“It will mean nothing for us,” St. Pierre said of the inflated Powerball sales, which topped $550 million Wednesday. “It doesn’t make any difference to schools whether the lottery does great or does poorly.”
Fairborn City Schools Treasurer Eric Beavers agreed, and said his district could use some extra revenue because it is facing a $2.7 million projected deficit by next school year. Voters rejected the district’s 7.4-mill emergency levy on Nov. 6.
But he’s not anticipating any extra money from this latest record lottery jackpot, which is estimated to generate nearly $8 million for Ohio K-12 education.
“It hasn’t generated any extra money for us in the past,” Beavers said.
Ohio voters in 1987 approved a constitutional amendment to permanently earmark lottery profits for education. Lawmakers created the Lottery Profits Education Fund (LPEF) in 1988 to allow a clear separation of lottery revenue from the state’s General Revenue Fund.
The LPEF is the repository for Ohio schools’ lottery money, which is 100 percent of the state’s lottery profits.
The state determines how much money it wants to allocate for education annually and draws some of that money from the LPEF.
According to Rob Nichols, a spokesman for Gov. John Kasich, money from the LPEF makes up 10 percent of state funding for K-12 education.
State funding does not increase in line with lottery sales. Instead, lottery money not usedin a particular year is saved in the LPEF and applied toward the next year of state funding, to cover any potential losses incurred from lottery sales that year.
Nichols referred to the LPEF as a “dedicated lockbox for lottery profits.”
“A school is allocated ‘X’ funds (in overall state funding, and that does not change),” Nichols said. “Lottery profits go into this special profits education fund. That way, if the next year profits are way below expectations, then the schools would be made whole by that fund. It’s a walled-off lottery fund.”
The state legislature also can approve using money from the LPEF for education initiatives, but Nichols said it doesn’t happen often. Recently, the legislature allocated $13 million for the state-mandated third-grade reading guarantee and $250 million for the Ohio School Facilities Commission from the LPEF.
Last year, the lottery transferred a record $771 million to that fund. It was the highest year-end transfer to education in the history of the Ohio Lottery Commission, and was a result of record lottery sales of $2.73 billion in fiscal year 2012.
Lottery profits have grown by $136 million, up from $635.2 million since fiscal year 2002, according to Ohio Lottery spokeswoman Danielle Frizzi-Babb.
Ohio joined the multistate Mega Millions game in 2002 and Powerball in 2010. The lottery benefited from the world record $656 million Mega Millions jackpot in March. In that one, Ohio had $25 million in sales and $9.6 million went to the LPEF.
This Powerball jackpot is expected to generate less than that.
“We’re estimating close to $8 million for the LPEF from this drawing,” Frizzi-Babb said, based on sales from Sunday through Wednesday.
“More people play when the jackpots are big, which means we are getting more people buying tickets. That means more sales, which leads to a higher profit transfer” to the education fund, Frizzi-Babb said.
Many Ohioans assume financially strained school districts, many which have experienced multimillion-dollar state funding cuts in the last two years, would benefit directly from those excess profits.
That was the case in the first year of its implementation; the lottery money generated extra set-aside money for districts, much like the state is planning to do with money generated from casinos.
“It was a separate little pot of money; almost like a little pot of gold at the end of the rainbow, in the day,” St. Pierre said. “But, within a year or two, the state got into financial trouble — sound familiar? So then that money went from being a separate set-aside pot of money to being dumped into the whole (education) pot.”
This is what will happen with the profits from this week’s Powerball sales, as well. Powerball is played across 42 states, plus Washington, D.C., and the Virgin Islands.
Of each lottery dollar spent in Ohio, 62 percent goes toward the prizes, 28 percent to education, 6 percent to retailers and 4 percent to lottery operations, according to lottery officials.
Springfield City Schools Treasurer Chris Mohr said the General Assembly determines how much money, regardless of the lottery, that schools receive.
“The state has already made overtures that schools already have enough money to operate and that they are going to be grappling with a potential $3.1 billion Medicaid problem,” Mohr said. “It is unlikely any added revenue in the state coffers will go to large increases for public schools.”
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