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Arizona casino profits help fund education

FLAGSTAFF, Ariz. - Like all other school officials around the state, Mitch Strohman of Flagstaff Unified School District has been anxiously waiting for the first payday from Arizona's tribal casinos.

The school district has been torn with strife because of a $7 million cut in state funding which led to the firing of the district's superintendent, a recall effort against three school board members and talk of school closures in the northern Arizona mountain city.

"We've been on the phones a lot with the Arizona Department of Education trying to figure out what the casino money is going to mean to us but no one seems to have any answers," said Strohman, director of public affairs for Flagstaff's public schools.

Those questions continued recently as the Arizona Department of Gaming prepared to make its first quarterly revenue-sharing payment to the state, which is expected to be considerably less than the quarterly payments of the $54 million projected for fiscal year 2004 and the quarterly payments of the $86 million predicted for fiscal year 2005. Payments are expected to be about $95 million annually after that for the 23 years that Proposition 202 will be in effect.

On July 30, Arizona state gaming officials said the initial payout would be $4.1 million, $3 million of which will go toward the agency's admistrative expenses.

Last November, Arizona voters were inundated with the most expensive advertising campaign in state history at $37 million when three gaming proposals were on the ballot.

Proposition 202, which was supported by 17 tribes in the state, won by a narrow margin of about 20,000 votes out of 1.2 million votes cast. That measure limited gambling to reservations, tightened state regulation and raised the number of slot machines and house-banked blackjack and poker at the Indian casinos. It also permits only one more Indian casino to be built in the state which began the sharing formula based on gambling revenues by each tribe.

Voters overwhelmingly rejected two other propositions, one sponsored by the Colorado River Indian Tribe, because it was considered much too heavily weighted in favor of that western Arizona tribe at the expense of other Indian gaming interests.

The other measure, which would have allowed slot machines at the state's race tracks and would have provided hundreds of millions more dollars to the state than the other propositions, also went down in flames because state voters feared no-holds-barred gambling in the state.

Karen Hoover, a spokeswoman for the gaming department, said that Arizona tribes in the gaming business must pay 1 percent of the first $25 million in gaming revenues, 3 percent of the next $50 million, 6 percent of the next $25 million and 8 percent of any gaming revenues more than $100 million.

The reason school officials are waiting with such bated breath for release of the casino revenue figures is the disbursement formula, which heavily favors schools and emergency services.

Hoover said that 12 percent of the gaming revenues will go to cities, towns and counties with each tribe given the discretion of deciding which governing entity will receive its money.

The remaining 88 percent of the money goes to the state with 56 percent of that amount earmarked for education, 28 percent for emergency services and the remainder going for Gaming Department regulation costs, tourism, wildlife conservation and treatment for gambling addiction.

Hoover said that initial calculations have estimated that Arizona's schools, which rank near the bottom of the nation's charts in funding, will receive an additional $59 million because of casino funding for the two-year period beginning at the start of fiscal year 2004.

All of which is music to the ears of Strohman.

"We need so much money in so many areas that it's hard to say where we will even begin with the casino money. Let's just say that we're very happy that this funding source is beginning," Strohman said.