An advocacy group released a report Friday claiming the North Carolina Education Lottery is becoming less and less about education as it matures.

N.C. Policy Watch found the state lottery “has steadily chipped away at the cut of money it sends to education.” It cost school districts $80 million last year.

Richmond County Schools lost more than $175,000 in lottery money last year after the formula to dole out funds was revised.

The report finds the formula state lawmakers use to divvy up proceeds from its gaming industry designates 29 cents of every dollar for schools, pushing aside a formula etched in state law that calls for 35 cents of every dollar to go to school systems.

This became possible in 2007 when the General Assembly made the 35 percent mark binding only “to the extent practicable.”

In its 2009 budget, the General Assembly tapped the lottery for $35 million to cover some of the state’s share of Medicaid and other federal social programs.

However, Richmond County Board of Education Chairman Ken Goodman said there is another conflict at play as metropolitan areas finagle the process to squeeze more money for their own districts out of the lottery.

“Initially, all the Tier I counties got 30 percent of the lottery money, and the rest was divided up based on population,” Goodman said. “In the last legislative session, they changed the formula to divide up all the money based on population, and it cost Richmond County about $175,000.”

He explained this was possible because 16 of the state’s 100 counties have a majority of its representation in the General Assembly, while the other 84 combined are still a voting minority.

“It’s just another example of how the legislators from the big metropolitan areas operate,” Goodman said. “In tougher economic times, with a shrinking budget, they don’t want to give up any funding, so they find a way to pick on the little guy.”

“The change in the formula eliminated funds that were designated to several eligible districts, including Richmond County,” RCS Superintendent Dr. George Norris said. “As a result, we lost just over $175,000 this year. Changes like this have a strong impact on small, rural districts.”

What money was left for RCS in 2009 was projected to be much more than it was.

RCS CFO Pam Satterfield said in a previous interview the money was projected at about $1.2 million, whereas the schools actually collected about $780,000.

The General Assembly also resolved to allow school districts to spend lottery money to pay teacher salaries last year in a bid to help larger districts avoid lay-offs, but this measure did little to nothing to help Richmond and other Tier I counties.

Lottery officials told N.C. Policy Watch the reason the percentage of cash going to education has fallen is because they feel they can increase the profit margin by investing more in prizes. Sales have gone up from $325 million in its first full year of operation to $419 million last year.

“Our focus is on the dollars we raise, not the percentage,” N.C. Education Lottery Acting Director Alice Garland is quoted in the report. “Our mission is to raise as much money for the state as we can.”

The report contends the increases to education have been drastic, though, and haven’t kept pace with the increasing sales.

Staff Writer Philip D. Brown can be reached at (910) 997-3111 ext. 32, or by e-mail at pbrown@yourdailyjournal.com.