WebExtra: Lottery saleappears DOA

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Bold plan or political gambit?

Gov. Rod Blagojevich unleashed a storm of controversy when he unveiled his scheme to sell the state’s lottery for $10 billion to raise more money for schools.

But the proposal seems to have alienated lawmakers as well as education activists, who are already dismissing it and looking toward the November midterm elections with the goal of reviving a push for school funding reform. (The veto session, set to begin a week after the elections, could include action on a school construction bill and Chicago school closings.)

“I wouldn’t want to see us selling a valuable asset the state owns,” says state Sen. Mike Jacobs (D-East Moline). The plan “is fraught with controversy, and I don’t think it will see the light of day.”

Besides the controversy, there is little historical precedent for the lottery sale. Only one state, Louisiana, has had its lottery system operated by a private company: In the 1800’s, the Louisiana Lottery Company operated nationwide for 22 years before being shut down due to corruption charges.

Blagojevich’s proposal has been tainted by suggestions that lottery company GTECH, whose Springfield lobbyist once worked for the governor, might be interested in the deal.

GTECH Corporation, a multinational company based in Rhode Island, provides online gaming technology, operates lotteries in the Caribbean and provides other gaming devices like slot machines and scratch-off tickets. The company already has a five-year contract with Illinois to provide Instant Lottery ticket machines.

In general, critics see the governor’s plan as nothing more than a political stunt to placate state Sen. James Meeks, who threatened Blagojevich with a third-party gubernatorial run. (Meeks—referring to the education initiatives that the governor tied to the lottery sale—said he told Blagojevich before the plan was announced, “You look me in straight in the eye and promise me we are going to do these things. He looked me straight in the eye and said, ‘I can’t do them if I’m not re-elected.’ “)

A number of the initiatives, such as merit pay for teachers, have failed to gain traction with lawmakers in the past.

No solution to inequity

The $10 billion price tag is only about $1 billion more than the cost of running the state’s schools for a single year; the 2007 education budget is $8.7 billion.

House Speaker Michael Madigan and some Republicans have questioned how investment banking company Goldman Sachs reached its estimate of the lottery’s worth. The governor’s administration so far has declined to release the Goldman Sachs report.

Critics also point out that the governor’s plan does not include any provision for replacing the $10 billion once it runs out ($4 billion would go directly into schools for the first four years, with $6 billion invested in an annuity expected to generate $650 million a year through 2025). There is also no provision for replacing the lost revenue from lottery growth, which has averaged $27 million annually for each of the past five years, according to an analysis by the Center for Tax and Budget Accountability.

“Not only is the funding source not sustainable, it actually results in schools having less money over the long term,” says Ralph Martire, executive director of the Center.

Overall, activists note, the proposal does nothing to solve the inequities in Illinois school funding.

In the first year, $250 million would be spent to raise the foundation level, which may not even cover increased costs due to inflation, says Bindu Batchu, campaign manager for A+ Illinois, an umbrella organization for groups working on funding reform.

“It leaves schools treading water,” Batchu says. This year, the state raised per-pupil funding by $170 to $5,334. The state is still more than $1,000 shy of the $6,405 per-pupil funding level recommended by the Education Funding Advisory Board.

The board estimated an additional $2.2 billion is needed to reach its recommended goal.

All eyes on November

With the lottery proposal seemingly on a road to nowhere and the November elections on the horizon, education activists are working once again toward legislative reform of school funding.

To draw attention to the issue, several rallies are being planned for this fall, including a Sept. 12 rally organized by the Rainbow/PUSH Coalition.

So far, neither Blagojevich nor Topinka have talked much about education, with the governor focusing on pushing his record of increasing per-pupil spending. Blagojevich also pushed through a $45 million universal preschool program, but failed to win enough GOP votes to pass a school construction bonding program.

Compromise on school closings?

On Nov. 14, legislators will return to Springfield for the veto session and, with the election out of the way, may revive a school construction bill.

There is also a slight chance that House Bill 2012, a bill that originally would have given voters a say in Chicago school closings, may come up for a vote in the Senate. Senate lawmakers essentially gutted the bill. Lawmakers intend to work out a compromise on closings with CPS before rewriting the bill.

The initial bill, crafted in response to widespread public outcry over closings, would have required CPS to follow these steps before shutting down schools:

* Announce school closings at least six months before the School Board vote.

* Hold three public hearings, in separate locations. If most of the testimony at the hearings is opposed to the closing, a federal mediator would be brought in to resolve the matter.

* If mediation does not resolve the dispute within 60 days, the closing would be submitted to voters in the school’s attendance area during the next regular election.

* If the closure is voted down, the board will be prohibited from shutting down the school during the current or following school year.