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Proposed allocation of lottery funding raises questions
By Derek Hodges
The already embattled North Carolina lottery, which has come up against lawsuits and opposition since it was passed last summer, is coming under fire from some local leaders.
Specifically the way lottery proceeds are set to be divided is being questioned across the state and here in Jackson County.
Since the General Assembly narrowly passed legislation creating the lottery, accusations have flown that state lawmakers plan to use lottery funds to supplant money already given to education and to pad the state budget.
Those suspicions center around Gov. Mike Easley’s proposal to use the largest part of the lottery proceeds for funding the state’s More at Four and smaller class-size initiatives. Both programs were instituted by Easley’s administration.
Under the current lottery proposal, an estimated $201.8 million will be earmarked for those programs, which are already funded by the state. The money currently used for those initiatives would be transferred to the general budget, where it may or may not be used for education.
While the governor contends he intended lottery money to be used to fund those programs since their inception, some local leaders are dismayed by what seems to be budgetary sleight of hand.
“I think it needs to be looked at very carefully. We were under the impression the money would be used to increase, not supplant education spending,” Jackson County Superintendent Sue Nations said.
Sen. John Snow (D-Murphy), who represents Jackson County in the N.C. Senate, said he would like to see the allocations reconsidered.
“I think we all need to work on changing some things,” Snow said. “We need to be sure this lottery is operated fairly. I want this thing to work. I want to be sure every penny of this money is spent to improve education.”
Some have also questioned scholarships slated to be funded by lottery money. Those awards, which could mean about $4,000 per recipient, will be based mainly on economic status.
Snow praised the scholarships, but said he wished they were better funded.
“Even though the scholarships are geared to helping low-income people to start with, they’ll have to maintain a certain (grade-point) average,” Snow said. “I think it’s going to be very helpful to a lot of folks, but I was hoping there would be more money put into the scholarships than into More at Four and the class-size programs.”
Another target of local lottery critics is the way school construction funds will be divided. Of the lottery’s first-year projected take of more than $1.2 billion, $161.5 million is to be directed to school construction.
Of those building funds, 65 percent, or nearly $105 million, will be divided among the state’s 115 school districts based on enrollment.
However, 35 percent of that money, about $56.5 million, will be awarded only to school districts in counties with a property tax rate higher than the state-average property-tax rate.
State officials said that formula is based on the fact that property taxes generally fund education. They perceive those counties that have a higher tax rate as doing more to help their schools.
According to an N.C. Public Schools Forum study, Jackson County has the third-lowest property-tax rate in the state at 36 cents per $100 valuation. The state average is 59 cents.
Since the county’s tax rate is considerably below the state average, local schools will see none of that additional $56.5 million for construction. Sixteen other counties in Western North Carolina, including all of Snow’s district, won’t receive the funds, either.
“That’s not all right with me,” Snow said. “I don’t think that formula’s fair.”
Snow defended the low tax rates in this area, pointing to the fact that many of the counties in this region have high poverty and unemployment rates.
“I represent four counties that get low-wealth funds for their schools because their economies aren’t very good,” Snow said. “I’m going to do everything I can to get that part of the allocations changed. I don’t know how they came up with that formula. I don’t think anybody realized how that money was going to be divided.”
In addition to Jackson County, 50 other of the state’s 100 counties have tax rates lower than the state average. Snow said he expects lawmakers from each of those counties will return to the General Assembly’s next session in May ready for a fight.
“Since there’s 51 counties that aren’t getting any of that money, I’d say we have a pretty good chance of doing something about it,” he said.
Nations said she hopes legislators will be able to reach a compromise that won’t hold money back from districts that need it.
“If the whole purpose is to help education, then certainly construction is one need that every county has,” Nations said.
A more equitable way to divide the money would be to base all construction allocations on enrollment, Nations said.
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