A proposal by crafters of the 2010-11 North Carolina budget will result in a huge void locally.

Earlier this week, members of a conference committee representing the NC Senate and NC House agreed to a plan that re-directs millions of dollars in NC Lottery proceeds destined for all 100 counties across the state.

That plan will cost the four counties of the Roanoke-Chowan area a combined $718,530. For two local counties – Bertie and Gates – they are now looking for ways to fill that void as both use Lottery proceeds to help pay for debt service on new school construction and classroom additions.

“You can’t change the rules in the middle of the game,” said Gates County Manager Toby Chappell whose county will lose nearly $130,000 in the proposed deal.

Based on numbers provided by the North Carolina Association of County Commissioners, Gates County was destined to receive $278,357 in lottery proceeds based on the state’s current distribution formula for those funds (65 percent per pupil and 35 percent on effective tax rate). With the budget crafters opting to go with a distribution formula based solely upon student enrollment, small school districts such as Gates (1,874 pupils) come out on the short end as they stand to lose $129,760. Comparatively, the Wake County Public School system (boasting of the state’s largest student population at 144,856 pupils) will lose less money ($101,835) than any of the four R-C area counties based on the new lottery distribution proposal.

In 2007, the Gates County Board of Commissioners borrowed $6.5 million for school construction projects – additions at Buckland and T.S. Cooper elementary schools and a new gym at Gates County High School. The annual debt service on that loan is $635,981.67 for 15 years.

The Gates County Commissioners and the county’s Board of Education agreed three years ago to use the Lottery proceeds to help pay that debt.

“As you can see, we have more school construction debt than what our normal share of the Lottery proceeds provides,” Chappell said. “We already knew that. We’ve accounted for that difference in our annual budget, but to make a change of this magnitude now puts us in a precarious situation, especially considering that we just approved our new budget (one that take effect today, Thursday).”

Chappell added, “These were obligations that we made years ago. The amount we pay in debt service doesn’t automatically get reduced because we aren’t receiving our full share of the Lottery proceeds.”

The Gates County Board of Commissioners has scheduled a 10 a.m. special called meeting tomorrow (Friday) to discuss the issue.

Meanwhile, over in Bertie County, the Lottery shortfall is nearly $200,000. Bertie, with a student population of 2,861 pupils, was originally to receive $424,963 in Lottery money. Under the new plan, they can expect $226,860.

Bertie County Manager Zee Lamb said the county uses the Lottery funds to help pay the debt service on the new middle school.

“Absent those Lottery funds, the money will have to come from our school capital reserve fund,” Lamb said. “We’ll have to use $700,000 of that reserve to meet the debt payment.”

Even though it has the largest student enrollment (3,124 students) in the R-C area, Hertford County will suffer the biggest hit to its share of the Lottery proceeds. The county was projected to receive $464,028 but the change in distribution methods will leave the county with $247,714 (a deficit of $216,314).

Fortunately, Hertford County does not rely on Lottery money to make annual payments on school construction debt. As for the county’s two ongoing school construction projects (additions to C.S. Brown and the Hertford County High School football field house), money for those was paid upfront using Lottery funds that were from current or past fiscal years.

“This change in the Lottery distribution formula has no impact on those projects currently under construction nor does it impact our budget,” Hertford County Manager Loria Williams said. “This proposal by the state only means that those funds will accumulate at a smaller level than in previous years.”

Northampton County (2,518 students) stands to lose $174,353. The county was slated to receive $374,015 under the old distribution formula. That figure is now $199,662.

“This $174,353 will have a significant impact and could be a devastating blow to our school system,” Northampton County Manager Wayne Jenkins said.

Jenkins expressed frustration over how the Lottery was initially endorsed to voters in comparison to what is now going on with the funds.

“What’s a little disturbing is the Lottery was promoted in North Carolina as funding for the educational system,” he said. “Now it appears that money is out there for the taking. I have a little heartburn with that.”

Northampton County Schools Superintendent Dr. Eric Bracy was also concerned with the impact the reduction would have on the schools.

“A reduction of this magnitude will definitely have an adverse effect on Northampton County Schools,” he said in an email response.

Bracy noted it would affect the school system’s capital improvement plans.

“For the past two years we have been saving the allocation from the lottery fund to accumulate enough for major roof, boiler and heating system repairs,” he said. “A reduction in this area creates an enormous void.”