LOCKE: What about the Lottery money?

I read the Pioneer daily, though I rarely pick up a physical copy of the paper.

I tend to read a lot online, in fact, I read more from the computer screen than printed pages. Online media provides more than just the author’s content — it often also includes an opportunity for the reader to share thoughts and opinions on the article.

As an educator, I am often interested in subject matter and responses related to public education. Almost any public policy piece elicits strong opinions and emotions, often aligned with partisan talking points and perceptions. In particular, public school funding generates highly-opinionated responses.

Over the past couple of years, there have been many studies released suggesting that Michigan needs to rethink how schools are funded. Each school funding study is accompanied by corresponding media coverage, including online articles.

I have reviewed the research and have read many of the connected articles. In virtually every discussion thread around the topic, the Michigan Lottery is inserted into the conversation, most often in a snarky manner.

It appears that the majority of individuals linking the Michigan Lottery to school funding suggest something dishonest is going on. In some variation, questions of “What about all that Lottery money?” appear.

After reading and hearing these comments for quite some time, it is clear, there is a lot of confusion regarding Michigan’s funding of public schools.

According to the 2018 Annual Financial Report of the Michigan Lottery, total lottery revenue was almost $3.6 billion. $2.2 billion of the dollars (61%) were distributed via cash and prizes to lottery winners.

After all, I guess individuals paying for and playing the Lottery should have some hope for a win.

Nearly $950 million (27%) went to the School Aid Fund (SAF). Much of the balance, approximately 9% was distributed to Lottery retailers for incentives and commissions. A small portion, roughly 3%, was used by the state for costs connected to operating the Michigan Lottery.

Recent headlines celebrated that 2019 saw even larger numbers, in fact, record-breaking numbers, including just over $1 billion for the School Aid Fund.

So, with all of this money going to public education, how come there are still funding shortfalls?

The School Aid Fund is the second-largest state budget, at approximately $13.5 billion (not including federal monies and programs). Multiple revenue sources contribute to the SAF, including the Michigan Lottery.

The 2018 Lottery generated nearly a billion dollars ($950 million) for the SAF, which, according to my phone’s calculator, is right around 7% of the SAF’s total revenue.

State sales tax, individual income tax and the state education tax (property taxes) collections are the biggest funders of the SAF. Smaller contributions come from tobacco and liquor sales, a use tax (online sales and services tax), casinos, and the real estate transfer tax.

For illustration purposes, consider $100 of SAF revenue. Just over $44 is generated from state sales tax, around $22 from individual income taxes and nearly $16 from state income tax. In this example, the Michigan Lottery contributes about $7. The other categorical taxes make up the balance of the $100.

As was stated earlier, Michigan’s approach to funding public education has been the focus of a number of studies. Each of these studies has concluded that Michigan’s funding model is outdated and is leaving many of it’s most vulnerable students at risk.

Identifying what is needed to adequately fund Michigan’s public schools is a topic for another column, but one study from the School Finance Research Collaborative puts that number at an additional $2.5 billion to the SAF.

While the Michigan Lottery’s contribution of $1 billion to the SAF is not insignificant, it cannot serve as a practical stand-alone remedy for public school funding challenges.

In fact, the Michigan Lottery is an expected contributor of revenue to the SAF, and not a bonus or bailout. It was never meant to be as such.

To achieve the level of funding that is needed to ensure that each student is provided the supports and services needed, the state requires new revenue sources.

If new revenue is out of the questions, I suppose we can ask the good people playing the Michigan Lottery buy a lot more scratch-off tickets.