BILL NUMBER: AB 363 CHAPTERED
BILL TEXT
CHAPTER 56
FILED WITH SECRETARY OF STATE JULY 1, 2011
APPROVED BY GOVERNOR JUNE 29, 2011
PASSED THE SENATE JUNE 20, 2011
PASSED THE ASSEMBLY MAY 19, 2011
AMENDED IN ASSEMBLY APRIL 14, 2011
INTRODUCED BY Assembly Member Hayashi
FEBRUARY 14, 2011
An act to amend Sections 8880.4, 8880.4.5, 8880.63, and 8880.64 of
the Government Code, relating to the California State Lottery.
LEGISLATIVE COUNSEL'S DIGEST
AB 363, Hayashi. California State Lottery.
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.
Existing law requires the commission to establish the percentage of
total annual revenues of the state lottery to be allocated to the
benefit of public education at a level that maximizes the total net
revenues allocated for the benefit of public education. Existing law
requires the Controller, by September 1 of each fiscal year for 5
years following the enactment of this provision, to report to the
Legislature whether specified events relating to the total net
revenues allocated to the benefit of public education have occurred
and, if so, to notify the Legislature and the Governor. Existing law
further requires the Controller to convene a lottery review group to
report to the Legislature, no later than December 31 following the
final fiscal year of that 5-year period, on whether certain
provisions have furthered the purposes of the California State
Lottery Act of 1984. Under existing law, those provisions shall
remain in effect only until December 31 of the year of notification
from the Controller to the Legislature and the Governor that those
specified events relating to the total net revenues allocated to the
benefit of public education have occurred, and the prior law will be
restored at that time.
This bill would instead require the Controller to make those
reports by December 31 and March 31, respectively. The bill also
would extend the operation of the provisions described above until
April 1 of the year following notification of the Legislature and the
Governor by the Controller that the specified events have occurred.
The California State Lottery Act of 1984 provides 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 its provisions further the purposes
of the act.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 8880.4 of the Government Code, as amended by
Section 1 of Chapter 13 of the Statutes of 2010, 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 become inoperative on April 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, and as of the
following January 1 is repealed, unless a later enacted statute, that
is enacted before January 1 of that following year, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 2. Section 8880.4 of the Government Code, as added by Section
2 of Chapter 13 of the Statutes of 2010, is amended 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 April 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 of the Government Code is amended 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 December 31 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 March 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 become inoperative on April 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) have occurred, and as of the following January 1 is
repealed, unless a later enacted statute, that is enacted before
January 1 of that following year, deletes or extends the dates on
which it becomes inoperative and is repealed.
SEC. 4. Section 8880.63 of the Government Code, as amended by
Section 4 of Chapter 13 of the Statutes of 2010, 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 become inoperative on April 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, and as of the
following January 1 is repealed, unless a later enacted statute, that
is enacted before January 1 of that following year, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 5. Section 8880.63 of the Government Code, as added by
Section 5 of Chapter 13 of the Statutes of 2010, is amended 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 April 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, as amended by
Section 6 of Chapter 13 of the Statutes of 2010, 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 become inoperative on April 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, and as of the
following January 1 is repealed, unless a later enacted statute, that
is enacted before January 1 of that following year, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 7. Section 8880.64 of the Government Code, as added by
Section 7 of Chapter 13 of the Statutes of 2010, 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 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 April 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 purposes of the California State Lottery Act of 1984, enacted by
Proposition 37 at the November 6, 1984, general election.