Audit says Mo. schools could have gotten $21M more from casino revenue

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

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

Meanwhile, an opponent of a proposed Cape Girardeau casino called the results of the audit a "black eye" for casino supporters.

At issue is a November 2008 ballot measure that raised casino taxes and eliminated Missouri's 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 may have remained unspent in the separate fund.

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

As a result, Montee said, legislators are using new casino revenue 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 revenue 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, R-Dexter, 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 revenue 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 revenue have been used to offset declines in general revenue for public schools without necessarily increasing the overall amount going to schools. But that's necessary, Mayer said, because Missouri's general revenue has 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.

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 revenue 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.

Officials from Jackson and Cape Girardeau School districts said they were not familiar enough with the issue to comment.

The findings of the audit did not come as a surprise to Doug Austin, leader of Quality of Life in Cape Girardeau, the group opposed to casino gambling in Cape Girardeau.

"Once again, all the highly touted millions of dollars going to education didn't seem to quite make it to education," Austin said.

The disputed audit, Austin said, might be a temporary "black eye and a sore spot" to legalized gambling proponents, but it probably won't change many minds or votes in November's election on casino gambling in Cape Girardeau.

St. Louis-based Isle of Capri proposes building a $125 million casino downtown, but the project depends on the support of residents in the pursuit of a casino license.

Cape Girardeau Mayor Harry Rediger said the school district stands to benefit from the property taxes the proposed casino would generate, but the city still is trying to quantify the numbers. Rediger said the audit will be viewed as a negative by some but that he hopes Cape Girardeau residents can sort through the "mixed messages."

"I hope they can distinguish between that issue, which is a state distribution issue, from the local issue," he said.

Staff writer M.D. Kittle contributed to this report.