Michigan Lottery's Contributions to State School Aid Fund Misrepresented in Associated Press Article

LANSING, May 24, 2001 – An article released by the Associated Press on May 23, 2001 reported that seven percent of the Michigan Lottery’s revenue is transferred to the state School Aid Fund. This number was a gross misrepresentation of the amount of Lottery revenue that is transferred to the state School Aid Fund each year.


Each year the Lottery transfers 35 percent – not seven percent – of its revenue to the state School Aid Fund to support kindergarten through 12th grade public education in the state of Michigan. In fiscal year 2000 (October 1, 1999 to September 30, 2000) the Michigan Lottery transferred $618,514,000 to the state School Aid Fund. On average, that would be approximately $11.89 million going into the state School Aid Fund every week, or $1.69 million per day!


“In a recent study by International Gaming & Wagering Business, the Michigan Lottery was ranked as one of the most efficient in the nation with regard to revenue returned to the state as a percentage of sales,” Lottery Commissioner Don Gilmer said. “Every time a Michigan Lottery player purchases a ticket, an average of 35 to 38 cents of that dollar is contributed to the state School Aid Fund. The Lottery is a proud supporter of public education in Michigan. The Lottery consistently maintains a good balance of prize payouts with sales, and shows the ability to keep costs low in order to raise the maximum amount of funds to support Michigan’s schoolchildren.”


The following is a breakdown of how the $1.749 billion in Lottery revenue for fiscal year 2000 was distributed:

Prizes to Lottery players 53%
Net revenue to State School Aid Fund 35%
Commissions to retailers 7 %
Game-related expenses 3%
Lottery advertising 1%
Administrative costs 1%

The Michigan Legislature passed a law in 1981 that requires all Lottery net revenues to be transferred directly into the state School Aid Fund. The state School Aid Fund is a restricted, constitutionally-dedicated government fund, which means the money can only be used for K-12 public education.


The Governor’s budget proposes, and the Michigan Legislature appropriates, the state School Aid Fund revenues to individual school districts through a foundation grant process, based upon the district’s pupil count and several other factors. Each school district then determines how the money will be spent.


Lottery revenues comprise roughly six percent of the total funding for the state School Aid Fund, while the other 94 percent of the money comes from a variety of other sources, including:

Sales & use taxes 48%
Earmarked income tax and state education property tax 32%
Lottery net revenue 6%
Federal funds and other sources 6%
Cigarette & liquor taxes 4%
Other taxes 4%

“Everyone agrees that sufficient funding is necessary to build a better, stronger public education system,” Gilmer said. “Public education is the largest single expenditure in state government. Although Lottery dollars are a small part of education funding needs, we’re very proud of our role in helping Michigan to invest more in the future of Michigan’s children.”


For more information about the Michigan Lottery and how its revenue is distributed, visit the Lottery’s Web site at http://www.state.mi.us/milottery.



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