Is the Texas Lottery really funding education?

LUBBOCK, TX (KCBD) - Whenever the state and local school districts face a budget shortfall, one question always seems to come up: "Weren't the profits from the Texas Lottery supposed to fix that?"

At least, that's the way Lubbock resident Judy Hix remembers the debate in the state legislature leading up to the creation of the lottery in 1992.

"There were TV commercials, ads in the paper, signs all over town saying, 'Vote for the lottery 100% of the profits from the Texas Lottery will go to education,'" Hix said. "They said the lottery was going to give the money to education. Why are we not seeing that?" Hix continued.

KCBD NewsChannel 11 launched an investigation into why all these numbers aren't adding up to more and more money for education.

Several current and former lawmakers say it's because that was never the case.

"Advocates said 100% would go to education when in reality it did not," 83rd District Representative Charles Perry explained.

"Truthfully, it was not allocated to education. It just made it another source of revenue for the general fund," former 83rd District Representative Delwin Jones said.

Between 1992 and 1997 that's the only place the lottery money went. Over $4 billion deposited into the General Revenue Fund which can be used for any expense of state government.

In fiscal year 2010, the lottery reported $3.74 billion in ticket sales. And here's where that money went:

• $2.3 billion goes to paying prizes
• $187 million in commissions to lottery venues
• $9 million in retailer bonuses
• $185.3 million for administrative expenses
• $7.2 million to the Texas Veterans Commission
• $86 million in unclaimed prizes goes back the state's General Fund.
• And just more than $1 billion to the state's Foundation School Fund.

It wasn't until after 1997 that a part of the lottery proceeds was specifically allocated to the Foundation School Fund.

"They didn't say it will go to education, they said it will be enough. That was the deception," Jones explained.

"They started making a report so people could say there is some money going to education. Nothing changed but public disclosure," Perry said.

A pie chart on the Lottery Commissions web site shows where the money goes:

• 72% of the lottery profits goes to paying prizes, administration and retailer commissions,
• 27% of the lottery profits, which last year was 1 billion, goes to education,
• and whatever's left, last year it was 76 million, goes  into the General Revenue Fund.

So that means education should be getting a billion more dollars right? Jones says the idea that lottery money adds to education funding is a myth.

"In effect, it just reduced the amount of general revenue funds that went to education so the net benefits to public education was zero," Jones said.

He says the best way to explain what's happening to lottery education money is to think of it like this:

"If your mother said your allowance from the general revenue fund would be $30 per week and she says she wants you to mow the lawn at the Lottery's house for $18 per week. But at the end of every week you still only walk away with $30 because your mother is only putting in $12 instead of the full $30."

"Its not an increase for education; it's just an offset," Jones explained.

For two weeks we tried to trace the lottery money and see where it's all gone over the years, but we discovered that once it's dumped into the general revenue fund its virtually untraceable.

"Can you trace the lottery dollar all the way through to the public education dollar? No. It's put into a big pool," Perry said.

So we called the Texas Lottery Commission to see what they thought about that.

"I've heard people talk about (how) it just replaces what would have come out of the general revenue fund, but you know what were responsible for here at the Texas Lottery is to generate revenue to support the state of Texas," Texas Lottery Media Relations Director Bobby Hieth said.

When we asked him where he heard the idea that the profits are not an increase for education, he responded,"I probably shouldn't have even said I heard it. I don't think I've ever been asked that question directly in the eight years I've been here."

"The whole thing was deceptive advertising," Delwin Jones said, "and never being honest up front about where the money would actually go."

"They lied to us and that's basically what it is: an out and out lie," Judy Hix exclaimed.

When we explained to Hix that $1 billion was never truly added to the education budget, she was disappointed.

"They need to look at every kid walking down the street and go yeah I took money out of your pocket; I robbed you," Hix said.

"I think this was one of the early beginnings of the public losing confidence in what government legislative bodies say they're doing versus what they're actually doing," Jones continued.

So is there a solution?

Representative Perry recommends if you want something to change, push your legislators to make sure lottery money will truly be additional educational funding.

"Have legislators force it to make all net proceeds go to education, and that's the only thing that money can be spent on. But that's probably not going to happen either. We have a long road to go to get there," Perry said.

Judy Hix wishes she could go back to the beginning of that road twenty years ago. "I would vote against it. And if they put it to the vote now, I have no doubt it would be gone."

But with 3.5 billion in ticket sales, the lottery isn't going anywhere. The commercials say there are "lots of ways to win" this lucrative game, but it seems the big winners are nowhere near a classroom.

Do you want to see where the money is going?

LOTTERY SALES AND REVENUE

WHERE THE MONEY GOES? (PIE CHART)

SEE WHERE THE LEGISLATION IS ALLOCATING MONEY

Want to voice your opinion,  you can email local lawmakers below:

EMAIL SENATOR DUNCAN

EMAIL REPRESENTATIVE CHARLES PERRY