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Drop-Off In Lottery Sales Will Hurt States' School Budgets

NOEL KING, HOST:

All right. Here's a story about unexpected consequences. People are buying fewer lottery tickets because of the pandemic, which is bad for convenience stores and gas stations. But it also means hundreds of millions fewer dollars for school funding. Peter Medlin of member station WNIJ in DeKalb, Ill., explains what's going on.

PETER MEDLIN, BYLINE: Last year, the Illinois Lottery set records sales. Proceeds from Powerball tickets to scratch-offs contributed $731 million to public education. That translates to more than 10% of the state's funding for school districts. But the receipts don't look nearly as good this year. With more strict reopening guidelines, sales have plummeted. And revenue has nosedived nearly $90 million during the pandemic. Victor Matheson teaches economics at the College of the Holy Cross in Massachusetts, where he researches sports and the lottery.

VICTOR MATHESON: So we do know, roughly, nationwide, money from lotteries plus other gambling constitutes about 2% of all state budgets in the country as a whole. So that's not huge. On the other hand, it's as much as states generate from, for example, state tobacco taxes, state alcohol taxes.

MEDLIN: Forty-five states and the District of Columbia run lotteries. More than half of state lotteries funnel a portion of their revenue into education. Fourteen completely devote their lottery money to public schools and scholarships. In fact, in North Carolina they even call it the North Carolina Education Lottery. Officials tout that more than 10,000 students received free pre-K last year thanks to the lotto.

Schools in that state are now projected to receive about $30 million less than what they expected from the lottery. The pandemic lottery dip in places like North Carolina and Illinois wouldn't normally be a huge loss for public education. But Matheson says since it's happening at the same time as the recession, it's a small but irreplaceable amount.

MATHESON: The drying up of lottery funding is just symbolic of drying up of all sorts of other types of revenue sources that state and local governments and schools all depend on.

MEDLIN: Jeff Craig is superintendent of the West Aurora School District, located west of Chicago. He's feeling a bit of whiplash. He says, just before the pandemic, he was planning to add resources.

JEFF CRAIG: All those folders are now in a filing cabinet because it's not something we can talk about for years to come now.

MEDLIN: Now, Craig is trying to figure out how to pay for additional costs, things like sanitation, protective equipment and ensuring the emotional health of his students. When trying to calculate it at all, the losses add up quickly. Michelle Jahr is the chief financial officer at Rockford Public Schools.

MICHELLE JAHR: Overnight, we went down $20 million, which is very significant.

MEDLIN: With less money from the lottery and the predicted drop-off of property and corporate taxes, school systems may have to start making tough decisions about cuts very soon.

JAHR: It depends on how long this recession will last. So you know, hopefully this is a one-year dip. But it's not looking like it. I mean, I would expect we're going to have a hard couple of years, two or three years, based on what's happening.

MEDLIN: Many school officials are hoping for federal stimulus money to help them bridge the funding gaps. But bridging those gaps will rely, in part, on people being able to stop by the gas station to buy a lottery ticket. For NPR News, I'm Peter Medlin.

(SOUNDBITE OF SABZI'S "RENTON HIGHLANDS") Transcript provided by NPR, Copyright NPR.