Where does the lottery money go?

A question I am frequently asked is: “Where does the lottery money go? I thought it was supposed to go to schools.”

Many people may be surprised to know that after the lottery was formed in 1982, the Legislature directed its revenue to be deposited in the state’s general fund. That’s the fund that pays for the day-to-day operations of the state.

The lottery legislation was approved during a time of recession and when the state faced economic hardships, much like Washington is facing today. Since there was a great need for funding in many areas, the Legislature was reluctant to direct lottery revenue solely to education. Instead, the money received after payouts, administration and commissions paid to retailers was directed to the general fund. Since public schools take the largest share of this budget, lottery money by default helped to support education in our state.

Throughout the 1990s, numerous measures were introduced in the Legislature to dedicate the state’s share of lottery revenue to public schools, but none passed.

Legislation providing for funding of the Seattle Mariners’ stadium in 1995, and the Seahawks’ stadium in 1997, contained a special sports-themed lottery game. Revenue from those scratch tickets is still used to assist in paying off the bonds.

The first successful move toward dedicating lottery funds for education came on Nov. 7, 2000 when voters approved Initiative 728. This measure redirected part of the lottery revenue to the Student Achievement Fund, which was created by the initiative to reduce class sizes. A small amount stayed with the general fund, but the largest portion of lottery revenue was redirected to the Education Construction Fund, which is used to construct K-12 and higher education facilities.

During the 2007-09 biennium, about $200 million in lottery revenue was transferred to the Education Construction Fund for modernization or replacement of schools. For the 2009-11 biennium, $178 million of projected lottery revenue was scheduled to go to the School Construction Fund. Unfortunately, because of a projected $9 billion state budget shortfall, the Legislature this year transferred about $194 million from the Education Construction Fund into the general fund to help close the budget gap. It was a one-time transfer approved through an operating budget measure, House Bill 1244, which I voted against.

Another portion of lottery revenue goes toward economic development and the Problem Gambling Account, which helps people break gambling addictions. The Washington Lottery Commission has created a Web page detailing “Where the Money Goes” at www.walottery.com.

Why is there a perception that lottery money would be dedicated exclusively to education? Perhaps it may be that in the 1970s, several bills were proposed to create a lottery, including legislation that would have dedicated proceeds to public schools. All of those measures died.

Nevertheless, the point may be moot. Total expenditures for public schools in fiscal year 2007-08 exceeded $12 billion. Lottery proceeds make up less than one percent of current spending on education. Our legislative budget analysts say that if used exclusively for education, lottery proceeds would run schools in Washington for less than two days.

That may be the biggest eye opener for those who ask, “Where does the lottery money go?”

EDITOR’S NOTE: State Rep. Dan Kristiansen, R-Snohomish, represents the 39th Legislative District, and also serves as chairman of the Washington House Republican Caucus. He can be contacted at (360) 786-7967 or from his Web site at: houserepublicans.wa.gov/Kristiansen.

State Representative Dan Kristiansen, 39th Legislative District
426A Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
(360) 786-7967 | Toll-free: (800) 562-6000