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New Jersey lawmakers look to shift more lottery cash into pension fund

A new bill could reduce education's lottery funding, but only if ticket sales hit key revenue goals.

The State Capitol Building Statehouse in Trenton, New Jersey.
Todd Betzold

New Jersey's lottery was originally designed to fund education, but over the years, lawmakers have quietly redirected a chunk of that money elsewhere. Now, a new bill could shift even more lottery funds away from schools and into the state's pension system.

Supporters call it a smart financial move. Meanwhile, critics worry about the long-term impact on education.

New bill in New Jersey

Legislators in New Jersey have introduced a new bill that would revise the distribution of New Jersey State Lottery funds. The original goal of the New Jersey Lottery was to fund education in the state.

However, lawmakers have been slowly taking money from these education funds and putting them into other accounts, including the common pension fund. With this new bill, they are looking to take even more of that lottery revenue away from education and use it to fund the state's public pension system.

How do they do this? The bill states they would revise the apportionment of the New Jersey State Lottery contributions. They would do this by adjusting the percentage of lottery revenue allocated to the Common Pension Fund L investment account.

What would the new percentages be?

The current law states that at least 30 percent of the proceeds from lottery ticket sales are specifically for the pension fund. This was put in place with the Lottery Enterprise Contribution Act.

Under the new bill, this would be lowered to at least 25 percent. However, this would only take place if annual lottery ticket sales and total revenues in a given fiscal year meet or exceed the average figures from the designated base fiscal year. The designated base fiscal year would be the year in which the bill becomes law.

Starting in the fourth fiscal year after the base year, the new bill states that if lottery revenues stay at or above base-year levels for three consecutive years, the 25 percent allocation will remain in place. However, if revenues drop below base-year figures during that period, the pension fund allocation will return to 30 percent in the next fiscal year.

Lawmakers said a comprehensive review of the State Lottery Planning Commission's findings, dating back to its 1969 establishment, along with other relevant financial data, helped lead them to these changes they are proposing.

Original purpose of New Jersey Lottery

The creation of the New Jersey State Lottery was done to help maximize funding for public institutions and education. This was to be done while also maintaining integrity and fairness.

Now with these proposed changes, they are aiming to balance fiscal responsibility with the evolving financial landscape of lottery revenues. If the bill is passed, it would provide a flexible funding structure based on lottery performance. This would help ensure that the contributions align with actual sales and revenue trends.

Banning online ticket sales in New Jersey

Another bill in New Jersey concerning the lottery is a bill that would ban internet lottery sales by the State Lottery Commission. Lawmakers are concerned about the decrease in foot traffic to these brick-and-mortar lottery retailers.

Hearings were held in November 2024 regarding and a key Assembly committee unanimously approved the legislation. The bill has yet to make it to the Senate floor for a full vote.

Enjoy playing the New Jersey Lottery, and please remember to play responsibly.

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