Maryland Question 1, the Gambling Revenue Dedicated to Education Lockbox Amendment, is on the ballot in Maryland as a legislatively referred constitutional amendment on November 6, 2018.

“yes” vote supports amending the state constitution to dedicate certain revenue from video lotteries to education as supplementary funding.
“no” vote opposes this amendment to the state constitution to dedicate certain revenue from video lotteries to education as supplementary funding.

Overview

Casino revenue and education funding in Maryland

Maryland voters approved constitutional amendments allowing slots in 2008 and table games in 2012. Proponents of those measures advertised them as being able to generate more funding through casino tax revenue for the education system. Maryland created the Education Trust Fund in 2009, which tax revenue from casinos has added an estimated 1.9 billion dollars to since 2009. According to the director of the Maryland Center on Economic Policy and the Maryland State Education Association, general fund revenue that was used to fund education prior to 2009 was used for other purposes as casino tax revenue increased.

Measure design

The amendment would incrementally dedicate gambling revenue to education through 2023. The amendment would dedicate revenue as supplemental to minimum required education funding levels. This means that casino revenue couldn’t be counted in the minimum education spending formulas and would have to be spent on education in addition to those minimum required levels under the amendment. The following amounts of casino revenue would be used as supplemental funding for public education under the measure:

  • $125 million for fiscal year 2020
  • $250 million for fiscal year 2021
  • $375 million for fiscal year 2022
  • 100% of revenues raised for fiscal year 2023 and for each fiscal year after.

The Maryland Department of Legislative Services estimated that the tax revenue of Maryland’s six casinos is projected to be $517 million.

This supplemental funding would be used to:

  • Ensure access to public education “that allows children in the state to compete in the global economy of the future;”
  • Provide funding for high-quality early childhood education programs;
  • Provide opportunities for career and technical education programs that lead to a job skill or certificate;
  • Allow students to obtain college credit and degrees while in high school at no cost to the student;
  • Support advancement and professional growth of educators; and
  • Maintain, renovate, or construct public schools.

Text of the measure

Ballot title

The ballot title for Question 1:

The amendment requires the Governor to include in the annual State Budget, as supplemental funding for prekindergarten through grade 12 in public schools, the revenues from video lottery operation licenses and any other commercial gaming dedicated to public education in an amount above the level of State funding for education in public schools provided by the Bridge to Excellence in Public Schools Act of 2002 (otherwise known as the Thornton legislation) in not less than the following amounts: $125 million in fiscal year 2020; $250 million in fiscal year 2021; $375 million in fiscal year 2022; and 100% of commercial gaming revenues dedicated to public education in fiscal year 2023 and each fiscal year thereafter. The amendment also requires the Governor to show in the annual budget how the revenues from video lottery operation licenses and other commercial gaming are being used in a manner that is in addition to the level of State funding for public education provided by the funding formulas established by the Bridge to Excellence in Public Schools Act. The State Constitution currently authorizes video lottery operation licenses for the primary purpose of raising money for public education.

Constitutional changes

Question 1 would amend and add a new sub-section to Article XIX of the state constitution. The following bolded and underlined text would be added, and [bracketed and struck-through] text would be deleted:

Article XIX – Video Lottery Terminals (c) (1) Except as provided in subsection (e) of this section, the State may issue up to five video lottery operation licenses throughout the State for the primary purpose of raising revenue for:(i) Education for the children of the State in public schools, prekindergarten through grade 12; and(ii) Public school construction and public school capital improvements[; and(iii) Construction of capital projects at community colleges and public senior higher education institutions].

(f) (1) Subject to the requirements of paragraphs (2) and (3) of this subsection, from the revenues raised under subsection (c)(1) of this section and any other commercial gaming revenues dedicated to public education, the governor’s budget submission shall include not less than the following amounts as supplemental funding for public education:(I) for fiscal year 2020, $125,000,000;(ii) for fiscal year 2021, $250,000,000;(iii) for fiscal year 2022, $375,000,000; and(iv) for fiscal year 2023 and for each fiscal year thereafter, 100% of revenues raised for public education under subsection (c)(1) of this section and any other commercial gaming revenues dedicated to public education.

(2) The supplemental funding shall be used to:(I) ensure access to public education that allows children in the state to compete in the global economy of the future;(ii) provide funding for high–quality early childhood education programs;(iii) provide opportunities for public school students to participate in career and technical education programs that lead to an identified job skill or certificate;(iv) allow students to obtain college credit and degrees while in high school at no cost to the students;(v) support the advancement and professionalization of educators in public schools; and(vi) maintain, renovate, or construct public schools.

(3) (I) The supplemental funding required under paragraph (1) of this subsection shall be in addition to the state funding provided through the funding formulas established in the bridge to excellence in public schools act of 2002 for prekindergarten through grade 12 in public schools.(ii) Beginning in fiscal year 2020 and for each fiscal year thereafter, the governor shall identify in the annual budget as introduced how the revenue required under this section is being used to supplement and not supplant spending on public education for prekindergarten through grade 12.

[(f)] (G) The General Assembly may, from time to time, enact such laws not 13 inconsistent with this section, as may be necessary and proper to carry out its provisions.

Arguments

Proponents of Question 1 said that lawmakers had promised to use funds from gambling for education when the 2008 and 2012 measures were approved, but there was no legal requirement dictating that funds must be spent on education and that the governor and legislators had diverted the revenue to other purposes.

  • Governor Larry Hogan’s deputy campaign manager, Doug Mayer said, “The education lockbox is a top priority of the governor, that’s why he proposed his own legislation that would have created one immediately, supported the ballot initiative, and was proud to sign it. Most importantly, he is willing to do whatever it takes to ensure Marylanders vote for it this fall, including using his own political and financial resources to get it done.”
  • President of the Maryland State Education Association Betty Weller, a proponent of the measure, said, “We applaud the General Assembly for taking the first step in making a new Maryland Promise to every family, in every community, that the state will fund a strong public school for their children.” The Maryland State Education Association also argues that since 2009 when the Education Trust Fund was created, $1.9 billion in casino revenue had been added to the Education Trust Fund, but education spending as a whole had not increased proportionally.
  • Maryland Center on Economic Policy Director Benjamin Orr, said, “While gambling was sold as a way to bring in more money for education, it really hasn’t been putting more money in schools. We’ve essentially invested the same amount of money in our schools that we would have with or without legalized gambling.”
  • Director of the Education Reform Project of the ACLU of Maryland, Bebe Verdery, said, “Maryland school funding falls over $1 billion short of what the education formula says students need. Casino operators are receiving higher-than-expected, record profits. In this time of fiscal distress for Baltimore and other schools, why can’t part of the solution be casinos sharing more of their excess profits?”

Casino revenue and education funding in Maryland

Maryland voters approved constitutional amendments allowing slots in 2008 and table games in 2012. Advertisements by proponents of those measures made school funding a focal point of the message, saying that allowing the state to have casinos and expanding gambling would pump hundreds of millions of dollars “directly into schools.” In 2009, Maryland created the Education Trust Fund. Since 2009, an estimated $1.9 billion was added to the Education Trust Fund from casino tax revenue.

According to Benjamin Orr, director of the Maryland Center on Economic Policy, and the Maryland State Education Association, general fund revenue that was used to fund education prior to 2009 was used for other purposes as casino tax revenue increased. This amendment would stop future governors and lawmakers from using revenue from casinos on anything other than K-12 education. In 2002, The Bridge to Excellence in Public Schools Act was passed. It is commonly referred to as the Thornton Funding Formula which established a state school aid formula so that schools have the necessary resources to “provide every child with an adequate and equitable education.”

The casino tax revenue from 2009 through 2017 and the levels of state education funding for the same time period are below. The figures used for the state education funding are the yearly appropriation totals taken from the general fund and special funds for the State Department of Education and do not include federal funds. The numbers for the casino tax revenue are taken from estimated revenue for the Education Trust Fund (ETF) each fiscal year.

Casino tax revenue per month during calendar year 2018

Following is a chart showing the amount of monthly tax revenue generated by the state’s six casinos for the calendar year 2018. The chart shows the amount of revenue dedicated to (1) the Education Trust Fund and (2) the state’s general fund. Aside from the ETF and the general fund, casino tax revenue also goes toward other causes such as to casino operators, purse dedication, and local grants.

MonthRevenueAmount dedicated to ETFAmount dedicated to general fund
January 2018$79,316,699.90$30,490,181.08$1,164,667.51
February 2018$84,718,498.48$32,525,116.02$1,241,725.26
March 2018$92,549,246.23$35,646,841.39$1,356,314.58
April 2018$90,246,181.37$34,672,910.35$1,321,603.23
May 2018$96,561,552.56$36,946,433.54$1,415,108.18
June 2018$93,704,104.50$35,864,513.38$1,372,165.77
July 201895,395,316.36$37,749,768.58$0.00