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Senate wants to use a raffle to help pay for education

The Alaska Senate is looking to gambling as a way to pay some of the state's education costs by creating a raffle that residents can enter using their Permanent Fund dividend checks.

"It is a new approach to help solve Alaska's fiscal problems and address concerns about education funding," wrote Sen. Click Bishop, R-Fairbanks, in the sponsor statement accompanying his bill, Senate Bill 78. The bill is currently under consideration by the state House after passing the Senate on Friday, 19-1.

Bishop's sponsor statement said the bill would establish a framework similar to the Permanent Fund's Pick.Click.Give. program, created by the state Legislature in 2008 as a way for Alaskans filing for their dividends to give a portion of their checks to nonprofits.

Under the bill's raffle program, Alaskans 18 and older could pledge their dividends in $100 increments to fund statewide public education. For each $100, they would receive one entry into the raffle.

The state would divide the donations into three pools of funds.

Half of the money would go directly to the state's annual education budget. A fourth would go into an education endowment, and if it grew to $1 billion, its investment earnings would also be used for education. The final fourth would go into another endowment for prizes, with 20 percent of that endowment used to pay raffle winners.

Under the bill, the state would hold a public drawing each year to select four winners, awarding the first name selected with a cash prize of 10 percent of the raffle fund. The fourth name would get 2 percent.

"Alaskans have a long history of involvement with games of chance and gambling," Bishop wrote in the sponsor statement.

"Under current law, there are many games of chance exempted from Alaska's gambling laws. Raffles, lotteries, bingo games, race classics, fishing classics, deep-freeze classics, Calcutta pools, and big bull derbies are but a few," the statement went on. "SB 78 follows in that tradition and channels that enthusiasm into a worthy cause: education."

The bill would add the PFD raffle as one of the activities not included in Alaska law's definition of "gambling."

It's unclear just how much money a raffle like this would generate for Alaska's public schools, which are largely funded by a per-student funding formula from the state's general fund — the single largest line item in the state's agency budget.

The Alaska Senate has proposed cutting the per-pupil funding by 5 percent this year, or $69 million, as a way to shrink a nearly $3 billion state deficit. The House has left the per-pupil funding unchanged from the current fiscal year, relying on a new income tax to help close the budget gap.

Bishop could not be reached for comment about his bill Monday. Peter Fellman, Bishop's chief of staff, said the senator was ill.

Fellman said Monday afternoon that the idea for the PFD raffle stemmed from a similar piece of legislation proposed in the 1980s that would have created a voluntary lottery, but which never became law.

Tim Parker, president of the NEA-Alaska, said in an interview Monday that the teachers union supported Bishop's bill, describing the raffle as "an innovative idea." But he said the state still needed a fiscal plan. He said he expected that if the raffle became law, it would play a "fairly small role" in funding public schools.

"It's only a small part of the fiscal solution that the state needs to consider. So we are continuing to emphasize, especially with our members, that we need a comprehensive fiscal plan that involves broad-based revenue sources," Parker said.

Bishop's office created examples of how the raffle would work based on the numbers of Alaskans betting $100 each from their dividends. If half the adults who applied for a dividend in 2016 got a $100 raffle ticket, it would generate $24.7 million. Half of that would go to the public education fund — about a sixth of the amount the Senate would cut from the per-pupil formula in next year's budget.

Nearly $6.2 million of the $24.7 million would go to the education endowment, the same amount that would go into the raffle fund.

The first-place raffle winner would be paid $617,500 and the fourth-place winner would get $123,500, according to the document.

But this year, Alaskans pledged only $2.7 million of their 2017 dividends to nonprofits through Pick.Click.Give, a total slightly lower than the past two years.

Other states have used revenue from lottery ticket sales to fund public education. However, The Washington Post reported in 2012 that some state legislatures used that money to supplant other education funding instead of using it as additional funding, so school budgets didn't get a boost.

Alaska does not have a lottery, but Fellman said people in Alaska spent $388 million in 2015 on "charitable gaming," including pull tabs.

Bishop wrote in his sponsor statement that his bill "set up an education lottery as a fun way to raise money for a good cause: supporting Alaska students in the classroom."

It would cost an estimated $8,000 to set up the raffle, according to the state Department of Revenue. According to the bill, the annual costs of administering the fund and promoting the raffle would be covered by the raffle fund.

The sole dissenter when Bishop's bill passed the Senate Friday was Sen. David Wilson, R-Wasilla. Wilson declined to comment in a phone interview Monday.

Bishop's bill was referred to the House Finance committee on Saturday.

If it becomes law, the raffle could start in 2018.

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