Part of the drive behind promotion of Proposition 1C for the May 19 special election is that the state’s budget is not the only thing in need of a reboot.

The ballot measure — one of six offered up to voters next week — is labeled the “Lottery Modernization Act.” An attempt at updating a gambling system left unchanged for 25 years, its intent is to take advantage of changes in funding streams for the benefit of California’s economy.

Foremost, Prop. 1C creates the opportunity for the state to borrow up to $5 billion in lottery winning proceeds during 2009-10, to help balance the California budget during the current nationwide fiscal crunch. It also calls for more borrowing against the lottery in the future.

So if that’s the sweet sound of a ringing jackpot to those voters who love their Pick 6s and scratch-offs, it’s because Prop. 1Cs aims to not only increase the likelihood of winning, but bigger payouts as well.

Prop. 1C seeks to amend Proposition 37, the voter-approved ballot measure that launched the 600-member state lottery commission in 1984. Prop. 37 mandated how lottery funds are routed to its winners, the state and education.

According to numbers from the lottery commission’s Web site, about 53 percent of proceeds from ticket sales are returned to its winners (on average, 53 cents for each dollar spent); 34 percent goes to schools; and the remainder supports game costs, operating overhead and auxiliary costs for the lottery commission.

Last year, those percentages translated into the sale of $3 billion in lottery ticket sales, with prize payouts of $1.6 billion, $1.1 billion for state education and $380 million in operating expenditures, notes the state elections division.

The rates, however, have remained static since 1984. Prop. 1C’s modernization of Prop. 37 essentially calls to increase prize payouts. The reasoning is that if winning is easier, more people will play, and the increase in resulting ticket sales means more profits available for leveraging the state’s budget deficit.

From a purely commercial standpoint — increasing business and sales to help the state financially — the state chamber of commerce supports Prop. 1C, as does the Camarillo Chamber of Commerce.

Tom Kelley, the Camarillo chamber’s CEO, said the chamber board of directors unanimously supports all six special election propositions, 1A through 1F.

“Our chamber took the same position as the California Chamber of Commerce, which is to support the whole package,” Kelley says. “We didn’t see any objection to doing it as a package and not trying to pick out one (proposition) or the other for not supporting … we look at it from a statewide basis.”

But while the lucky of the lottery enthusiasts can look forward to more winning scratch offs, with Prop. 1C, schools will be scratched off.

Under the ballot measure, lottery profits will no longer be earmarked for education. Instead, monies that schools have counted on since 1984 would be streamed into the state’s general fund, in part to help pay down the budget deficit.

Part of the Prop. 1C deal calls for legislators to continue subsidizing schools to compensate for the lack of lottery funding.

The $1.1 billion in funds California schools received last year from lottery proceeds accounts for 80 percent of schools, kindergarten through 12th grade, says the lottery commission. Statistics provided from the Ventura County Office of Education also reveal that county schools received more than $19.7 million last year from the lottery.

Yet the county’s superintendent of schools, Stan Mantooth, isn’t worried. It’s only a small percentage of the district’s overall funding, he says.

“The lottery only contributes about one and a half percent of school districts’ budgets,” says Mantooth. “It might not be the panacea people thought and, to this day, still believe.”

Prop. 1C also goes beyond the financial for schools. Long caught in a less than comfortable relationship with the world of gambling, it could be better to sever those ties, says Mantooth, even if schools don’t address the issue much anymore.

“Should we use money from essentially a vice to support schools? Largely, I think that controversy has died down,” he said.

Mantooth added, “Philosophically, I think it’d be a good thing to separate ourselves from gambling revenue anyway.”

Disassociation from the negative image of gambling could perhaps work for funding planned elsewhere with Prop. 1C. The ballot measure would require the lottery to pay $1 million annually to state gambling addiction services. Currently, only a quarter of that amount is paid out to state-funded treatment and awareness programs.

Mantooth cites what he calls Prop. 1C’s silver lining: schools are ensured general funding with the measure’s passage, or continued lottery revenues, as normal, if Prop. 1C fails.

State elections numbers show that in the quarter-century since Prop. 37 passed, education funding from the lottery has peaked and dipped marginally. In 2006, California schools received their maximum amount, about $1.3 billion. The lowest year was 1992, when $500 million flowed into educational funding.

Yet last year’s total lottery profits for schools — $1.1 billion — nearly equals the amount afforded in 1989. It’s a tendency of funding to remain relatively flat over the years, says Mantooth.

Pass or fail, the superintendent hopes that education funding will continue so cutbacks to the schools system can be prevented.

“I think it’s important to do everything we can to keep the budget deficit number as low as possible,” he said. “It’s critical we have the money to avoid other cuts to education and other services.”   

paul@vcreporter.com