The Impact of the Ohio Lottery on Public Primary and Secondary Schools in Montgomery County

In 1974, voters in the state of Ohio approved the institution of a lottery as a means to raise funds for their public primary and secondary schools. According to the legislative history of the Ohio Lottery, the purpose for the lottery is to provide a means for relatively poor school districts to enhance their own local tax base such that more public school funds could be produced locally to meet the special needs of their primary and secondary schools. Lottery operations have been conducted in most school districts for more than a quarter of a century. For a number of relatively poor school districts in Montgomery County, the amount of local school funding derived from local lottery operations within the district is significantly less than the entitlement expressed in the legislative history of the Ohio Lottery.Under the present formula used to allocate lottery profits, there is no correspondence between lottery revenue and profit generated within a district. The resultant pricing policy, which involves the bundling of a game of chance for players to win money and provisions for additions to players’ local tax bases, has caused an increase in the unit cost of public primary and secondary education in poorer school districts in Montgomery County. Additionally, the formula has precipitated a broadening of the disparity between educational opportunities for youth in poor districts and youth in relatively affluent districts.The focus of this research report is on Ohio Lottery operations for the year of 1997. A primary inquiry is whether the lottery is a regressive tax in Montgomery County. My approach will involve an examination of the effects the redistribution policy had on the sixteen school districts in Montgomery County. I will also address the trade-off involved in subsidizing some of the sixteen school districts in Montgomery County while attempting to motivate low-income households to increase their lottery expenditures.