Where Is Lottery Money Going?

HOUSTON - During the current education budget crisis in Houston and across Texas, the No. 1 question you've been asking KPRC Local 2 is: Where's the lottery money?

We all know proceeds from the Texas Lottery are supposed to help pay for public education, but Local 2 Investigates found not all lottery money is going there. 

Schools in Houston and across Texas are facing shutdowns, teacher layoffs, bigger class sizes and budget cuts. However, parents and grandparents at the E.O. Smith Education Center in Houston's Fifth Ward said they don't see anything extra in their school.

"Considering the state the schools are in now, they must have really been in bad shape if we've received all this lottery money," said Harold Cann, a grandparent of an elementary student.

Cann may be on to something. Local 2 Investigates crunched the numbers and our report card shows lottery proceeds paid out $1 billion to public education in fiscal year 2010. The problem: That's just 5 percent of the state's part of the public school budget and just 1/60th of the amount needed to pay for all of Texas public education.

"I think the public is confused, and rightly so," State Sen. Wendy Davis said.

Davis said many people mistakenly think the lottery funds a majority of public education, but it's not even close. She said that when the lottery began, the proceeds added $1 billion to the state's school fund, but then, Davis said, the state took out $1 billion of other state funding for schools.

"It hasn't added new dollars to public education," Davis said. "I think that's what voters expected when they voted for that lottery."

State Rep. Garnet Coleman from Houston said education costs and student population continue to rise year after year, but he said the lottery money has roughly stayed the same for almost 20 years.

"It's not the savior and it never could be," Coleman said. "It was the savior for the shortfall at that time in 1991, 1992."

But Local 2 Investigates found millions of dollars associated with the Texas Lottery that never go to public education. It's the unclaimed prize money. In fiscal year 2010, it added up to almost $87 million. Local 2 Investigates found $10 million of that goes to the trauma center at the University of Texas Medical Branch in Galveston, but the rest goes back to the state's general fund.

Davis said she wants that money to go to schools. She's filed a bill in Austin to change what she calls the "diversion" of lottery money. Since the beginning of the lottery, the total in unclaimed prize money is $626 million.

"That money is going into the general fund, and it's being spent on other purposes" said Davis. "It's not going into the foundation school program to fund education, as I believe it should."

So, as the school budget crisis continues at E.O. Smith and every other Texas school, the lottery money is there -- just not all of it.

The lottery bill is still pending in the Texas Senate. However, lawmakers said that even if every single penny of unclaimed prize money was pumped into schools, it still would not make a dent in the overall budget problem. They said the lottery is just not the power player in education as it used to be.  

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