North Carolina’s lottery is relatively new. The state government instituted a lottery in 2005, after a fierce debate between pro and anti lottery groups. Groups protesting the implementation of a state lottery objected on religious grounds and on claims that lotteries unfairly tax poor communities. Pro lottery groups, however, won the day by showing how lottery income would be a boost to North Carolina’s stretched to the max public school system. Since its creation, the North Carolina state lottery has raised millions of dollars for education. Every dollar of proceeds from the lottery goes into the state education system, and every cent of every dollar is allocated in a certain way in advance.
To understand the breakdown of North Carolina lottery proceeds, you first have to understand the breakdown of each dollar that comes into the lottery pot. For each dollar paid into the lottery, 50% goes into the lottery jackpot pool. Of the remaining 50%, 35% goes into education, 8% goes towards the operating cost of the lottery, and 7% goes to lottery retailers.
That means that the proceeds for the North Carolina educations system from the state lottery are 35% of every dollar. That 35% is then broken down again to fund different pre-assigned components of the educational system. The Educational Lottery Reserve Fund automatically gets 5% of the proceeds. This fund has been put into place so there is money set aside if lottery proceeds ever fail to meet the costs of the educational programs they are funding. The total of the money in the fund, however, cannot be allowed to exceed $50 million dollars. If it does, the state legislature must re-assign a portion of the funds to other educational programs.
After that 5% is allocated, the remainder of the money is distributed across several educational programs. Initiatives that are designed to reduce class sizes in younger grades to 18 students per class, and even less than that for “at risk” four year old pre-kindergarten students get 50% of the remaining money. Forty percent of the money goes into school remodeling and new school construction. Of that 40%, 65% is distributed evenly among the school districts, and 35% is based on county tax rates. Counties with taxes above the state average get more money from the lottery for their school. The remaining 10% of each dollar of state lottery proceeds goes into the state scholarship fund. This fund is used to give scholarships to North Carolina residents who qualify for federal Pell Grants. The scholarship can be used at any North Carolina public or private university or community college.
The North Carolina Education Lottery is thought to generate approximately $1 billion dollars a year in income, with a total of 35% of that money going directly into the North Carolina public school system. To many North Carolinians, this makes good sense. In the past, North Carolinians traveled to South Carolina and Virginia to buy tickets for their state lotteries, in effect, funding those states’ education systems at the expense of North Carolina’s. Now, those lottery players can spend their money in state and fund in state education. North Carolina has seen a population boom in the past decade, and the state lacks the infrastructure to support all of the new kids entering the school systems. Since the lottery has been implemented, ground has been broken on dozens of new schools across the state, and older schools have been renovated to accommodate the incoming students. While many people still oppose the lottery, the school systems across the state have benefited from the additional income.
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