Reality check: NC education lottery’s impact on Charlotte schools construction is negligible

Reality check: NC education lottery’s impact on Charlotte schools construction is negligible

Photo: Alexandria Sands/Axios

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Local school bond supporters are tired of saying it. When it comes to building new schools, your scratch-off and Powerball tickets aren’t cutting it.

  • The NC Education Lottery is helpful, to a degree. It contributed nearly $11 million to pay off Mecklenburg County’s school construction debt last year — money the county wouldn’t have otherwise had.
  • But that’s 0.004% of the $2.5 billion CMS leaders say is needed for prioritized construction projects over the next decade.

Why it matters: The lottery was enacted in 2005 after years of debate. It was pitched as a way to supplement school funds. To this day it’s touted for its benefits to public education, distributing millions each year to the state’s 1o0 counties and charter schools.

  • But the system has created a misconception among voters who are hesitant to support county bonds.
  • There’s a $2.5 billion referendum on the election ballot this week with a real chance of failing. Many are hesitant to support property tax increases, especially after the recent property revaluation. If the bond referendum fails, it could set the county behind on school construction needs.

“I do think it is misleading to the community when the NC Education Lottery system advertises it funds schools,” board of education member Jennifer De La Jara says. “It doesn’t even fund one-fourth of one school when elementary schools these days cost $50M.”

Zoom out: North Carolina public schools reported a need for around $13 billion in construction over the next five years in 2021, according to a facility needs survey. That figure is likely much higher now due to inflation.

“To put it into perspective, the entire state budget for North Carolina this year was $30 billion, but we’re spending that on other stuff,” Matthew Ellinwood of the NC Justice Center said during a panel on the state’s school infrastructure crisis this week. “It’s very difficult to generate this amount of money with the current tax structures.”

By the numbers: Since its inception, the lottery has contributed $9.7 billion total to education, including $929 million last year.

  • Nearly half of last year’s total went to school construction, according to the lottery.
  • Money also is divvied up for pre-K, transportation, scholarships and staff.
  • In the end, only $10.9 million of Mecklenburg County’s $61.8 million allocation went to school construction.

What’s happening: All counties get an equal $500,000 disbursement from one lottery-fueled construction fund. From another bucket that’s based on enrollment, Mecklenburg County receives the second-largest allocation, behind Wake.

Yes, but: There’s another growing funding source that Mecklenburg County doesn’t qualify for. In 2017, the General Assembly created the Needs-Based Public School Capital Fund to help rural, lower-wealth counties. Last year $395 million of the lottery’s construction money went to 28 eligible counties.

What they’re saying: The North Carolina Association of County Commissioners says this leaves out counties like Mecklenburg that are trying to keep up with growth. The association is advocating for revisions to the program to allow more counties to access to the pot.

  • In its legislative agenda, CMS has also requested that lawmakers eliminate the economic tier system it uses to allocate funds. Because of its economic standing, Mecklenburg falls in Tier 3. The Needs-Based Public School Capital Fund only serves Tier 1 and 2 counties.
  • Charles Jeter, CMS’ executive director of government affairs, tells Axios the lottery isn’t the only funding they’ve missed out on because of the tier system.

Separately, CMS has also requested the legislature issue a statewide school construction bond. The state would get cheaper rates than the county, Jeter says.

  • Statewide school bonds were once a regular occurrence, but the NC Education Lottery became a replacement, according to NCACC.  The last was issued in 1996.

By the numbers: In addition to the $10.9 million for construction, last year, Mecklenburg County also received:

  • $7 million to cover attendance for 720 preschoolers.
  • $3.8 million for 2,750 scholarships.
  • $1.2 million toward 5,746 grants to help students attend a state university.
  • $36 million for non-instructional staff at public and charter schools, including office assistants, custodians and substitute teachers.
  • $2.6 million for school transportation costs.
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