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Voters consider education tax and review lottery promises

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Lori Zehnder's 3rd grade classroom at Linwood Elementary School with Donors Choose supplies in forground, 8-27-15. - MARK HANCOCK
  • Mark Hancock
  • Lori Zehnder's 3rd grade classroom at Linwood Elementary School with Donors Choose supplies in forground, 8-27-15.

More than a decade ago, Oklahoma voters approved two measures to cash in on state lottery revenue and send relief to cash-starved public schools. Voters were persuaded to vote yes on the lottery as lawmakers touted it as a chance “to do something big for education.”

The 2004 lottery proposal, authored by state Sen. Brad Henry, promised as much as $300 million annually would be deposited into the state’s Education Lottery Trust Fund. The funds were to be distributed to common education, higher education and CareerTech. The school consolidation and assistance fund and the teachers’ retirement system also benefited.

Now, in 2016, Oklahoma voters are once again faced with a measure to direct funding to education, which has suffered in recent years after repeated budget cuts at the state level. State Question 779 asks November voters to decide whether to raise the state’s sales and use tax by 1 percent to support investments in public education, CareerTech and higher education. The tax increase calls for pre-kindergarten through 12th-grade teacher pay raises of $5,000.

It comes before Oklahoma voters on the Nov. 8 ballot. In the months leading up to the vote, a common question of debate is, Where have Oklahoma’s lottery funds been during the recent education funding crisis?

Oklahoma education has received $755.5 million in aid since its inception, according to Oklahoma Lottery data.

At Oklahoma Policy Institute, a nonprofit think tank, staff have closely watched the state’s Education Lottery Trust Fund, which averages about $60 to $70 million a year. Gene Perry, the institute’s policy director, said the fund has pumped funding into Oklahoma’s pre-kindergarten through high school classrooms; however, the dollars are far less than those cut from other revenue sources.

“The lottery has been helping some, but many of the other revenue sources for schools have been cut significantly,” Perry said. “The lottery is not enough for what has been cut.”

For this current fiscal year, $2.4 billion was allocated to the Oklahoma State Department of Education. Lottery funds comprise $23.3 million of the common education funding.

The national recession hit just four years after state voters approved the lottery. The economy’s downward spiral also negatively affected public education, as the state’s investment has wavered between $2.33 billion and $2.572 billion over the past eight years.

According to the Center on Budget and Policy Priorities, the Sooner State leads the nation for the largest cuts to general school funding since the start of the recession. After inflation, the state’s per-pupil funding is down by 24.2 percent since 2008.

Oklahoma schools are supported mostly through state and local funding, with some federal dollars. The Center on Budget and Policy Priorities, a well-known research institute issuing reports on government policies, also found state and local funding combined dropped 10.1 percent since 2008 when taking inflation into account.

Lottery payoff

Oklahomans haven’t forgotten the claims of lawmakers. As governor, Henry stated lottery sales would generate as much as $300 million in new education funding.

However, political analysts and educational leaders come to similar conclusions on low lottery revenues. Henry’s original lottery plan included video gaming, which was removed to win legislative support. Notably, Oklahoma voters also approved Oklahoma’s State-Tribal Gaming Act, paving the way for American Indian tribes to operate electronic amusement games and electronic instant bingo games, which have boomed over the last 12 years.

“Many people would rather gamble than scratch a lottery ticket,” said Shawn Hime, Oklahoma State School Boards Association (OSSBA) executive director.

When lottery dollars were first distributed to the state Department of Education, Hime served as assistant state superintendent. By law, 35 cents of every dollar spent on a lottery ticket goes to education. Of those 35 cents, 45 percent goes to common education, specifically distributed through the state funding formula.

Lottery funds benefit school districts, but not as a baseline-funding stream, Hime said. At the headquarters of Yes for State Question 779, campaign volunteers often field questions about the lottery and its mission to fund public education.

“I don’t think the lottery was ever intended to be the fix for education,” said Amber England, Stand for Children Oklahoma executive director and supporter of State Question 779. “I am afraid it was sold that way, but it never generated enough revenue. I think the intention was great, in terms of creating a stable revenue source of education.”

Tribal gaming also is a funding source for Oklahoma’s schools. Fees collected by the state are deposited into Oklahoma’s general revenue fund and the Education Reform Revolving Fund, also known as the 1017 fund. In a study commissioned by the Oklahoma Indian Gaming Association, tribal gaming reached $1 billion in contributions to education during the fall of 2015.

Protective language

Like the lottery, supporters of the 1 percent tax increase for public education included supplant language in the ballot initiative. If voters approve the sales tax increase, the funds are in addition to already-allocated education funding.

“For lack of a better word, it’s a lockbox,” England said when describing the ballot measure. “It is protecting the funding and making sure it goes exactly where voters intended it to.”

In recent years, Oklahoma’s education funding has waved in and out of cuts. However, the Board of Equalization hasn’t supplanted those cuts with lottery dollars, Perry said.

“How it works is the Legislature hasn’t targeted education more than another state government agency,” Perry said. “It doesn’t count as supplanting when education is actually being relatively protected, only getting a 3 to 4 percent cut as other agencies take much higher cuts.”

Real fixes

The lottery is often a topic of debate at the state Capitol. Some argue increasing cash prize amounts would generate more sales and generate more revenue for education. Others propose legislation to review the state’s lottery system.

While the lottery has not provided the financial boom it promised, it has generated a funding source for education. To truly fix Oklahoma’s education funding crisis, all revenue streams and tax policies must be examined, Perry said.

“The lottery and State Question 779 are backed by real revenue, which is vital to any proposal,” Perry said. “There are other [proposals] that say move money around to fix schools, but the money is simply not there. Unless you have a new revenue source behind it, we are not going to be able to improve education.”

Improving Oklahoma’s education system and correcting funding gaps will take statewide conversations among educators, lawmakers, parents, business leaders and civic leaders, Hime said. OSSBA supports State Question 779 but hopes to see continual efforts to boost education. The sales tax proposal is a step, but not the magic bullet.

“What do we want our schools to look like? What do we want high school graduates to look like? How do we get there? What are the resources necessary to offer that first-class education that we want?” Hime asked. “It has to include a high-quality teacher in the classroom and today’s technology. That’s what we have been missing in the past. … Instead of talking about the money, let’s talk about the resources we need.” 

Print headline: Money matters, Lottery payoff is questioned as voters begin to consider a state question regarding a tax increase for education.

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