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Audit: Missouri schools could have gotten $21 million more from casino revenue

Thursday, September 23, 2010 | 6:33 p.m. CDT

JEFFERSON CITY — Missouri could be spending an additional $21 million on public schools if lawmakers had followed the wishes of voters when distributing new casino revenues, State Auditor Susan Montee said Thursday.

Senate Appropriations Committee Chairman Rob Mayer, R-Dexter, said Montee's audit is wrong and that schools are getting more from casino tax revenues this year than they would have under the original voter-approved law.

At issue is a November 2008 ballot measure that raised casino taxes and eliminated Missouri's unique limits on how much gamblers could lose. The initiative directed the new money to be placed in a separate fund and distributed to schools on top of their normal funding.

But budget analysts in the legislative and executive branches said the new law created technical difficulties for Missouri's school funding formula. Their projections showed many schools wouldn't have been eligible for the new money, and some of that money might have remained unspent in the separate fund.

Last year, legislators changed the voter-approved initiative by removing the requirement to treat additional casino revenues as new money for schools. The extra money is instead deposited in the same fund as existing revenues from casinos.

As a result, Montee said, legislators are using new casino revenues to offset school spending reductions from other revenue sources during the current 2011 budget year. Assuming Missouri gets at least the same amount of casino tax revenues as last year, the ballot measure would have directed at least $20.9 million more to K-12 education than what lawmakers budgeted for the current school year, Montee said.

"This was sold to the voters as new money to education and then it came back to the Legislature who just stripped all of those provisions," said Montee, a Democrat.

Mayer said lawmakers fixed what was an unworkable law. Had legislators not changed the voter-approved law, he said, less than one-fourth of the new casino tax revenues actually would have made it to schools.

As it is, "all the money collected from gaming that is supposed to go to Missouri's public schools is going to public schools," Mayer said.

He acknowledged that some of the new casino tax revenues have been used to offset declines in general revenues for public schools without necessarily increasing the overall amount going to schools. But that's necessary, Mayer said, because Missouri's general revenues have fallen by about 15 percent over the past two years.

In 2008, Montee's office estimated that K-12 schools would receive between $105 million and $130 million annually as a result of the ballot measure.

But there is no way to know exactly how much more money the initiative generated. Missouri's casino tax revenues grew by $67 million from the 2008 to 2009 fiscal years and by an additional $45 million in 2010, but gambling regulators do not track the reason. During that time, an additional Missouri casino opened and some neighboring states also changed their casino laws.

The ballot measure was financed by casino groups, which stood to benefit from the repeal of gamblers' loss limits. They promoted it as a way to boost funding for education, because more revenues for casinos would result in the payment of more taxes.

"We were skeptical from the beginning that this proposition would provide additional state money to education, and this audit has confirmed that," said Brent Ghan, a spokesman for the Missouri School Boards' Association.


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