As millions of dollars continue to flow through the North Carolina Education Lottery (NCEL), the dollar amount reaching public schools has remained flat, raising red flags from the state auditor. 

What was once promised as a reliable boost for schools is now under scrutiny as the North Carolina state Senate struggles to finalize a budget for the 2025–2026 school year. 

In 2005, The N.C. Senate voted 25-24 in favor of the N.C. State Lottery Act and Appropriation Act to supplement education funds and to enhance public schools in the state. 

At the start, the NCEL was required to send 35% of its revenue to the state for educational purposes. Two years later, a legislative change turned this percentage into a suggestion. Now, the percentage of revenue sent to education continues to decline as total revenue increases. 

During the 2021-2022 Session, the NC Senate introduced Bill 376 which aimed to restore lottery funding and return to allocating 35% of total annual lottery revenue to the Education Lottery Fund. The S376 was sent to the Senate’s Rules and Operation Committee and referred to the Senate Appropriations Base Budget Committee but the bill never reached a floor vote. 

US Representative Valerie Foushee, currently the representative for Durham County, was a State Senator in the NC General Assembly at the time and was one of five sponsors of S376. 

Despite an inability to increase the percentage of money allocated and an overall decrease in percentage, the total dollar amount sent to education remains relatively the same, averaging $98 million a year since 2006. 

According to Amanda Fratrik, senior director at the North Carolina Department of Public Instruction (NCDPI), the funds sent to NCDPI are determined by state budget allocations created by The NC General Assembly. 

“They don’t have to give us a certain percentage, if they can say that decreasing the percentage that goes to education increases the total dollar amount that will go to education,” Fratrik said. 

The idea behind the NCEL’s approach is that increasing the prize amount could attract more players, which might result in higher overall earnings and more funds for education, despite a lower percentage return to schools.  

“Now, this is a really difficult thing to measure,” Fratrik said.

In the past three fiscal years, the percentage has dropped from 23% in the 2023 fiscal year to 16% in the 2025 fiscal year — a 7% drop. Since 2005, the percentage has dropped by nearly 20%, while funding for education has largely plateaued.

Despite this, Fratrik said, “the dollar amount going to education has increased every year.”

In 2025, the General Assembly of North Carolina released a report detailing the dollar amounts the DPI received from lottery funds and how these allocations have grown annually. However, according to Page 13 of the Financial Statement Audit Report of the North Carolina Education Lottery, the money towards public schools as a whole has decreased. 

The General Assembly report shows how much money lawmakers choose to allocate to DPI programs, while the lottery’s financial audit shows how much net lottery revenue is actually available for education. DPI’s appropriations can rise even when total lottery revenue for public schools decreases because appropriations are set by policy, not by the lottery’s profit levels.

In 2024, the NCEL recorded $5.376 billion in sales with $1.07 billion sent to the state and in 2025, the NCEL had $6.586 billion in sales and $1.05 billion reserved for education. This equates to a 22% increase in sales and a 1.9% decrease in education contributions. 

The NCEL Director of Corporate Communications Adam Owens said the decline reflects a broader national slowdown in lottery sales.

“The decline in sales in FY25 was caused by economic factors, the poor performance of nationwide draw games, and increased competition,” Owens said. “Lotteries across the country also faced the same issues. The popularity of Digital Instant sales helped the NC Education Lottery offset some of those losses.”

Still, questions remain about the lottery’s long-term impact. 

When the N.C. Lottery Act was first established, an early provision stated that lottery funds should supplement existing state education funding. That language was ultimately removed before the final vote, allowing the state to redirect federal education funds and replace them with lottery revenue instead.

“Basically, they kept the budget the same; they just replaced general fund money with lottery money,” Fratrik said. “To us, that doesn’t make a big difference.” Where the money comes from is not an issue as long as the money keeps flowing. 

While the source of funding may not concern NCDPI, the state’s broader budget reflects ongoing uncertainty.

The state budget remains at a standstill as lawmakers continue to debate how to fund schools. Unallocated NCEL funds rise while the amount distributed to education stays relatively steady.

Since fiscal year 2014–15, unallocated funds from the NCEL have increased by nearly 46%, reaching approximately $134 million.

At the same time, Gov. Josh Stein has proposed a $1.4 billion plan to raise teacher salaries — an initiative that has yet to take shape after years of stalled efforts.

That uncertainty is felt beyond the state level, reaching local districts like Durham Public Schools (DPS).

“I don’t think that we get as much as we should in many school systems,” DPS Chief Financial Officer Jeremey Teetor said. “I think we’re all wanting to know more because it’s not coming here like it should.”

 

In Durham County:

In Fiscal Year 2025, Durham County received $13.6 million in lottery funding for education programs. The money was distributed across several categories, including school construction, staff support, pre-kindergarten programs, college scholarships and transportation. 

Despite additional lottery revenue available through the Need-Based Public School Capital Fund (NBPSCF), Durham County does not qualify because of its relatively high property tax base. This restricts the county’s ability to secure additional capital funding. 

The funds the county does receive are not allocated solely to Durham Public Schools. Instead, lottery revenue is distributed among public schools, charter schools, and higher education scholarships.

For DPS administration officials, the gap between what the lottery generates and what schools actually receive is an ongoing concern. 

“I think there’s been a lot of conversation, and even the state auditor has pushed into it,” Teetor said. “The lottery is generating more money, and it’s not going to schools. I didn’t vote for him, but I agree with him on that issue. I think it’s a fair question.” 

And even when funding reaches Durham, it doesn’t always have much of an impact. 

In 2025, DPS received just over $2.5 million in direct lottery funding, along with an additional $577,00 from a lottery-supported repair and renovation fund.  

“It seems like a lot of money, right, probably to the typical household,” Teetor said. “We can’t do much with that.” 

In Durham, aging school buildings present some of the most urgent challenges. 

“For us predominantly, I think the space with our facilities is what we hear the most about when we meet with feedback groups, ” Teetor said. “It is our climate control, so boilers, chillers, anything related to the integrity of a major HVAC system.”

And beyond DPS’s climate control, basic building functionality remains a great concern. In some cases, problems with the buildings have been severe enough to disrupt learning. 

“We’ve got one school. and at least two times since I’ve worked here, they haven’t been able to get water,” Teetor said. “They’ve had to dismiss school.” 

While lottery funds are often promoted as a major source of support for schools, they represent only a small fraction of overall district funding. 

Durham Public Schools 2025 Teacher of the Year Alec Virgil said he has not directly interacted with lottery funding in his work as an educator. However, he sees clear areas where additional funding, whether from the lottery or elsewhere, could make a difference. 

“I know a few educators personally who hold a master’s degree, and they are also classroom teachers,” Virgil said. “There are some districts who struggle with paying teachers for their master’s degrees.” 

Despite these challenges, Virgil emphasized that educators and administrators continue to find ways to meet students’ needs. 

“Thankfully, we have people who are grinding, working hard every day, who are making sure that schools get what they need,” he said. 

That resilience, however, does not eliminate the underlying concern: If lottery revenues continue to rise while school funding remains relatively flat, districts like Durham may be left struggling to fill the gaps.

 

 

Edited by: Jessica Lynette & Kyla McGhee