Education lottery funds in jeopardy for local schools

Lenoir County Schools' portion of the North Carolina Education Lottery quarterly proceeds were recently reversed back to the state, a county official said Monday.

The state's current deficit crisis has forced officials to scramble for cash where they can find it, including local funds for public school capital construction.

Lenoir County Manager Mike Jarman told the commissioners during a Monday meeting the state has diverted $300,000 from its school building capital fund to help decrease the state's deficit.

"The $300,000 is gone," Jarman said. "(The state) doesn't intend to pay it back."

Lenoir County Schools wasn't alone in the recent reversion of lottery quarterly payouts. Jarman said the state decided not to distribute $43 million in lottery proceeds for school districts use this quarter.

The state's education lottery began on April 30, 2006 with instant scratch-off ticket sales at about 5,000 retail locations.

While quarterly payouts will continue to be in jeopardy, Jarman said the state could decide March 22 to dip into every county's education lottery savings account. The county manager said about $1.2 million is distributed from the state's lottery to Lenoir County annually.

Commissioner Chris Humphrey questioned Jarman if the state could legally request that lottery proceeds for Lenoir County be returned.

"The people voted for the referendum (on the education lottery)," Humphrey said. "They didn't expect the state to steal (the money) back."

According to Jarman, Gov. Bev Perdue has the discretion during times of economic crisis to use local funds however she sees fit to meet the state's financial needs. Jarman said Lenoir County officials were willing to work with officials in Raleigh to try and reduce the deficit.

"We want to be part of the solution," Jarman said.

But if the state decides to take more lottery proceeds away from Lenoir County's account, Jarman said it will have a substantial impact on the county's ability to pay its debt service for school construction.

Jarman will travel to Raleigh on Thursday to meet with state officials to see what they plan to do.

This year, the county will pay $5.9 million on the debt services for school construction, the county manager said.

"We plan to give (the state) a couple of days to see where they go with this," Jarman said. "It could have a serious impact."

Lenoir County Schools Superintendent Terry Cline said Monday afternoon he is concerned about the state's seizure of lottery proceeds in February earmarked for school construction.

"These funds are important to us," Cline said. "They help us pay for the debt on the bond."

Chris Lavender can be reached at (252) 559-1078 or clavender@freedomenc.com.

N.C. Education Lottery estimated distribution for Lenoir County Schools

2008-2009 - $1,064,512

2007-2008 - $1,169,321

2006-2007 - $245,500