BILL NUMBER: AB 142 CHAPTERED
BILL TEXT
CHAPTER 13
FILED WITH SECRETARY OF STATE APRIL 8, 2010
APPROVED BY GOVERNOR APRIL 8, 2010
PASSED THE SENATE MARCH 22, 2010
PASSED THE ASSEMBLY MARCH 25, 2010
AMENDED IN SENATE MARCH 11, 2010
AMENDED IN SENATE FEBRUARY 1, 2010
AMENDED IN SENATE AUGUST 25, 2009
AMENDED IN ASSEMBLY APRIL 13, 2009
INTRODUCED BY Assembly Member Hayashi
(Principal coauthor: Senator Maldonado)
JANUARY 22, 2009
An act to amend, repeal, and add Sections 8880.4, 8880.63, and
8880.64 of, and to add and repeal Section 8880.4.5 of, the Government
Code, relating to the California State Lottery, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 142, Hayashi. 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 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. The act further
specifies that, of that 84%, 50% of the total annual lottery revenues
be returned to the public in the form of prizes, and that at least
34% of those revenues be allocated to the benefit of public
education. The act establishes the State Lottery Fund, a continuously
appropriated fund for carrying out the purposes of the act.
This bill would require revenues of the state lottery to be
allocated so as to maximize the amount of funding allocated to public
education, and would require 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 further
specify that, of that 87%, not less than 50% of the total annual
lottery revenues, in an amount to be determined by the commission, be
returned to the public in the form of prizes. The bill would require
the commission to establish the percentage to be allocated to the
benefit of public education at a level that maximizes the total net
revenues allocated to the benefit of public education. By changing
these allocations, the bill would change the purposes for which the
funds of a continuously appropriated fund may be appropriated, and
thereby would make an appropriation. The bill would make other
conforming changes.
This bill would require the lottery, following the end of each
full fiscal year, to calculate and report to the Controller and to
the Legislature the amount of total net revenues allocated to the
benefit of public education from the California State Lottery
Education Fund for that fiscal year. The bill would require the
Controller, if in any one of the first 5 full fiscal years after the
enactment of this measure, the Controller determines that specified
events occur, to notify the Legislature and the Governor, and post
that notification on the Controller's Internet Web site. The bill
would then provide for the repeal of the changes made by this measure
on the following January 1, and the prior law to be restored. If
those events do not occur, the bill would require the commission,
when setting the percentage to be allocated to the benefit of public
education, to ensure that net revenues allocated to public schools
are at least as much as were allocated on average in the prior 5
fiscal years, and increased in proportion to any upward increases in
lottery net revenues. The bill would require the Controller, at the
end of the first 5 full fiscal years following enactment of this
measure, to convene a lottery review group to report to the
Legislature, no later than December 31 following the final fiscal
year, on whether the amendments made by this measure have furthered
the purposes of the California State Lottery Act of 1984 as intended.
(2) The California State Lottery Act of 1984, an initiative
measure, specifies that none of its provisions may be changed 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.
This bill would declare that it furthers the purpose of the act
and would require a 2/3 vote as an amendment of that act.
(3) This bill would declare that it is to take effect immediately
as an urgency statute.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 8880.4 of the Government Code is amended to
read:
8880.4. Revenues of the state lottery shall be allocated so as to
maximize the amount of funding allocated to public education,
including from the first full fiscal year following enactment of the
act adding Section 8880.4.5, as follows:
(a) Not less than 87 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) The commission shall determine the percentage of total annual
revenues that shall be returned to the public in the form of prizes
as described in this chapter, however the percentage shall not be
less than 50 percent of the total revenues.
(2) (A) The percentage of the total annual revenues to be
allocated to the benefit of public education, as specified in Section
8880.5, shall be established by the commission at a level that
maximizes the total net revenues allocated to the benefit of public
education.
(B) 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
8880.32.
(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 total annual revenues
that are required to be allocated for the benefit of public education
as specified in paragraph (2).
(5) No more than 13 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 13
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 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.
(e) This section shall remain in effect only until December 31 of
the year of notification from the Controller to the Legislature and
the Governor that the events described in paragraphs (1) and (2) of
subdivision (c) of Section 8880.4.5 have occurred, and as of that
date is repealed, unless a later enacted statute, that is enacted
before December 31 of that year, deletes or extends that date.
SEC. 2. Section 8880.4 is added to the Government Code, to read:
8880.4. Revenues of the state lottery 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
8880.32.
(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.
(e) This section shall become operative on January 1 of the year
following notification from the Controller to the Legislature and the
Governor that the events described in paragraphs (1) and (2) of
subdivision (c) of Section 8880.4.5 have occurred.
SEC. 3. Section 8880.4.5 is added to the Government Code, to read:
8880.4.5. (a) Following the end of each full fiscal year, the
commission shall calculate and report to the Controller and to the
Legislature the amount of total net revenues allocated to the benefit
of public education from the California State Lottery Education Fund
for that fiscal year.
(b) To ensure increases in lottery net revenues allocated to
public education, if in any one of the first five full fiscal years
after the enactment of the act adding this section, the Controller
determines that both of the events described in paragraphs (1) and
(2) of subdivision (c) occur, then the Controller shall notify the
Legislature and the Governor, and post that notification on the
Controller's Internet Web site, and on January 1 of the following
year, both of the following shall occur:
(1) The amendments made to Sections 8880.4, 8880.63, and 8880.64
by the act adding this section shall become inoperative.
(2) Sections 8880.4, 8880.63, and 8880.64, as they existed prior
to the effective date of the act adding this section shall become
operative.
(c) No later than September 1 following each of the first five
fiscal years in which the amendments made by the act adding this
section are in effect, the Controller shall report to the Legislature
whether either of the following occurred in the prior fiscal year:
(1) The total net revenues allocated to the benefit of public
education from the California State Lottery Education Fund are less
than the total net revenues allocated to the benefit of public
education in the last full fiscal year prior to the enactment of the
act adding this section.
(2) The annual average of total net revenues allocated to the
benefit of public education from the California State Lottery
Education Fund after the enactment of the act adding this section is
less than the total net revenues allocated to the benefit of public
education in the last full fiscal year prior to the enactment of the
act adding this section, adjusted for an annual growth rate of 1.8
percent or the actual growth rate of lottery revenues since enactment
of the act adding this section, whichever is greater.
(d) If the conditions specified in subdivision (c) do not occur,
then in subsequent fiscal years, to ensure continued growth in
lottery net revenues allocated to public education, the commission,
when setting the percentage required in subparagraph (A) of paragraph
(2) of subdivision (a) of Section 8880.4, shall ensure that net
revenues allocated to public schools are at least as much as were
allocated on average in the prior five fiscal years, and increased in
proportion to any upward increases in lottery net revenues.
(e) At the end of the first five full fiscal years following
enactment of the act adding this section, the Controller shall
convene a lottery review group to consist of the Controller, the
Superintendent of Public Instruction, and the chairperson of the
commission. The review group shall report to the Legislature, no
later than December 31 following the final fiscal year, on whether
the amendments made by the act adding this section have furthered the
purposes of the California State Lottery Act of 1984 as intended.
(f) This section shall remain in effect only until December 31 of
the year of notification from the Controller to the Legislature and
the Governor that the events described in paragraphs (1) and (2) of
subdivision (c) have occurred, and as of that date is repealed,
unless a later enacted statute, that is enacted before December 31 of
that year, deletes or extends that date.
SEC. 4. Section 8880.63 of the Government Code is amended to read:
8880.63. (a) As nearly as practical, at least 50 percent of the
total projected revenue, computed on a fiscal-year basis, accruing
from the sales of all lottery tickets or shares shall be apportioned
for payment of prizes.
(b) This section shall remain in effect only until December 31 of
the year of notification from the Controller to the Legislature and
the Governor that the events described in paragraphs (1) and (2) of
subdivision (c) of Section 8880.4.5 have occurred, and as of that
date is repealed, unless a later enacted statute, that is enacted
before December 31 of that year, deletes or extends that date.
SEC. 5. Section 8880.63 is added to the Government Code, to read:
8880.63. (a) As nearly as practical, 50 percent of the total
projected revenue, computed on a fiscal-year basis, accruing from the
sales of all lottery tickets or shares shall be apportioned for
payment of prizes.
(b) This section shall become operative on January 1 of the year
following notification from the Controller to the Legislature and the
Governor that the events described in paragraphs (1) and (2) of
subdivision (c) of Section 8880.4.5 have occurred.
SEC. 6. Section 8880.64 of the Government Code is amended to read:
8880.64. (a) Expenses of the lottery shall include all costs
incurred in the operation and administration of the lottery and all
costs resulting from any contracts entered into for the purchase or
lease of goods and services required by the lottery, including, but
not limited to, the costs of supplies, materials, tickets,
independent audit services, independent studies, data transmission,
advertising, promotion, 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 for the costs of any other goods and
services necessary for effectuating the purposes of this chapter. 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) (1) Not more than 13 percent of the total annual revenues
accruing from the sale of all lottery tickets and shares from all
lottery games shall be expended for the payment of the expenses of
the lottery.
(2) Expenses recorded as a result of a nonmonetary exchange shall
not be considered an expense for the purposes of Section 8880.4 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.
(c) This section shall remain in effect only until December 31 of
the year of notification from the Controller to the Legislature and
the Governor that the events described in paragraphs (1) and (2) of
subdivision (c) of Section 8880.4.5 have occurred, and as of that
date is repealed, unless a later enacted statute, that is enacted
before December 31 of that year, deletes or extends that date.
SEC. 7. Section 8880.64 is added to the Government Code, to read:
8880.64. (a) Expenses of the lottery shall include all costs
incurred in the operation and administration of the lottery and all
costs resulting from any contracts entered into for the purchase or
lease of goods and services required by the lottery, including, but
not limited to, the costs of supplies, materials, tickets,
independent audit services, independent studies, data transmission,
advertising, promotion, 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 for the costs of any other goods and
services necessary for effectuating the purposes of this chapter. 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) (1) Not more than 16 percent of the total annual revenues
accruing from the sale of all lottery tickets and shares from all
lottery games shall be expended for the payment of the expenses of
the lottery.
(2) Expenses recorded as a result of a nonmonetary exchange shall
not be considered an expense for the purposes of Section 8880.4 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.
(c) This section shall become operative on January 1 of the year
following notification from the Controller to the Legislature and the
Governor that the events described in paragraphs (1) and (2) of
subdivision (c) of Section 8880.4.5 have occurred.
SEC. 8. The Legislature finds and declares that this act furthers
the purpose of the California State Lottery Act of 1984, enacted by
Proposition 37 at the November 6, 1984, statewide general election,
which is to maximize lottery revenues available to supplement funding
for public education. In the past 10 years, lottery revenues have
grown at a much lower rate than has state spending on education. The
experience of other states demonstrates that increasing the share of
sales revenues allocated to prizes increases lottery ticket sales
sufficient to increase the total net revenues available to the
lottery's beneficiary, which in California is public education. Thus,
the purpose of this act is to increase lottery net revenues
available to supplement funding for public education, and to maximize
the amount of the increase in total net revenues generated by the
lottery that are made available to public education.
SEC. 9. 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:
Because the state is currently in a fiscal crisis, and this act
will generate much needed revenue, it is necessary that this act take
effect immediately.