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N.C. Education Lottery sparks debate over how dollars will be spent

By Michael Beadle

The North Carolina Education Lottery might be seen by state officials as a boon for public education, but it’s already becoming a frustration for some school officials in Western North Carolina.

That’s because not all of the state lottery proceeds designated for education will go to every school or every school district. Under current provisions of the lottery law, which narrowly passed last summer, part of the money is doled out based on the county’s tax rate. If a county has a tax rate lower than the statewide average — which is roughly 66 cents per $100 — it gets a smaller share of the lottery money, namely the portion set aside for school construction.

Counties with higher than average property tax rates get a larger share of school construction money. The upshot: in a region with historically low property tax rates, every county in WNC is getting a smaller share of that school construction fund pool.

Anne Garrett, superintendent of Haywood County Schools, says she’s not sure why the state doesn’t fund all counties based on the formula of average daily membership, or per student capita. That way, school districts get money based on how many students they have.

Generally, education dollars are distributed based on a per student basis, Garrett said, so why change the formula? As it is now, school systems in Western North Carolina could miss out on hundreds of thousands of dollars when it comes to school construction projects.

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And with a growing list of needs in Haywood County Schools — everything from replacing old windows and roofs to building new schools to adding new classrooms that would alleviate overcrowding — every dollar counts.

“We’ve got all kinds of needs,” Garrett said. “Any money would be most appreciated.”

Thanks to a $25 million school construction bond referendum that passed overwhelmingly last March, Haywood County Schools is building a new Bethel Elementary School, new auxiliary gyms at Pisgah and Tuscola high schools, and ball fields for the east end of the county where hurricane floods wiped out school property in 2004.

With new roofing and air conditioning units at Waynesville Middle School and extra classrooms at North Canton, Riverbend and Clyde elementary schools, construction money will be easily spent, Garrett explained. While the bulk of the school bond is going to pay for the new Bethel Elementary School, bond money won’t cover an additional $300,000 needed for desks and other furniture at the new school, Garrett said.

That’s why she and other school officials in the region are already writing letters to state legislators to help change the law so that all school systems get fairly funded.

Swain County commissioners passed a resolution calling for equal funding based on student capita, not whether a county’s tax rate meets a certain threshold.


Too soon to fix

Phil Haire, D-Sylva, who represents Haywood, Jackson, Macon and Swain counties in the North Carolina General Assembly, said it’s too early to start tweaking the lottery law since the revenue hasn’t even been collected yet.

“I think it’s hard to fix something before we know what the problem is,” Haire said. “Let’s wait and see.”

While Haire said he isn’t opposed to fixing the formula for how schools get the lottery money, he said he wouldn’t recommend any changes to the lottery until the long session of the state legislature in late January 2007.

The way the funding formula was written in the lottery, it was supposed to help low-wealth counties with high tax rates, according to Haire. Low-wealth counties tend to be more rural in population and therefore do not tend to have as high a tax base as more urban counties. However, under the current funding formula for the state lottery, school systems in more urban counties like Mecklenburg, Durham, Forsyth and Orange counties are getting the extra funds for school construction based on their higher tax rates.

Certainly that is cause for a closer look, Haire agreed.

“Anytime you start something up, you’re going to have perhaps a few little glitches,” Haire said. “That formula — it’s not set in concrete.”

Robert White, superintendent of Swain County Schools, is not yet sure how much lottery money may end up in Swain County — especially with the current formula for funding school construction. There are certainly needs for more classrooms, according to White. Among the priorities for Swain County Schools are a new elementary school and about 10 more rooms at the high school to alleviate overcrowding.

“The lottery is going to help us,” White said. “It may take some time to accrue some money.”

The state lottery money for school construction not only goes to pay for the building of new schools. It can also be used to pay off the debt for projects that started as far back as Jan. 1, 2003. School districts don’t have to use matching funds to get the lottery money.

While state officials have touted the lottery as an “education lottery,” only a third of the lottery revenues will actually go to education. Half of that money goes to pay for teachers and staff to reduce class sizes in early elementary grades and to help pre-kindergarten programs. The remainder goes to school construction and college scholarships based on the student’s financial need.


Slicing the pie

School officials gladly welcome the influx of money to their school districts, but some are worried that the lottery money will eventually take the place of current state spending for education.

“I think it’ll be a wash out,” said Gary Shields, principal at Franklin High School.

However, Rep. Haire said he wants to make it clear that the lottery money is “icing on the cake” — extra funding that is not supposed to replace money that’s already going to education.

“It specifically states in the bill that it will not supplant [current state education spending],” Haire said.

According to Shields, it’s still too early to see how the lottery money may be spent or what impact it will have on school construction or scholarships at the high school level. Shields is also concerned by the state’s lottery formula for doling out school construction money. Counties with low tax rates have what’s being termed as “an ability to pay,” meaning that if a tax rate is low in a particular county, the state somehow deems that the county has more of an untapped potential for collecting tax dollars and therefore has “an ability to pay.”

“You get penalized if you don’t have high taxes,” Shields said.

While school officials wonder how the lottery pie will be served, there are some who may never get a chance to eat.

“We’re getting cut out of the deal altogether,” said Carter Petty, co-director of Mountain Discovery School in Bryson City.

Mountain Discovery, a kindergarten through eighth-grade charter school, is one of about 100 charter schools that don’t get any school construction funds. Charter schools only get a share of lottery money designated for lowering elementary class sizes. Charter schools represent about 30,000 students — an estimated 2 percent of the state’s student population. The League of Charter Schools in North Carolina is working on changing the wording in the lottery law to allow charter schools to receive their share of the funding.

Meanwhile Connie Leonard, the Parent/Teacher Organization president at Franklin High School, voices a concern that many lottery opponents still have.

“I can only speak for myself, not as the president of the Franklin High PTO,” Leonard stated in an email response to questions. “My personal stand on the lottery is from a Christian point of view. I believe that gambling destroys many people and families. It may seem like a wonderful way to fund credible causes, and although my opinion may seem simplistic in this complicated world, I don’t believe gambling is being a good steward of the money that God entrusts us with.”

Interestingly enough, built into the lottery law is a provision that sets aside $1 million for the state’s Department of Health and Human Services each year to pay for gambling addiction treatment and education, which may come as a cruel irony for some lottery opponents.

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