To make matters worse, my understanding is that when the state receives money from the lottery for the schools, that money does in fact go to the schools... and then an equivalent amount of money comes out of the school's budget and goes into the state's general budget.

So, for example: if the school budget for the year is $5 million, and lottery brings in $1 million for the school, the school doesn't get $6 million the way a lot of people seem to think. The school gets $1 million from the lottery and the state only has to pay $4 million out of the general budget.