Lottery sales slipping; education to lose $136 million
North County Times 3/8/07
The California State Lottery recently released projections that show a $400 million decrease in its sales this year. The figures mean sales could top $3.2 billion, with public education projected to receive $1.13 billion of that total. That's about $136 million less than last year.
Lottery officials attribute the sales downturn to an unusually low number of large jackpots in the first half of the fiscal year, which runs from July 1 to June 30. Huge prizes tend to drive sales, but the size of jackpots, officials said, is largely out of their hands.
"Lotto game sales are jackpot-driven; meaning higher jackpots lead to higher sales," the Lottery Commission said in a news release last week. "Jackpot levels are out of the Lottery's control and have been significantly below average this year."
A budget analyst for the state Department of Education said lottery revenues represent only a small part of the state's overall education budget.
While every dollar helps in tight budget years, Brett McFadden, a budget analyst for the Association of California School Administrators in Sacramento, also said the California State Lottery contributes relatively little money to public education.
"For us, (Lottery money) is like the sprinkles on the cake," McFadden said. "It's not even the icing on the cake."
Schools use much of the California State Lottery money to buy instructional material, such as books and software, and other expenses that can be reduced without cutting programs or personnel, McFadden said. Any drop in revenue can also squeeze school budgets, he said.
"Don't get me wrong -- in a year when we are seeing revenues drop ... this just makes things more challenging," McFadden said.
Gov. Arnold Schwarzenegger's proposed 2007-08 budget released in January recommended spending $56.8 billion in kindergarten through community college education, an increase of about 3.3 percent over the current year. But that could change when the governor issues his revised budget in May.
One of the adjustments the governor will have to take into consideration is the lower projected revenues from the various lotteries, said H.D. Palmer, a spokesman for the state Department of Finance.
"Any change in revenues, we would have to reflect that in the May revise," Palmer said. "The one thing that is certain about those numbers is that they will change."
Lottery officials said the lower sales projections this year came after a record contribution last year to education of $1.28 billion. The California Lottery Act that voters approved in 1984 to establish the games, requires that 34 percent of sales must be spent on education.
The rest of the money is spent on prizes, promotions and administrative expenses.
In response to the shortfall, California State Lottery officials said in the news release that they are researching ways to boost sales. They also have reduced administrative spending and cut back reserves, officials said.