Illinois Governor Proposes Selling State Lottery

Published July 1, 2006

Illinois Gov. Rod Blagojevich (D) has proposed selling or leasing the state’s lottery to provide several billion dollars in immediate funding for the state’s public schools.

The governor announced his proposal May 23, saying he expects $10 billion from a sale or long-term lease. He would use $4 billion of the proceeds over four years to boost operating funds, build and repair schools, expand preschool programs, and buy new textbooks.

The remaining proceeds would be invested, and principal and interest would be drawn down and paid out to the schools until the money was exhausted, expected to occur in 2024. The state’s public schools would receive $650 million each year until then. That is how much the Blagojevich administration estimates the lottery would generate for the state’s schools for the budget year that begins July 1, if the lottery stayed in the state’s hands. After 2024, there would be no more lottery money for the public schools, as the lottery would be in private hands.

The proposal requires the approval of the General Assembly, which could come in the fall veto session.

Speaker Calls for Study

On May 30, Illinois House Speaker Michael Madigan (D-Chicago) sent a letter to state lawmakers calling for an “in-depth review” of the governor’s plan, suggesting he has serious reservations about it.

The letter said lawmakers need answers from the governor regarding the “four-year cliff,” when the $4 billion in spending would end, and the “15-year cliff,” when the annual $650 million in school funding would end. Madigan’s letter also questioned several other items, including:

  • the state’s readiness to take over chronically failing schools;
  • which schools stand to benefit the most from the plan; and
  • whether the lottery operator would be able to expand gambling in the state.

Political Payoff Alleged

Critics both within the General Assembly and outside it say the proposal does nothing to solve the state’s long-term education funding problems. They say it is a political payoff to a Democrat state senator, the Reverend James Meeks of Chicago, who was threatening a third-party challenge to Blagojevich this November over the school funding issue. Meeks acknowledged to reporters he worked with Blagojevich on the proposal before announcing he would not run for governor.

Meeks runs the 20,000-member Salem Baptist Church of Chicago. His candidacy could have taken black voters from Blagojevich, giving a boost to the governor’s Republican challenger, state treasurer Judy Baar Topinka.

Governor: ‘Fundamental Change’

Blagojevich announced his plan at a Chicago public school, surrounded by local and state elected officials, educators, and others, including Senate President Emil Jones (D-Chicago).

“This education plan is historic, it’s ambitious, and it fundamentally will change the way we educate our kids in Illinois and fundamentally change the way we fund our schools in Illinois,” Blagojevich announced. “It’s a plan that stresses accountability and doesn’t tolerate failure.”

State Sen. Miguel del Valle (D-Chicago), vice chairman of the state Senate Education Committee, told reporters he believes the lottery sale or lease “is probably the largest step” toward school reform he has seen in the General Assembly.

However, Blagojevich provided few details, presenting the plan in a PowerPoint demonstration.

Critics Scoff

The lack of details did not prevent critics from poking holes in what they heard.

“He must think we’re all a bunch of jamokes. He thinks we’re simpletons,” said state Sen. Chris Lauzen (R-Aurora). “This is the pattern of a guy who borrows to the maximum, then hocks everything. This is what Illinois is doing.”

Since Blagojevich became governor in 2003, the state’s general obligation debt has nearly tripled, from $7.6 billion to $20.3 billion. Lauzen noted the annual $650 million payment would end 18 years from now, and there would be no more lottery money for schools. He also noted the funding estimates depend on the state receiving $10 billion for the lottery, which is not guaranteed.

Former Republican state Rep. Bob Bergman of Palatine, who remains active in state politics, said the plan insults the intelligence of Illinois voters. “This ‘plan’ is just another of the promised quick-fixes that have been presented by the bipartisan combine that has run Illinois for the last three decades,” Bergman said. “They consider the Illinois electorate a bunch of rubes.”

“It’s a short-term fix at best,” state Sen. William Petersen (R-Buffalo Grove) said of the plan. “There’s a four-year infusion of money, then revenue drops off, and so does the governor’s term in office, if he’s reelected. This is something to grab press and is a blatant buy-off of Rev. Meeks. Like many of the governor’s grandiose plans, this will collapse.”

Dems Also Have Questions

In addition to Speaker Madigan, some other Democrat lawmakers are also concerned about the plan.

“The upfront $4 billion over four years is okay for the short term, but the long-term plans need to be changed,” said state Rep. Monique Davis (D-Chicago). “Long term, we absolutely need a stream of dollars that go to education and are ongoing. This money would be gone by 2025. Our children will be here, and we need to be cognizant of that fact.”

Davis said the state cannot pass a sales tax increase or income tax hike “because the governor won’t propose it. He absolutely believes it won’t pass. I’ve been in the legislature 19 years. Every governor has had a task force on school funding, and they’ve all come up with almost the same solution. Very rich school districts should put more toward the income tax. They don’t want to do that, and nothing changes.

“As we get into the meat of this and realize extra dollars will be there, at least for a time, I think it will pass” if the measure comes up in the fall veto session, Davis said, because of the Democrats’ control of the governorship and General Assembly.

“[Senate President] Emil Jones is supporting this, and so are a lot of education organizations,” Davis said, “so I think it has a chance.”

Steve Stanek ([email protected]) is managing editor of School Reform News’s sister publication, Budget & Tax News.