Plastered on highway billboards and gas station windows and doors, the image is familiar to many Virginians: a white cartoon hand with crossed fingers laid over a green background.
It’s the logo of the Virginia Lottery.
With the lottery hosting programs like “Thank a Teacher” and sporting slogans like “We’re game” and “We’re game for education,” it’s easy to see that lottery proceeds somehow benefit Virginia schools.
But how does it work?
Here’s a breakdown, a brief history of the Virginia Lottery and a look into the process of how the money moves from a 7-Eleven counter to affordable school lunches and special needs programs.
In fiscal year 2018 — from July 1, 2017, to June 30, 2018 — the Virginia Lottery reported ticket sales of $2.1 billion. Sixty-one percent of this went back into the prize pool, 6 percent paid commissions to the establishments selling the tickets and 5 percent went to operational expenses.
The remaining 28 percent — more than $600 million in profits, according to the Virginia Lottery website — will go to educational funding in state public schools. Unclaimed prizes also go to the Literary Fund, which grants low-interest loans for school construction and supports teacher retirement funds, among other things, according to the Virginia Department of Education’s website.
Of the $600 million, Williamsburg-James City County schools received almost $3 million and York County schools received $3.5 million in fiscal year 2018, according to school communication officials.
Generating more than $6 million for local education in a single year isn’t a bad track record, but that hasn’t always been the case. For many years, public education only sometimes benefited from lottery proceeds.
The early days of the lottery
Since its creation in 1988, the Virginia Lottery was believed by many to be a benefactor of public education.
According to a write-up by the National Gambling Impact Study Commission, these beliefs were founded on “advertising” and “public statements by state and lottery officials.” But for nearly a decade, the entirety of lottery proceeds went into the state’s general fund, where it was used largely for other projects.
When the money did benefit education, it was used to fill gaps where the state budget failed to meet promised funding. Lottery profits were not given as extra revenue for public schools.
“In 1997, Virginia Lottery officials publicly apologized for implying that lottery funds were added ‘on top of’ the legislature’s annual appropriations for education,” the commission’s write-up stated.
Three years later, the Lottery Proceeds Fund became part of the Virginia Constitution, requiring all lottery profits to be used exclusively to benefit public education.
So what’s changed?
Now, more than 20 years after the public apology, all lottery profits are given to public schools in Virginia.
Some funding is required to go to specific programs, which is determined by a General Assembly vote, and other lottery funds are flexible and can be used at the school divisions’ discretion.
The process to divvy up the funds, such as fiscal year 2018’s $600 million, between the state’s 133 school divisions is fairly rigorous.
First, Virginia Lottery profits from each fiscal year are reported to the Virginia Department of Education, which analyzes pre-existing educational programs for a range of categories, such as special education, school supplies and affordable student breakfast.
Eileen Cox, Williamsburg-James City County Public Schools’ senior communications director, said state education department specifically identifies programs that did not have their budgets filled by state funding.
Next, the education department draws up a suggested financial plan based on their findings and the General Assembly votes on it. Although the department plays a large part in the process, the General Assembly makes the final call on the amount school districts receive and what they can use it for, Cox said.
Matching funds
Certain lottery-funded programs require school districts to fund a share of the costs themselves, said Katherine Goff, public relations officer for the York County School Division.
This year, for example, York County schools were allocated $56,355 for the Standards of Learning Algebra Readiness program, and the school division’s share of the cost was $36,106.
Overall, Cox said, Williamsburg-James City County schools paid $1.5 million toward programs requiring a match. Goff said York County’s share was $317,717.
Flexible funding
Today, a significant portion of lottery profits are allocated to schools as additional revenue, called “supplemental per pupil allocation.”
The supplemental per pupil allocation funds are not allocated towards a specific program, and they aren’t pulling any slack for the state budget.
Supplemental per pupil allocation funds are more flexible because they don’t require a match from the school district, Goff said.
The state education department allows school divisions to spend supplemental per pupil allocation on both recurring and nonrecurring expenses in a manner that best supports the needs of the school divisions, Goff said. There is no required local match.
The use of supplemental per pupil allocation is left largely up to the discretion of the district. These funds make all the difference because they are extra revenue, not just filling a hole left by the state budget neglecting to fill a predetermined need.
Here are the final numbers for supplemental per pupil allocation:
In fiscal year 2018 Williamsburg-James City County schools received nearly $3 million, about 0.5 percent of Virginia Lottery’s profits. About $1.3 million was designated as supplemental per pupil allocation.
Of York County’s allocated $3.5 million, nearly $2.1 million was designated as supplemental per pupil allocation.
Lotteries have been used to help fund public projects since as early as 1612, funding projects such as the construction of Harvard University and Yale University, the National Gambling Impact Study Commission said.
