It’s an annual ritual in Michigan: The state proclaiming how much cash the lottery is pouring into schools. Gov. Gretchen Whitmer recently announced that for the seventh year in a row, the lottery contributed more than $1 billion to the School Aid Fund.
But buying a $1 scratch-off doesn’t mean you’ve just pumped $1 into school coffers. In fact, Michigan schools get about a fourth of that — or less, depending how you count it.
For every dollar spent on a lottery ticket, 63 cents goes toward prizes. Nine cents toward lottery sales commissions and 3 cents for operations and administration costs. That leaves about a quarter for Michigan’s School Aid Fund.
We decided to find out what happens next to that quarter:
Where does my quarter go?
The 25 cents goes to the School Aid Fund, a pot of money — including sales, income and property tax revenue — that’s used to pay for K-12 schools as well as some early childhood programs.
Lottery proceeds account for less than 6% of the School Aid Fund, and for more than a decade, the fund has also been used to help pay for community college and public universities. (You can find annual financial reports of the state lottery here.)
So, how much of my quarter goes to K-12 and preschools?
It’s not a perfect science but here’s some “back of the napkin” math: About 22 cents.
That’s once you strip out the money that goes toward community colleges, universities and paying down debt for public school employee pensions.
Once you strip out those expenses, about 88% of the $18.6 billion of School Aid Fund in fiscal 2025 went toward preK-12 programs. That’s 22 cents out of every quarter.
Now, out of the 22 cents that’s left, how much actually ends up in the classroom?
Hard to tell. Once a local school district receives money from the state, it’s up to them how they spend the money. Money largely goes to employees’ salaries and benefits. But funds also go toward getting students to and from school, materials for students in class and other expenses. Lottery funds are combined with other funds that ultimately make up the state education budget.
During the 2023-2024 year, public school districts reported a total of $15.48 billion in state revenue. During the fiscal year 2024, the lottery contributed nearly $1.25 billion to the School Aid Fund. That’s equivalent to about 8% of the state revenue schools got that year.
Why do colleges and universities get money from the lottery anyway? I thought it just went toward K-12 schools.
It’s a common misconception.
For sure, the No. 1 item on the state lottery’s mission statement is “to maximize net revenues to supplement state education programs.” But the state Constitution allows the School Aid fund to be used for higher education.
“There shall be established a state school aid fund which shall be used exclusively for aid to school districts, higher education, and school employees’ retirement systems, as provided by law,” the Constitution says.
Robert McCann, executive director of The K-12 Alliance of Michigan, a group of 123 school districts, said that School Aid funds should be exclusively used for public school districts. But in reality, that’s not what’s happening.
“It’s just getting siphoned out of the schools in fact so that they can spend it elsewhere.”
Are lottery contributions to schools up or down?
The most recent contribution is below last year’s. This year’s unaudited lottery total is the lowest it has been since fiscal year 2019.
But let’s look at the big picture: The lottery funds have made up 5-7% of the School Aid revenue for the last three decades, according to analysis from the Senate Fiscal Agency. This analysis includes estimates of School Aid revenue for the most recent years.
Why the drop?
As prices on other goods rise, consumers may decide they can no longer afford to purchase lottery tickets.
Craig Thiel, research director of the Citizens Research Council of Michigan, told Bridge there are also more options for gambling now than when the lottery was created in 1972.
Since then, the state has authorized Native American casinos and non-tribal casinos. Plus, there’s online sports betting, poker and other games.
“It’s kind of a small minnow in a tank with a whole bunch of other fish,” Thiel said.
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This story was originally published by Bridge Michigan and distributed through a partnership with The Associated Press.
