Think those Illinois Lottery tickets help schoolkids? Think again
Lawmakers sold the idea of a lottery with the promise the money would go toward education. But in reality, students never see the money.
In Illinois, popular lottery scratch-off tickets should come with the feel-good side benefit of helping public school students, right? Wrong: Illinois’ pension crisis guarantees lottery money never makes it to classrooms.
When lawmakers were debating the Illinois Lottery in 1973, some of the public opposition was overcome by lawmakers promising “the state share [of lottery revenues] would be used entirely for public schools,” according to The Associated Press at the time. That promise was soon broken when the lottery started in 1974 and profits were deposited into the state’s general revenue fund, which pays for far more than just schools.
But in 1985, former Gov. Jim Thompson signed legislation ensuring all lottery proceeds were deposited directly into the Common School Fund, the portion of the state budget that funds education. As a result, lawmakers today can claim most lottery revenues are technically “funding education.” The lottery itself pushes that narrative: “Twenty-five cents of every dollar spent on the lottery goes to fund public education, infrastructure projects, and other special causes.”
A closer look shows that is a disingenuous claim.
As far back as 1991, the Southern Illinoisan reported that saying lottery proceeds all go to the Common School Fund is “both accurate and meaningless.” More recently, WBEZ referred to the use of lottery proceeds by the state as a “shell game.” The main reason is lottery profits do not typically represent a net increase in state spending on education. Instead, lottery money simply frees up revenue that would have gone to education and allows lawmakers to spend it on other things.
Lottery money never really makes it to the classroom. Instead, those revenues are more than eaten up by annual contributions to teachers’ pensions.
Pension contributions to the Teachers’ Retirement System are paid from the Common School Fund. For the current budget year, net lottery proceeds after payouts and expenses are projected to be $745 million. Meanwhile, the state’s payment to TRS this year is just under $5 billion.
The money is going directly to pensions; students do not benefit from it. This school year, 36% of spending on education is going toward pensions. Spending on teacher pensions has risen 200% while spending on students in the classroom has risen just 20% since 2000.
Lawmakers sealed the deal on this broken promise in 2009 when they capped the amount of lottery money that would be deposited into the Common School Fund. All proceeds above 2009 funding levels are now diverted to capital projects.
Rising pension costs draw lottery and other funding away from classrooms as well as drive up property taxes, but there is a solution. Lawmakers can agree to amend the Illinois Constitution to protect earned pension benefits while allowing for changes to future, unearned benefits.
Pension spending since 2000 has grown 501% as core services have been cut by the state. Illinois’ state and local governments already spend the most in the nation on pensions as a percentage of their revenues – about double the national average, data from the National Association of State Retirement Administrators shows. It is not a matter of Illinois taxpayers failing to pay enough toward pensions. It is a matter of where state leaders place their priorities, and priorities are defined by where they spend money.
On Nov. 3, 2020, voters will be asked to amend the Illinois Constitution to eliminate the current flat tax guarantee and give lawmakers greater power to divide up Illinoisans and tax them at different rates. Gov. J.B. Pritzker is pushing a progressive income tax hike as a fix for state finances, but the $3.4 billion he projects from the tax is enough for only about four months of pension payments.
Illinois politicians have a history of broken promises to taxpayers, including that the lottery funds education. Overtaxed Illinoisans are aware of that history, which explains why nearly half of likely voters in a recent survey viewed the progressive tax as nothing but a “blank check” for more taxes and higher spending.
Pritzker projects $3.4 billion from the progressive tax yet has made spending promises that total $10 billion. Keeping Pritzker’s promises would require a tax increase of $3,500 on the typical Illinois family.
So, what are the odds Pritzker and state lawmakers will keep this promise not to use the progressive tax to go after middle-class taxpayers? About the same as winning the lottery.