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The Impact of Earmarked Lottery Revenue on K–12 Educational Expenditures

William Evans and Ping Zhang ()
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Ping Zhang: Kowloon, Hong Kong

Education Finance and Policy, 2007, vol. 2, issue 1, 40-73

Abstract: Of thirty-eight states with lotteries, sixteen earmark lottery profits for primary and secondary education. In this article, we use a panel data set of states with lotteries to examine the impact of earmarking lottery revenues on state educational spending. We can reject the hypothesis that spending increases dollar for dollar with earmarked profits, but there is a high likelihood that earmarking increases school spending more than non-earmarking. We find that 50–70 cents out of an earmarked dollar finds its way to local school districts. In contrast, each dollar of lottery profits increases state revenues to schools by about 30 cents in states that deposit profits into the general fund. Of the lottery dollars that reach local school districts, we find that at least 80 percent of it is spent on schools. © 2007 American Education Finance Association

Keywords: lottery revenue; educational spending (search for similar items in EconPapers)
JEL-codes: I22 I28 (search for similar items in EconPapers)
Date: 2007
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