BILL NUMBER: AB 1654 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 16, 2008
PASSED THE ASSEMBLY SEPTEMBER 16, 2008
AMENDED IN SENATE SEPTEMBER 15, 2008
AMENDED IN SENATE MARCH 11, 2008
AMENDED IN ASSEMBLY JANUARY 18, 2008
AMENDED IN ASSEMBLY JANUARY 15, 2008
AMENDED IN ASSEMBLY JANUARY 7, 2008
INTRODUCED BY Committee on Budget
FEBRUARY 23, 2007
An act to amend Sections 8880.1, 8880.4, 8880.5, 8880.25, 8880.26,
8880.321, 8880.38, 8880.48, 8880.56, 8880.62, 8880.64, and 8880.65
of, to add Sections 8880.4.5 and 8880.5.5 to, and to repeal Section
8880.63 of, the Government Code, and to amend Section 5 of the
California State Lottery Act of 1984, relating to the California
State Lottery, and declaring the urgency thereof, to take effect
immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1654, Committee on Budget. California State Lottery.
(1) The California State Lottery Act of 1984, enacted by
initiative, authorizes a California State Lottery and provides for
its operation and administration by the California State Lottery
Commission and the Director of the California State Lottery, with
certain limitations. The act provides that none of its provisions may
be changed by the Legislature except to further its purpose by a
bill passed by a 2/3 vote of each house of the Legislature and signed
by the Governor. The act establishes the State Lottery Fund, which
is continuously appropriated for the purposes of the California State
Lottery. Existing law provides that the purpose of the act is
support for the preservation of the rights, liberties, and welfare of
the people by providing additional moneys to benefit education
without the imposition of additional or increased taxes.
This bill would provide instead that the purpose of the act is
support for preservation of the rights, liberties, and welfare of the
people by providing additional moneys to benefit education either
directly or indirectly by providing funds to pay the General Fund and
infrastructure bond obligations without the imposition of additional
or increased taxes. The bill would provide that the act may be
changed for the purposes of modernizing the lottery or to further the
purpose of the act. The bill would provide that specified provisions
regarding General Fund appropriations and California State Lottery
Fund appropriations may only be amended by a vote of the people. The
bill would state the intent of the People of California to
permanently secure the contribution that the California State Lottery
has made to funding public education, as specified. Specified
provisions of the bill would become effective only upon approval by
the voters at the next statewide election. The bill would set forth
the language to be used for the ballot label and the ballot title and
summary relating to these measures in a supplemental state ballot
pamphlet.
(2) Existing law requires that not less than 84% of the total
annual revenues from the sale of state lottery tickets or shares be
returned to the public in the form of prizes and net revenues to
benefit public education, and that no more than 16% of those revenues
be used for expenses of the lottery. Existing law requires that all
unclaimed prize money revert to the benefit of public education, and
that all of the interest earned upon funds held in the State Lottery
Fund be allocated to the benefit of public education. Existing law
defines net revenues for the purposes of the act.
This bill would require instead, commencing with the 2009-10
fiscal year, that not less than 87% of the total annual revenues of
the state lottery be returned to the public, and no more than 13% be
used for lottery expenses. The bill would define total revenues of
the state lottery to include revenue from the sale of tickets or
shares, merchandising revenue, advertising revenue, interest earnings
on moneys in the State Lottery Fund, and unclaimed prizes. The bill
would modify the definition of net revenues, as specified.
(3) Existing law requires that 50% of the total annual lottery
revenues be returned to the public in the form of prizes, and that
34% of those revenues be used to benefit public education.
This bill would require, instead, commencing with the 2009-10
fiscal year, that not less than 50%, of the total annual lottery
revenues, in an amount to be determined by commission, be returned to
the public in the form of prizes. The bill would require that
$1,000,000 be allocated to the Office of Problem and Pathological
Gambling within the State Department of Alcohol and Drug Programs for
problem gambling awareness and treatment programs. The bill would
establish the Lottery Assets Fund, to be continuously appropriated,
and would require that the amount of net revenues designated by the
Director of Finance as lottery revenue assets subject to sale
pursuant to specified provisions of law relating to the
securitization of lottery revenues be transferred to the Lottery
Assets Fund. The bill would require the net annual revenues remaining
to be transferred to the Debt Retirement Fund, and would allow those
funds to be appropriated by the Legislature to repay General Fund
budgetary obligations, infrastructure bond debts, and the Economic
Recovery Bonds, including reimbursement to the General Fund for the
costs of these debts.
(4) Existing law requires that, to the extent that expenses of the
lottery are less than 16% of the total annual revenues, any surplus
funds be allocated to the benefit of public education.
This bill would provide, instead, that, to the extent that
expenses of the lottery are less than 13% of the total annual
revenues, any surplus funds may be carried over from year to year
upon a determination by the commission that the carryover furthers
the purpose of the act, provided that the annual total revenues for
any year allocated for payment, plus carried over revenues, shall not
exceed 16% of the annual total revenues for the year in which
carried over revenues are available.
(5) Existing law establishes the California State Lottery
Education Fund, and requires that payments be made from that fund
directly to various educational entities based on specified factors.
This bill, commencing with the 2009-10 fiscal year, would
appropriate sums on an annual basis from the General Fund to
specified educational entities in amounts equal to the payments made
to the above entities during the 2008-09 fiscal year under the
provisions described above, adjusted for inflation and attendance, as
specified.
(6) Existing law exempts the lottery from specified provisions of
law applicable to state agencies.
This bill would also exempt the lottery, with respect to certain
expenditures, from specified provisions of law governing contracting
by state agencies.
(7) Existing law requires one of the deputy directors of the
lottery to be responsible for a security division to assure
integrity, honesty, and fairness in the operation and administration
of the lottery, including an examination of the qualifications and
criminal history of all prospective and current employees,
prospective and current lottery game retailers, and prospective and
current lottery suppliers. Existing law requires that fingerprints be
obtained in this process and be furnished to the Department of
Justice.
This bill would allow the commission to adopt regulations for
alternate methods of examining the qualifications and criminal
history of lottery game retailers and lottery suppliers.
(8) Existing law allows the director of the lottery to purchase or
lease goods and services as are necessary for effectuating the
purposes of the provisions governing the lottery.
This bill would instead provide that the director has express
authority, subject only to commission approval, to make any and all
expenditures as are necessary or reasonable for effectuating the
purposes of those provisions.
(9) Existing law requires the director, in all procurement
decisions, to award contracts to the responsible supplier submitting
the lowest and best proposal that maximizes the benefits to the state
in relation to the areas of security, competence, experience, and
timely performance.
This bill would delete the requirement that the director award
contracts to the responsible supplier submitting the lowest proposal.
(10) Existing law requires the commission to adopt and publish
competitive bidding procedures for the award of any procurement or
contract involving an expenditure of more than $100,000.
This bill would instead require the commission to adopt and
publish those procedures for any procurement or contract involving an
expenditure of more than $500,000.
(11) This bill would declare that it is to take effect immediately
as an urgency statute.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. More than 20 years having passed since the inception of
the California State Lottery, the Lottery, as a state-owned asset,
should be authorized to modernize its operations in order to improve
its financial performance.
SEC. 2. Section 8880.1 of the Government Code is amended to read:
8880.1. The People of the State of California declare that the
purpose of this Act is support for preservation of the rights,
liberties and welfare of the people by providing additional moneys to
benefit education either directly or indirectly by providing funds
to pay General Fund and infrastructure bond obligations without the
imposition of additional or increased taxes.
The People of the State of California further declare that it is
their intent that the net revenues of the California State Lottery
that are allocated for public education shall not be used as
substitute funds but rather shall supplement the total amount of
money allocated for public education in California.
It is further the intent of the People of California to
permanently secure the contribution that the California State Lottery
has made to funding public education by increasing the minimum
guarantee set forth in Section 8 of Article XVI of the California
Constitution.
SEC. 3. Section 8880.4 of the Government Code is amended to read:
8880.4. For fiscal years prior to the 2009-10 fiscal year, total
revenues of the lottery, as defined in Section 8880.65, shall be
allocated as follows:
(a) Not less than 84 percent of the total annual revenues from the
sale of state lottery tickets or shares shall be returned to the
public in the form of prizes and net revenues to benefit public
education.
(1) Fifty percent of the total annual revenues shall be returned
to the public in the form of prizes as described in this chapter.
(2) At least 34 percent of the total annual revenues shall be
allocated to the benefit of public education, as specified in Section
8880.5. However, for the 1998-99 fiscal year and each fiscal year
thereafter, 50 percent of any increase in the amount calculated
pursuant to this paragraph from the amount calculated in the 1997-98
fiscal year shall be allocated to school districts and community
college districts for the purchase of instructional materials, on the
basis of an equal amount per unit of average daily attendance, as
defined by law, and through a fair and equitable distribution system
across grade levels.
(3) All unclaimed prize money shall revert to the benefit of
public education, as provided for in subdivision (e) of Section
8880.321.
(4) All of the interest earned upon funds held in the State
Lottery Fund shall be allocated to the benefit of public education,
as specified in Section 8880.5. This interest is in addition to, and
shall not be considered as any part of, the 34 percent of the total
annual revenues that is required to be allocated for the benefit of
public education as specified in paragraph (2).
(5) No more than 16 percent of the total annual revenues shall be
allocated for payment of expenses of the lottery as described in this
chapter. To the extent that expenses of the lottery are less than 16
percent of the total annual revenues, any surplus funds also shall
be allocated to the benefit of public education, as specified in this
section or in Section 8880.5.
(b) Funds allocated for the benefit of public education pursuant
to subdivision (a) are in addition to other funds appropriated or
required under existing constitutional reservations for educational
purposes. No program shall have the amount appropriated to support
that program reduced as a result of funds allocated pursuant to
subdivision (a). Funds allocated for the benefit of public education
pursuant to subdivision (a) shall not supplant funds committed for
child development programs.
(c) None of the following shall be considered revenues for the
purposes of this section:
(1) Revenues recorded as a result of a nonmonetary exchange.
"Nonmonetary exchange" means a reciprocal transfer, in compliance
with generally accepted accounting principles, between the lottery
and another entity that results in the lottery acquiring assets or
services and the lottery providing assets or services.
(2) Reimbursements received by the lottery for the cost of goods
or services provided by the lottery that are less than or equal to
the cost of the same goods or services provided by the lottery.
(d) Reimbursements received in excess of the cost of the same
goods and services provided by the lottery, as specified in paragraph
(2) of subdivision (c), are not a part of the 34 percent of total
annual revenues required to be allocated for the benefit of public
education, as specified in paragraph (2) of subdivision (a). However,
this amount shall be allocated for the benefit of public education
as specified in Section 8880.5.
SEC. 4. Section 8880.4.5 is added to the Government Code, to read:
8880.4.5. Commencing with the 2009-10 fiscal year, total revenues
of the lottery, as defined in Section 8880.65, for each fiscal year
shall be allocated as follows:
(a) Not less than 87 percent of the total revenues shall be
returned to the public as follows:
(1) The commission shall determine the percentage of total
revenues that shall be returned to the public in the form of prizes
as set forth in this chapter, provided that the percentage shall not
be less than 50 percent of the total revenues.
(2) One million dollars ($1,000,000) shall be allocated to the
Office of Problem and Pathological Gambling within the State
Department of Alcohol and Drug Programs for problem gambling
awareness and treatment programs. No later than April 1 of each year,
the Director of the Office of Problem and Pathological Gambling
shall report to the commission on the effectiveness of problem
gambling awareness and treatment efforts. The funding provided
pursuant to this paragraph shall not replace or limit any other
problem gambling awareness or treatment activity determined by the
director to further the purposes of this chapter.
(3) The amount of net revenues designated by the Director of
Finance as lottery revenue assets subject to sale pursuant to Article
6.7 (commencing with Section 63048.91) of Chapter 2 of Division 1 of
Title 6.7 shall be transferred to the Lottery Assets Fund, which is
hereby established in the State Treasury, and, notwithstanding
Section 13340, is continuously appropriated for the purposes of that
article.
(4) Net revenues remaining after the allocations made pursuant to
paragraphs (1) through (3) shall be transferred to the Debt
Retirement Fund, which is hereby established in the State Treasury.
The Debt Retirement Fund may be appropriated by the Legislature for
the purpose of repaying General Fund budgetary obligations,
infrastructure bond debts, and the Economic Recovery Bonds, including
reimbursement to the General Fund for the costs of these debts.
(b) No more than 13 percent of the total revenues shall be
allocated for payment of expenses of the lottery as described in this
chapter. To the extent that expenses of the lottery are less than 13
percent of the total revenues, surplus funds may be carried over
from year to year upon a determination by the commission that the
carryover furthers the purposes of this chapter, except that the
total revenues allocated for payment, plus carried over revenue,
shall not exceed 16 percent of the total revenues for the year in
which carried over revenue is available. Excess carried over revenue
shall be allocated pursuant to subdivision (a).
(c) None of the following shall be considered revenues for the
purposes of this section:
(1) Revenues recorded as a result of a nonmonetary exchange.
"Nonmonetary exchange" means a reciprocal transfer, in compliance
with generally accepted accounting principles, between the lottery
and another entity that results in the lottery acquiring assets or
services and the lottery providing assets or services.
(2) Reimbursements received by the lottery for the cost of goods
or services provided by the lottery that are less than or equal to
the cost of the same goods or services provided by the lottery.
SEC. 5. Section 8880.5 of the Government Code is amended to read:
8880.5. The California State Lottery Education Fund is created
within the State Treasury, and is continuously appropriated for
carrying out the purposes of this chapter. For fiscal years prior to
the 2009-10 fiscal year, the Controller shall draw warrants on this
fund and distribute them quarterly in the following manner, provided
that the payments specified in subdivisions (a) to (g), inclusive,
shall be equal per capita amounts.
(a) Payments shall be made directly to public school districts,
including county superintendents of schools, serving kindergarten and
grades 1 to 12, inclusive, or any part thereof, on the basis of an
equal amount for each unit of average daily attendance, as defined by
law and adjusted pursuant to subdivision (l).
(b) Payments shall also be made directly to public school
districts serving community colleges, on the basis of an equal amount
for each unit of average daily attendance, as defined by law.
(c) Payments shall also be made directly to the Board of Trustees
of the California State University on the basis of an amount for each
unit of equivalent full-time enrollment. Funds received by the
trustees shall be deposited in and expended from the California State
University Lottery Education Fund, which is hereby created or, at
the discretion of the trustees, deposited in local trust accounts in
accordance with subdivision (j) of Section 89721 of the Education
Code.
(d) Payments shall also be made directly to the Regents of the
University of California on the basis of an amount for each unit of
equivalent full-time enrollment.
(e) Payments shall also be made directly to the Board of Directors
of the Hastings College of the Law on the basis of an amount for
each unit of equivalent full-time enrollment.
(f) Payments shall also be made directly to the Department of the
Youth Authority for educational programs serving kindergarten and
grades 1 to 12, inclusive, or any part thereof, on the basis of an
equal amount for each unit of average daily attendance, as defined by
law.
(g) Payments shall also be made directly to the two California
Schools for the Deaf, the California School for the Blind, and the
three Diagnostic Schools for Neurologically Handicapped Children, on
the basis of an amount for each unit of equivalent full-time
enrollment.
(h) Payments shall also be made directly to the State Department
of Developmental Services and the State Department of Mental Health
for clients with developmental or mental disabilities who are
enrolled in state hospital education programs, including
developmental centers, on the basis of an equal amount for each unit
of average daily attendance, as defined by law.
(i) No Budget Act or other statutory provision shall direct that
payments for public education made pursuant to this chapter be used
for purposes and programs (including workload adjustments and
maintenance of the level of service) authorized by Chapters 498, 565,
and 1302 of the Statutes of 1983, Chapter 97 or 258 of the Statutes
of 1984, or Chapter 1 of the Statutes of the 1983-84 Second
Extraordinary Session.
(j) School districts and other agencies receiving funds
distributed pursuant to this chapter may at their option utilize
funds allocated by this chapter to provide additional funds for those
purposes and programs prescribed by subdivision (i) for the purpose
of enrichment or expansion.
(k) As a condition of receiving any moneys pursuant to subdivision
(a) or (b), each district and county superintendent of schools shall
establish a separate account for the receipt and expenditure of
those moneys, which account shall be clearly identified as a lottery
education account.
(l) Commencing with the 1998-99 fiscal year, and each year
thereafter, for the purposes of subdivision (a), average daily
attendance shall be increased by the statewide average rate of
excused absences for the 1996-97 fiscal year as determined pursuant
to the provisions of Chapter 855 of the Statutes of 1997. The
statewide average excused absence rate, and the corresponding
adjustment factor required for the operation of this subdivision,
shall be certified to the State Controller by the Superintendent of
Public Instruction.
(m) It is the intent of this chapter that all funds allocated from
the California State Lottery Education Fund and pursuant to Section
8880.5.5 shall be used exclusively for the education of pupils and
students and no funds shall be spent for acquisition of real
property, construction of facilities, financing of research, or any
other noninstructional purpose.
SEC. 6. Section 8880.5.5 is added to the Government Code, to read:
8880.5.5. (a) Notwithstanding Section 13340 of the Government
Code, commencing with the 2009-10 fiscal year and each fiscal year
thereafter, the following annual appropriations are hereby made from
the General Fund:
(1) To the State Department of Education, for allocation to school
districts, county offices of education, and charter schools serving
kindergarten and grades 1 to 12, inclusive, or any part thereof, on
the basis of an equal amount for each unit of average daily
attendance, as defined by law and adjusted pursuant to subdivision
(l) of Section 8880.5, an amount equal to the payments made during
the 2008-09 fiscal year pursuant to subdivision (a) of Section
8880.5, adjusted for inflation and attendance. The amount
appropriated each year pursuant to this paragraph shall be determined
by multiplying the amount appropriated in the preceding fiscal year
by one plus the percent change in average daily attendance, as
defined by law and adjusted pursuant to subdivision (l) of Section
8880.5, for school districts, county offices of education, and
charter schools serving kindergarten and grades 1 to 12 from the
second preceding fiscal year to the preceding fiscal year and then by
applying a cost-of-living adjustment pursuant to paragraph (10) of
this subdivision.
(2) To the Board of Governors of the California Community
Colleges, for allocation to community college districts, on the basis
of an equal amount for each full time equivalent student, as defined
by law, an amount equal to the payments made during the 2008-09
fiscal year pursuant to subdivision (b) of Section 8880.5, adjusted
for inflation and attendance. The amount appropriated each year
pursuant to this paragraph shall be determined by multiplying the
amount appropriated in the preceding fiscal year by one plus the
percent change in full time equivalent students for community college
districts from the second preceding fiscal year to the preceding
fiscal year and then by applying a cost of living adjustment pursuant
to paragraph (10) of this subdivision.
(3) To the Board of Trustees of the California State University,
an amount equal to the payments made during the 2008-09 fiscal year
pursuant to subdivision (c) of Section 8880.5, adjusted for inflation
and attendance. The amount appropriated each year pursuant to this
paragraph shall be determined by multiplying the amount appropriated
in the preceding fiscal year by one plus the percent change in
full-time equivalent students for the California State University
system from the second preceding fiscal year to the preceding fiscal
year and then by applying a cost-of-living adjustment pursuant to
paragraph (10) of this subdivision.
(4) To the Regents of the University of California, an amount
equal to the payments made during the 2008-09 fiscal year pursuant to
subdivision (d) of Section 8880.5, adjusted for inflation and
attendance. The amount appropriated each year pursuant to this
paragraph shall be determined by multiplying the amount appropriated
in the preceding fiscal year by one plus the percent change in
full-time equivalent students for the University of California system
from the second preceding fiscal year to the preceding fiscal year
and then by applying a cost-of-living adjustment pursuant to
paragraph (10) of this subdivision.
(5) To the Board of Directors of the Hastings College of the Law,
an amount equal to the payments made during the 2008-09 fiscal year
pursuant to subdivision (e) of Section 8880.5, adjusted for inflation
and attendance. The amount appropriated each year pursuant to this
paragraph shall be determined by multiplying the amount appropriated
in the preceding fiscal year by one plus the percent change in
full-time equivalent students for the Hastings College of the Law
from the second preceding fiscal year to the preceding fiscal year
and then by applying a cost-of-living adjustment pursuant to
paragraph (10) of this subdivision.
(6) To the California Department of Corrections and
Rehabilitation, for educational programs serving kindergarten and
grades 1 to 12, inclusive, or any part thereof, an amount equal to
the payments made during the 2008-09 fiscal year pursuant to
subdivision (f) of Section 8880.5, adjusted for inflation and
attendance. The amount appropriated each year pursuant to this
paragraph shall be determined by multiplying the amount appropriated
in the preceding fiscal year by one plus the percent change in
equivalent average daily attendance for the Department of Corrections
and Rehabilitation Division of Juvenile Justice from the second
preceding fiscal year to the preceding fiscal year and then by
applying a cost-of-living adjustment pursuant to paragraph (10) of
this subdivision.
(7) To the State Department of Education, for support of the State
Special Schools, an amount equal to the payments made during the
2008-09 fiscal year pursuant to subdivision (g) of Section 8880.5,
adjusted for inflation and attendance. The amount appropriated each
year pursuant to this paragraph shall be determined by multiplying
the amount appropriated in the preceding fiscal year by one plus the
percent change in equivalent average daily attendance for the State
Special Schools from the second preceding fiscal year to the
preceding fiscal year and then by applying a cost-of-living
adjustment pursuant to paragraph (10) of this subdivision.
(8) To the State Department of Developmental Services, for clients
with developmental disabilities who are enrolled in developmental
center education programs, an amount equal to the payments made to
the State Department of Developmental Services during the 2008-09
fiscal year pursuant to subdivision (h) of Section 8880.5, adjusted
for inflation and attendance. The amount appropriated each year
pursuant to this paragraph shall be determined by multiplying the
amount appropriated in the preceding fiscal year by one plus the
percent change in equivalent average daily attendance for the State
Department of Developmental Services from the second preceding fiscal
year to the preceding fiscal year and then by applying a
cost-of-living adjustment pursuant to paragraph (10) of this
subdivision.
(9) To the State Department of Mental Health, for clients with
mental disabilities who are enrolled in state hospital education
programs, an amount equal to the payments made to the State
Department of Mental Health during the 2008-09 fiscal year pursuant
to subdivision (h) of Section 8880.5, adjusted for inflation and
attendance. The amount appropriated each year pursuant to this
paragraph shall be determined by multiplying the amount appropriated
in the preceding fiscal year by one plus the percent change in
equivalent average daily attendance for the State Department of
Mental Health from the second preceding fiscal year to the preceding
fiscal year and then by applying a cost-of-living adjustment pursuant
to paragraph (10) of this subdivision.
(10) The amounts appropriated pursuant to this subdivision shall
be increased each year by the change in the cost-of-living determined
pursuant to paragraph (1) of subdivision (e) of Section 8 of Article
XIII B of the California Constitution.
(b) The amounts appropriated for the 2009-10 fiscal year pursuant
to paragraphs (1), (2), (6), (7), (8), and (9) of subdivision (a)
shall be in addition to the sums required by, and shall not be
considered towards fulfilling the funding requirements of, paragraph
(2) of subdivision (b) of Section 8 of Article XVI of the California
Constitution.
(c) The amounts appropriated for the 2009-10 fiscal year pursuant
to paragraphs (1), (2), (6), (7), (8), and (9) of subdivision (a)
shall not offset or in any way reduce the maintenance factor
determined pursuant to subdivisions (d) and (e) of Section 8 of
Article XVI of the California Constitution, and shall be in addition
to the amount of maintenance factor allocated in the 2009-10 fiscal
year pursuant to subdivision (e) of Section 8 of Article XVI of the
California Constitution.
(d) Commencing with the 2009-10 fiscal year and each fiscal year
thereafter, for the purposes of making the computations required by
Section 8 of Article XVI of the California Constitution, the
appropriations made by paragraphs (1), (2), (6), (7), (8), and (9) of
subdivision (a) of this section shall be deemed to be included
within the "total allocations to school districts and community
college districts from General Fund proceeds of taxes appropriated
pursuant to Article XIII B," as defined in subdivision (e) of Section
41202 of the Education Code.
(e) Commencing with the 2009-10 fiscal year, the percentage
determined pursuant to paragraph (1) of subdivision (b) of Section 8
of Article XVI of the California Constitution, as adjusted pursuant
to Chapter 2 (commencing with Section 41200) of Part 24 of the
Education Code, shall be increased by adding to it the number of
percentage points determined by dividing the total amount allocated
pursuant to subdivisions (a), (b), (f), (g), and (h) of Section
8880.5 of the Government Code for the 2008-09 fiscal year by the
total General Fund revenues that may be appropriated pursuant to
Article XIII B of the California Constitution for the 2008-09 fiscal
year.
(f) Commencing with the 2009-10 fiscal year, references in law to
lottery education funds, to funds allocated pursuant to Section
8880.5, to funds allocated from the California State Lottery
Education Fund, or similar references in law to the proceeds of
lottery revenues allocated for the benefit of public education to the
entities described in subdivisions (a), (b), (f), (g), and (h) of
Section 8880.5 shall be deemed to be references to the funds
appropriated pursuant to this section. This subdivision shall be
broadly construed to effectuate its purpose.
SEC. 7. Section 8880.25 of the Government Code is amended to read:
8880.25. The Lottery shall be operated so as to produce the
maximum amount of net revenues available for allocation pursuant to
Sections 8880.4 and 8880.4.5.
SEC. 8. Section 8880.26 of the Government Code is amended to read:
8880.26. (a) The provisions of Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 are not applicable to any rule
or regulation promulgated by the commission.
(b) Section 2889 of the Public Utilities Code shall not be
applicable to any live, recorded, or recorded-interactive audio text
access telephone service under contract to the commission, as of the
effective date of the act adding this subdivision, that provides the
public with lottery game draw results.
(c) The provisions of the Public Contract Code shall not apply to
expenditures made by the lottery in furtherance of its duty to
produce the maximum amount of net revenues.
SEC. 9. Section 8880.321 of the Government Code is amended to
read:
8880.321. The commission shall promulgate regulations to
establish a system of verifying the validity of prizes and to effect
payment of the prizes, provided that:
(a) For convenience of the public, lottery game retailers may be
authorized by the commission to pay winners of up to six hundred
dollars ($600) after performing validation procedures on their
premises appropriate to the lottery game involved.
(b) No prize may be paid arising from tickets or shares that are
stolen, counterfeit, altered, fraudulent, unissued, produced or
issued in error, unreadable, not received or not recorded by the
lottery by applicable deadlines, lacking in captions that confirm and
agree with the lottery play symbols required by the lottery game
involved, purchased by a minor, or not in compliance with additional
specific rules and regulations and confidential validation and
security tests appropriate to the particular lottery game. The
lottery may pay a prize even though the actual winning ticket is not
received by the lottery if the lottery validates the claim for the
prize based upon substantial proof. "Substantial proof" means any
evidence that would permit the lottery to use established validation
procedures, as specified in lottery regulations, to validate the
claim.
The commission may require that any form relating to a claim for a
prize shall be signed under penalty of perjury. This declaration
shall meet the requirements of Section 2015.5 of the Code of Civil
Procedure.
(c) No particular prize in any lottery game shall be paid more
than once.
(d) The commission may specify that winners of less than
twenty-five dollars ($25) claim the prizes from either the same
lottery game retailer from whom the ticket or share was purchased or
from the lottery itself.
(e) Players shall have the right to claim prize money for 180 days
after the drawing or the end of the lottery game or play in which
the prize was won. The commission may define shorter time periods for
eligibility for participation in, and entry into, drawings involving
entries or finalists. If a valid claim is not made for a prize
directly payable by the commission or for any on-line game prize
within the period applicable for that prize, the unclaimed prize
money shall be treated as set forth in subdivision (c) of Section
8880.4 or, commencing with the 2009-10 fiscal year, be treated as
total revenues as set forth in Section 8880.4.5.
(f) After the expiration of the claim period for prizes for each
lottery game, the commission shall make available a detailed
tabulation of the total number of tickets or shares actually sold in
a lottery game and the total number of prizes of each prize
denomination that were actually claimed and paid directly by the
commission.
(g) A ticket or share shall not be purchased by, and a prize shall
not be paid to, a member of the commission, any officer or employee
of the commission, any officer or employee of the Controller who is
designated in writing by the Controller as having possible
access to confidential lottery
information, programs, or systems, or any spouse, child, brother,
sister, or parent of that person who resides within the same
household of the person. Any person who knowingly sells or purchases
a ticket or share in violation of this section, or who knowingly
claims or attempts to claim a prize with a ticket or share that was
purchased or sold in violation of this section, is guilty of a
misdemeanor.
(h) No prize shall be paid to any person under the age of 18
years. Any person who knowingly claims or attempts to claim a prize
with a ticket or share purchased by a person under the age of 18
years is guilty of a misdemeanor.
SEC. 10. Section 8880.38 of the Government Code is amended to
read:
8880.38. (a) One of the deputy directors shall be the Deputy
Director for Security, and be responsible for a security division to
assure integrity, honesty, and fairness in the operation and
administration of the California State Lottery, including, but not
limited to, an examination of the qualifications and criminal history
of all prospective and current employees, prospective and current
Lottery Game Retailers, and prospective and current Lottery suppliers
as defined in Section 8880.57. Fingerprints shall be obtained in
this process and shall be furnished to the Department of Justice. The
Department of Justice shall submit one set of the fingerprints to
the Federal Bureau of Investigation as required, and shall retain the
other set to obtain the California criminal history record that may
be maintained.
(b) The Deputy Director for Security shall be qualified by
training and experience, including at least five years of law
enforcement experience, and shall have knowledge and experience in
computer security, to fulfill these responsibilities. The Deputy
Director for Security shall confer with the Attorney General or his
or her designee and the Controller or his or her designee as the
Deputy Director for Security deems necessary and advisable to promote
and ensure integrity, security, honesty, and fairness of the
operation and administration of the Lottery. The Deputy Director for
Security shall report any alleged violation of any law related to the
operations of the California State Lottery to the appropriate law
enforcement agency and the Attorney General for further investigation
and action. The Deputy Director for Security and lottery security
officers shall have access to criminal history information pursuant
to Sections 11105 and 11105.01 of the Penal Code.
(c) Notwithstanding subdivision (a), the commission may adopt
regulations for alternate methods of examining the qualifications and
criminal history of lottery game retailers and lottery suppliers, as
defined in Section 8880.57.
SEC. 11. Section 8880.48 of the Government Code is amended to
read:
8880.48. (a) The director shall, pursuant to this chapter and the
regulations of the commission, select as lottery game retailers
those persons and organizations as the director deems shall best
serve the public convenience and promote the sale of tickets or
shares. No person under the age of 18 years shall be a lottery game
retailer. In the selection of lottery game retailers, the director
shall consider factors such as financial responsibility, integrity,
reputation, accessibility of the place of business or activity to the
public, security of the premises, the sufficiency of existing
lottery game retailers to serve the public convenience, and the
projected volume of the sales for the lottery game involved.
(b) In order to allow an evaluation of the competence, integrity,
and character of potential lottery game retailers, the commission may
require information it deems necessary of any person, corporation,
trust, association, partnership, or joint venture applying for
authority to act as a lottery game retailer.
(c) No person shall be a lottery game retailer if the person is
engaged exclusively in the business of selling lottery tickets or
shares. A person lawfully engaged in nongovernmental business on
state property, an owner or lessee of an establishment which sells
alcoholic beverages, and a civic and fraternal organization may be
selected as a lottery game retailer. The director may contract with
lottery game retailers on a seasonal or temporary basis.
(d) The commission shall establish a formal written appeal process
concerning the denial of an application for, or revocation of, a
contract to be a lottery game retailer.
SEC. 12. Section 8880.56 of the Government Code is amended to
read:
8880.56. (a) Notwithstanding any other provision of this chapter
or of any other law, the director has express authority, subject only
to commission approval, to make any and all expenditures that are
necessary or reasonable for effectuating the purposes of this
chapter, including, but not limited to, payment for the costs of
supplies, materials, tickets, independent audit services, independent
studies, data transmission, advertising, promotion, consumer,
retailer, and employee incentives, public relations, communications,
compensation paid to the lottery game retailers, bonding for lottery
game retailers, printing, distribution of tickets or shares,
reimbursement of costs of services provided to the lottery by other
governmental entities, and payment for the costs of any other goods
and services necessary or reasonable for effectuating the purposes of
this chapter. The director may not contract with any private party
for the operation and administration of the California State Lottery,
created by this chapter. However, this section does not preclude
procurements that integrate functions. In all procurement decisions,
the director shall, subject to the approval of the commission, award
contracts to the responsible supplier submitting the best proposal
that maximizes the benefits to the state in relation to the areas of
security, competence, experience, and timely performance, shall take
into account the particularly sensitive nature of the California
State Lottery and shall act to promote and ensure integrity,
security, honesty, and fairness in the operation and administration
of the lottery and the objective of raising net revenues for the
benefit of the public purpose described in this chapter.
(b) Notwithstanding any other provision of this chapter, the
following shall apply to contracts or procurement by the lottery:
(1) To ensure the fullest competition, the commission shall adopt
and publish competitive bidding procedures for the award of any
procurement or contract involving an expenditure of more than five
hundred thousand dollars ($500,000). The competitive bidding
procedures shall include, but not be limited to, requirements for
submission of bids and accompanying documentation, guidelines for the
use of requests for proposals, invitations to bid, or other methods
of bidding, and a bid protest procedure. The director shall determine
whether the goods or services subject to this paragraph are
available through existing contracts or price schedules of the
Department of General Services.
(2) The contracting standards, procedures, and rules contained in
this subdivision shall also apply with respect to any subcontract
involving an expenditure of more than five hundred thousand dollars
($500,000). The commission shall establish, as part of its bidding
procedures for general contracts, subcontracting guidelines that
implement this requirement.
(3) The provisions of Article 1 (commencing with Section 11250) of
Chapter 3 of Part 1 of Division 3 apply to the commission.
(4) The commission is subject to the Small Business Procurement
and Contract Act, as provided in Chapter 6.5 (commencing with Section
14835) of Part 5.5 of Division 3.
(5) In advertising or awarding any general contract for the
procurement of goods and services exceeding five hundred thousand
dollars ($500,000), the commission and the director shall require all
bidders or contractors, or both, to include specific plans or
arrangements to utilize subcontracts with socially and economically
disadvantaged small business concerns. The subcontracting plans shall
delineate the nature and extent of the services to be utilized, and
those concerns or individuals identified for subcontracting if known.
It is the intention of the Legislature in enacting this section to
establish as an objective of the utmost importance the advancement
of business opportunities for these small business concerns in the
private business activities created by the California State Lottery.
In that regard, the commission and the director shall have an
affirmative duty to achieve the most feasible and practicable level
of participation by socially and economically disadvantaged small
business concerns in its procurement programs.
By July 1, 1986, the commission shall adopt proposal evaluation
procedures, criteria, and contract terms which are consistent with
the advancement of business opportunities for small business concerns
in the private business activities created by the California State
Lottery and which will achieve the most feasible and practicable
level of participation by socially and economically disadvantaged
small business concerns in its procurement programs. The proposal
evaluation procedures, criteria, and contract terms adopted shall be
reported in writing to both houses of the Legislature on or before
July 1, 1986.
For the purposes of this section, socially and economically
disadvantaged persons include women, Black Americans, Hispanic
Americans, Native Americans (including American Indians, Eskimos,
Aleuts, and Native Hawaiians), Asian-Pacific Americans (including
persons whose origins are from Japan, China, the Philippines,
Vietnam, Korea, Samoa, Guam, the United States Trust Territories of
the Pacific, Northern Marianas, Laos, Cambodia, and Taiwan), and
other minorities or any other natural persons found by the commission
to be disadvantaged.
The commission shall report to the Legislature by July 1, 1987,
and by each July 1 thereafter, on the level of participation of small
businesses, socially and economically disadvantaged businesses, and
California businesses in all contracts awarded by the commission.
(6) The commission shall prepare and submit to the Legislature by
October 1 of each year a report detailing the lottery's purchase of
goods and services through the Department of General Services. The
report shall also include a listing of contracts awarded for more
than one hundred thousand dollars ($100,000), the name of the
contractor, amount and term of the contract, and the basis upon which
the contract was awarded.
(c) The lottery shall fully comply with the requirements of
paragraphs (2) to (5), inclusive, of subdivision (b), except that any
function or role which is otherwise the responsibility of the
Department of Finance or the Department of General Services shall
instead, for purposes of this subdivision, be the sole responsibility
of the lottery, which shall have the sole authority to perform that
function or role.
(d) Where a conflict exists between the provisions of this chapter
and any other provision of law, the provisions of this chapter shall
control.
SEC. 13. Section 8880.62 of the Government Code is amended to
read:
8880.62. Funds shall be disbursed from the State Lottery Fund by
the Controller for any of the purposes authorized by this chapter.
SEC. 14. Section 8880.63 of the Government Code is repealed.
SEC. 15. Section 8880.64 of the Government Code is amended to
read:
8880.64. (a) Expenses of the lottery shall include all costs
incurred pursuant to Section 8880.56. As a promotional expense, the
commission may supplement the prize pool of a game or games upon its
determination that a supplement will benefit the public purpose of
this chapter.
(b) Expenses recorded as a result of a nonmonetary exchange shall
not be considered an expense for the purposes of Sections 8880.4 and
8880.4.5 and this section. "Nonmonetary exchange" means a reciprocal
transfer, in compliance with generally accepted accounting
principles, between the lottery and another entity that results in
the lottery acquiring assets or services and the lottery providing
assets or services.
SEC. 16. Section 8880.65 of the Government Code is amended to
read:
8880.65. (a) For the purposes of this chapter, the total revenues
of the lottery shall include all revenue received by the California
State Lottery, including, but not limited to, revenue from the sale
of tickets or shares, merchandising revenue, advertising revenue,
interest earnings on moneys in the State Lottery Fund, and unclaimed
prizes returned to or retained by the State Lottery Fund. The net
revenues of the lottery shall include total revenues remaining after
accrual of all obligations of the lottery for prizes and expenses.
(b) For fiscal years prior to the 2009-10 fiscal year, the net
revenues of the lottery shall be transferred from the State Lottery
Fund not less than quarterly to the California State Lottery
Education Fund.
(c) Commencing with the 2009-10 fiscal year, the net revenues of
the lottery shall be transferred from the State Lottery Fund as
required by Section 8880.4.5.
SEC. 17. Section 5 of the California State Lottery Act of 1984 is
amended to read:
Sec. 5. The provisions of this Act, except Sections 8880.5 and
8880.5.5 which may be amended only by a vote of the People, may be
changed for the purpose of modernizing the California State Lottery
or to further the purposes of this Act as set forth in Sections
8880.1 and 8880.25 of the Government Code by a bill passed by a vote
of two-thirds of the membership of both houses of the Legislature and
signed by the Governor.
SEC. 18. Notwithstanding any other provision of law, the Secretary
of State shall submit to the voters, as a single measure, at the
next statewide election, the provisions of Senate Constitutional
Amendment 12 of the 2007-08 Regular Session and the provisions of
this act that are required to be submitted to the voters.
SEC. 19. (a) Sections 1 to 7, inclusive, Section 12, and Sections
14 to 17, inclusive, of this act amend Chapter 12.5 (commencing with
Section 8880) of Division 1 of Title 2 of the Government Code, an
initiative statute, and shall become effective only when submitted to
and approved by the voters.
(b) Notwithstanding the requirements of Sections 9040, 9043, 9044,
9061, and 9082 of the Elections Code or any other provision of law,
the Secretary of State shall submit Sections 1 to 7, inclusive,
Section 12, and Sections 14 to 17, inclusive, of this act and Senate
Constitutional Amendment 12 to the voters at the next statewide
election.
(c) (1) Notwithstanding any other provision of law, all ballots
for the next statewide election shall contain the following ballot
label:
"LOTTERY MODERNIZATION ACT. Raises revenues for the payment of
General Fund obligations and allows modernization of the California
State Lottery to improve the efficiency of the operation of the
Lottery."
(2) At the appropriate location on the ballot, in the manner
prescribed by law, there shall be provided the opportunity for voters
to indicate whether they vote for or against the measure.
(d) Notwithstanding Sections 13247 and 13281 of the Elections Code
or any other provision of law, the language in subdivision (c) shall
be the only language included in the ballot label for the condensed
statement of the ballot title, and the Attorney General shall not
supplement, subtract from, or revise that language, except that the
Attorney General may include the financial impact summary prepared
pursuant to Section 9087 of the Elections Code and Section 88003 of
the Government Code. The ballot label is the condensed statement of
the ballot title and the financial impact summary.
(e) (1) Notwithstanding any other provision of law, all ballots
for the next statewide election shall contain the following ballot
title and summary:
"LOTTERY MODERNIZATION ACT. INCREASED STATE REVENUES. PROTECTS
EDUCATION FUNDING. Allows the state Lottery to be modernized to
improve its performance with increased payouts, improved marketing,
and effective management. Ensures the state maintains ownership of
the state lottery. Increases revenues that will be used to increase
payouts, build a needed budget reserve, and pay down state bond debt.
Ensures that schools continue to receive the same dollar amount or
more funding than previously received from Lottery revenues."
(2) Notwithstanding any other provision of law, the language in
paragraph (1) shall be the only language included in the ballot title
and summary, and the Attorney General shall not supplement, subtract
from, or revise that language, except that the Attorney General may
include the financial impact summary prepared pursuant to Section
9087 of the Elections Code and Section 88003 of the Government Code.
(f) Where the voting in the election is done by means of voting
machines used pursuant to law in the manner that carries out the
intent of this section, the use of the voting machines and the
expression of the voters' choices by means thereof are in compliance
with this section.
SEC. 20. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to ensure that Sections 1 to 7, inclusive, Section 12,
and Sections 14 to 17, inclusive, of this act are submitted to the
voters at the next statewide election, it is necessary that this act
take effect immediately.