Lottery earns partial credit

Trailing expectations, Wilson’s share of lottery proceeds still vital for school debt

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The North Carolina Education Lottery makes almost $100 million in contributions to schools across the state each year.

But how much of that goes to Wilson County Schools?

According to school system spokeswoman Amber Lynch, the N.C. Education Lottery paid Wilson County $827,059 in 2016-17.

Lottery funds are used entirely to pay for debt service for the construction of John W. Jones Elementary School.

The school on N.C. 42 was financed by the Wilson County Board of Commissioners in 2007 using $18 million in certificates of participation, which are loans that use the project itself as collateral.

The lottery was only two years old when construction began. At the time, Wilson County expected the $1.5 million in annual contributions from the N.C. Education Lottery to easily cover the expected $1 million in annual debt service for the school construction project.

According to Ron Hunt, assistant Wilson County manager, the outstanding balance for the loan is $11,775,000. Annual debt service is between $1.1 and $1.5 million in annual principal and interest payments.

Lottery contributions vary year to year depending upon “average daily membership,” in each school system. The number of Wilson County students in public schools has declined from 12,424 in 2007-08 to 11,984 in the 2016-17 school year, according to the North Carolina Department of Public Instruction.

“The lottery has never really provided the level they initially said it would be funded at and I think that has extended the life of the payback period for the county because of that,” said Lane Mills, superintendent of Wilson County Schools. “I do think that has probably affected the length of the loan that we are paying back because of the percentage of funding that does not come in that was stipulated when the lottery first started.”

In 2010 Wilson County’s lottery funds were reduced when the state changed the lottery funding formula.

“Due to this reduction, there was no longer a full amount to cover the debt service,” Hunt said. “The county can choose to use draw-down dollars that are available or allow funds to build as a reserve and use to pay the debt service at a later point in time. Wilson County is currently funding the debt payment with sales tax revenue restricted for schools, instead of pushing the liability of reduced lottery funds out to 2028. We chose to allow the lottery funds to accumulate and will begin using lottery funds to cover the debt payments again starting in (fiscal year) 2021.”

Mills said the school system is thankful for any funds it receives.

“We need every bit of funding that we can gather from all of our sources,” Mills said. “We just know that when that money does come in, it’s going to pay off what we needed, which was a new school. So we are thankful for that.”

Mills said it’s important for people to remember that Wilson County Schools doesn’t have a big line item that’s just lottery money going into the school system budget.

“It’s going toward what we need it to go to, which is the capital piece,” Mills said.

At the time Jones Elementary was built, the alternative for funding the project was to raise Wilson County property taxes by 3.45 cents per $100 in valuation, which would likely have been an unpopular alternative.

The lottery funds were seen as a “godsend” according to a Wilson Times editorial in August 2007.

Mills said some of the television commercials promoting the N.C. Education Lottery don’t give a clear picture of how lottery funds are used.

“I think that’s very misleading to folks when you see the commercials that say the lottery pays for so many teachers and has done all this and it does all that, but for us, it’s paying for our capital and so it’s not money that’s available to us to do other things with,” ills said. “We needed it for the building. We are thankful for that and that’s a good thing. It’s good infrastructure for that. So that is piece of it that people could really understand at least locally.”

“It does come up in conversations about the lottery money,” Mills said. “The commercials are out there. You see them all of the time about the education lottery paying for teachers, and it is, but in our case, it is paying for capital, which is still going to education.”

If Wilson County Schools were not paying for Jones Elementary’s construction and instead applied lottery proceeds toward other costs, the $827,059 in lottery money would pay for about 15.5 teachers. Including salary, supplement, Social Security, retirement and hospitalization, one teacher costs WCS about $53,035.84.