot keeps going up because lottery sales are soaring, Denton added.

“Think what it would have been like if the state had not had $450 million to support education,” he said.

This year, $230 million of that will pay for an estimated 3,900 teachers in kindergarten through third grade. The lottery will pump about $100 million into building schools, but for counties, that's replacement money. A portion of corporate income taxes used to go toward construction. When the lottery passed, the tax money went away, substituted with lottery revenue.

“This is the last piece of state funding in existence to support capital needs in North Carolina. So, yes it does help,” Matthews said.

Some money can't be supplanted. About $30 million for college scholarships this year wasn't available before the lottery. In Wake County alone, the lottery has paid for nearly 10,000 scholarships

“This is a little bit of icing on the cake to help out with these specific programs,” Matthews said.

Not all the lottery money goes to education. In last year's budget, lawmakers used $26 million to fill a Medicaid gap.


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  • btneast Jul 18, 2012

    then I want my tax money for something that benefits me.

    An educated work force does benefit you. Also, a good education system affects home and land prices. A good example is to comapre Warren County to Wake County......Warren has a on average a poorly educated work force....Wake has a highly educated work force.....look at the industry and land prices between the two.

  • Lone Voice in the Wilderness Jul 17, 2012

    "Time for vouchers"

    I don't have kids.

    I want a voucher too. I don't want my tax dollars subsidizing money to a private school. I'll support public school for the common good. But if you want to start taking pieces of the common pie to go to private school, then I want my tax money for something that benefits me.

  • Mo Blues Jul 17, 2012

    warbirdlover: I work very hard for my money. I pay lots of income taxes. "If I want to spend some money on some lottery tickets, it nobodies business but mine. I am also very good at math including calculus. Spout your rhetoric elsewhere. My kids get an excellent education in Moore County. Because I am intelligent enough to participate in there education."

    No rejoinder required......:)

  • whatelseisnew Jul 17, 2012

    "Hopefully, this will decrease the amount of "where da lottery money going" questions. Oh, wait. Given North Carolina's stance on education and the state's widespread literacy problem, I guess this article won't help much. Maybe if it had fewer words and the words were smaller, more North Carolinians could then read and comprehend it."

    You make an excellent case for getting rid of Government Controlled schools. The money should go with the Students and not to an unaccountable, inefficient and ineffective bunch of bureaucrats. Time for vouchers, State gives a portion and the counties give a portion. We not only stop building new schools and taking property off of the tax roles, we save the cost of maintenance and busing. Plus we will no longer be saddled with servicing debt. Over time we can slowly but surely close down the traditional government schools.

  • Z Man Jul 17, 2012

    So why is this money grab called an 'education lottery'? Even if all of the lottery money is going towards education then that money is supplanting other funding that pays for lawmakers pet peeves. And just how 2-faced is The Bev when she screams "it's for the children" and conveniently overlooks the fact that money is being supplanted? So we could just as easily call the lottery the 'pet projects lottery' because it really pays for the bureaucrats pet projects and NOT education. We should dismantle the lottery while we still have a shred of dignity.

  • jason19 Jul 17, 2012

    "So, if the Democrats are moving the same ammount of money from the education fund as the lottery puts in, what social programs are the education funds going to?!!! By the way, isn't this the same thing Easley (another Democrat) did with the highway trust fund?!!!"--boneymaroney13

    Huh? Democrats? Republicans control both houses of the General Assembly. Try again.

  • scottmac Jul 17, 2012

    Please do not be naive to think that the Lottery was put in place to increase the budget for Education. Once the government gets their hands on money, they spend it any where they choose. Don't get me wrong, they are not spending the lottery money on roads or something like that. They simply cut the Education budget by an amount almost equal to the money the lottery funds.

    The government can find all new ways to waste money, no matter how much they get. There are simple solutions to major problems. Stop handout programs. If someone needs food stamps, then they can work 40 hours a week cleaning litter off the ground instead of paying someone $18 an hour to do it. Stop providing welfare and food stamps to the 100,000+ Miguel Rodriguez without a documented Visa.

  • boneymaroney13 Jul 17, 2012

    So, if the Democrats are moving the same ammount of money from the education fund as the lottery puts in, what social programs are the education funds going to?!!! By the way, isn't this the same thing Easley (another Democrat) did with the highway trust fund?!!!

  • cynda-ur-way Jul 17, 2012

    How can you look at a person in line and tell if they have food stamps while buying lotto tickets? Please explain.

  • SaltyOldJarhead Jul 17, 2012

    I listened carefully when they sold the lottery to voters. They always said that the lottery money would be a supplement to the existing budget and had provisions in the bill to make sure. Then, surprise! They removed the wording from the bill and our tax dollars from the education budget.

    Welcome to bait and switch politics, as played in NC.