Governor Seizes "Education" Lottery Funds

Special Report - February 27, 2009
In light of this year’s budget difficulties, Governor Bev Perdue has authorized the transfer of $150 million in education funds, most of which were generated by the state lottery, into the State General Fund potentially to be used to pay for non-education items. The transfer is part of a $300 million “precautionary step” intended “to manage the current fiscal year budget shortfall,” according to a press release from the Governor’s office.

All $50 million in the Education Lottery Reserve Fund will be transferred, along with $100 million of the $316 million currently on hand in the Public School Building Capital Fund. The remaining $150 million of the transfer is comprised of $50 million in the Public School Textbook Fund and $100 million from the Clean Water Management Trust Fund.

The North Carolina General Assembly instituted the lottery after a contentious vote in 2005, and in that legislation lawmakers specifically required that lottery proceeds be used to fund education. Governor Perdue contends that the North Carolina Constitution gives the governor primary authority over the state budget, and as a result, the redirection of these funds is within her prerogative.

“The lottery was sold to the people of North Carolina as a means to provide funding for education, but as we have seen happen in many other states, lottery revenues are often used as a grab bag to fund programs and services other than those for which they were designed by law,” says John Rustin, director of government relations for the North Carolina Family Policy Council. “Governor Easley started this practice when he supplanted funding for More at Four and class size reduction. Then the General Assembly allowed the State Lottery Commission to reduce the percentage of lottery revenues that are directed to education. Now the Governor is seizing ‘education’ lottery dollars to plug a hole in the budget.”

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