House Appropriations pitches idea to send new school money through lottery formula

The House Appropriations Committee is considering a different way to send almost $190 million in new state funds to local school divisions, using money from the Virginia Lottery with fewer strings attached than proposed by Gov. Terry McAuliffe.

The Appropriations plan would use money proposed by McAuliffe to hire new teachers and increase support of at-risk students to restore lottery funding for local schools that the state has used to balance its budget for the past five years.

The advantage would be more local flexibility in how school divisions spend the money without the requirement to match any state funds used to hire new teachers, said Appropriations Chairman S. Chris Jones, R-Suffolk.

“We’re not going to reduce the amount of funding, but we want to give more flexibility,” Jones said after a staff presentation on how, during the recession, the state gradually zeroed out the allocation of lottery funds to help local school divisions.

Chesapeake School Superintendent James T. Roberts told the committee that school divisions would welcome the proposed flexibility in how they spend the money included in the governor’s proposed two-year budget, as long as no school division receives less.

“I would submit to you that using any new revenue to restore funds in an area such as the lottery dollars would not only give school divisions more flexibility to fill holes created by cuts in previous years, but it would also restore confidence in the public that lottery funds are being used to increase funding to our public schools,” Roberts said.

“I would caution you, however, that any change to the governor’s proposal should guarantee each school division at least the same amount of increased funding in the original budget submitted by the governor,” he said.

The option suggested by committee staff would “re-purpose” about $139 million proposed by McAuliffe to help school divisions hire 2,500 new teachers to partly fill the hole created by deep cuts in state funding for K-12 education since 2008.

It also would send about $50 million over two years to school divisions for at-risk programs through the lottery, but a fiscal analyst for local governments warned that some poorer divisions could receive less money by using a formula that places less emphasis on the number of free lunches as a measure of poverty.

“You’re going to change who gets what by re-purposing it,” said James J. Regimbal Jr., a fiscal consultant to the Virginia Municipal League and Virginia Association of Counties, in an interview after the Appropriations Committee meeting.

Regimbal dismissed the notion that funneling the proposed new spending through the lottery fund would help localities any more than any other kind of state budget appropriation, although he said school divisions would welcome flexibility in how they can spend the money.

“Flexibility is fine — that’s what everybody wants,” he said. “But the real issue is how much money do you get.”

Increasing state funding of K-12 education is the top priority in the budget McAuliffe proposed last month because of budget cuts that Roberts estimated at up to $1.7 billion since the 2008-2009 school year.

“For the first time since I have been in this job, the losses to public education seem to have been recognized and there is a desire to meet the statement in the Virginia Constitution for the General Assembly to ‘ensure that a system of high quality education is established and continually maintained,” he said.

Roberts said the suggestion of routing the proposed new funding to hire teachers through the lottery would allow school systems such as Chesapeake’s to restore cuts it has made in replacing equipment and deferring maintenance, rather than hire new teachers that would require more in local funding than the state would provide under the governor’s plan.

The money also would begin to restore the lottery as a dedicated source of local funding that would be allocated through a complex formula intended to measure a locality’s ability to pay, Jones said.

Since the first lottery ticket was sold in 1988, the proceeds of the profitable state gaming enterprise have been used to pay for one-time capital projects, to help pay the state’s share of direct aid to education, and send money to localities to use for a combination of capital and operating expenses.

However, since voters created the State Lottery Proceeds Fund through a statewide referendum in 2000, the state has gradually used the lottery money to supplant general tax dollars to pay for its share of education costs and reduced the amount sent directly to localities. In 2011, for the first time, local school divisions received no direct lottery proceeds.

Jones said in an interview he hopes to restore the local share to 40 percent in the future and not use the money to supplant state funds.

Roberts said he likes the idea, but hesitated to endorse it outright without knowing the effect on each division’s funding. “Public schools feel very good about what’s happening in terms of increased funding,” he said. “I’d just hate to see any change cause negative consequences.”