New York State Exposed: Lottery windfall -- where does the money go?

Posted at: 01/27/2014 7:26 AM
Updated at: 01/27/2014 5:48 PM
By: Rebecca Leclair

Your kids, their schools and your community, how are your tax dollars being spent to make them top-notch? New York residents are paying some of highest taxes in the country. The money trail includes billions of dollars from the New York State Lottery. You are not forced to play the lottery, like you’re forced to pay taxes.

For almost 50 years, lawmakers have been using lottery profits to pay for K-12 schools, almost $50 billion in total. Some people can’t believe that because it seems like schools never have enough money. News10NBC has received several emails from viewers wondering if lottery money goes to schools, why do school taxes go up?

Three billion dollars is collected in the lottery. That’s just from the last fiscal year alone, but the way the state crunches the numbers, local schools really haven’t seen a windfall for years.

Every time Kevin O’Connor from Penfield spends a dollar at the Bay Road Grocery Store in Webster, he’s giving New York schools about 30 cents. That’s what the lottery makes on a one dollar ticket. The majority, 60 cents, is paid out to players who win. Four cents pays overhead costs and six cents on the dollar ends up with store owners like Mike Palencar for selling lottery tickets.

Mike Palencar, owner of the Bay Road Grocery Store, said, “Do people come in and say, ‘Ah, I'm helping the schools? ‘ Never, they're helping themselves and everybody plays the lottery because they want to win!”

Elizabeth Goad, player, said, “I don't play very much but when I do play, I don't think about education.”

Winning is what the commercials focus on. Basically every year, state legislators win because lottery profits serve as a jackpot they can use as state aid for schools. Lottery money covers about 15 percent. The other 85 percent comes from your state taxes.

Senator Joe Robach said, “That does help, that portion of the lottery, but it's a small portion so the way I look at it is yes, it goes to education if we didn't have that, we would have to make up for that portion of it somewhere else.”

In 2012-2013, Monroe County Schools shared more than $161 million in lottery funds. The Rochester City School District got the single largest chuck. They received $64 million. The remaining $97 million went to suburban districts. Rush-Henrietta got $5 million, Webster received $9.5 million, Greece received $16 million and Churchville-Chili received $6 million. 

News10NBC went to Churchville Chili’s Deputy Superintendent Frank Nardone. He says people mistakenly think lottery money is bonus money. It’s not. He says it has simply replaced regular state aid already coming to schools. 

Nardone said, “For every dollar, we lost one dollar of regular aid. Only on paper do we receive lottery aid. It's just state aid. They could call it what they want, it’s still regular aid.”

So why do so many people question the lottery and school taxes? The state legislature uses money from the general fund to pay state aid to schools. Then there’s the lottery aid, which can only be used for education. The state replaces school aid with that so they don’t have to raise state taxes, but since state aid never pays the whole bill, local school districts end up raising taxes to make the money add up. Plus, when the recession hit in 2009, the state began taking back aid from schools and has done that every year since. In Churchville-Chili, the district has actually lost $20 million over the past four years, even though lottery sales have soared.

Nardone said, “You know we just deal with it. The budget cuts are what really hurt.”

They deal with it by using reserve funds, which will only last a few more years.

Nardone said, “I'll leave that up to the politicians in Albany to decide that. We're just looking for our state aid, whatever they want to call it, just give us the cash so we can fund our operation.”

Less than a week ago, the governor put out his proposed state budget. He wants to boost state aid by $800 million or 3.8 percent. 

For information on the School aid distribution 2012-2013, click here

For the year end review 2012-2013 NYS Gaming, click here.

For 2014-2015 school aid information by district, click here

For the GAP Elimination Explanation from NYSSBA, click here