BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 363
                                                                  Page  1

          Date of Hearing:   May 11, 2011

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                                 Isadore Hall, Chair
                    AB 363 (Hayashi) - As Amended:  April 14, 2011
           
          SUBJECT  :   California State Lottery.

           SUMMARY  :   Extends the due date from December 31 to April 1 for 
          each of the next five years, on specified reporting requirements 
          regarding the California State Lottery Commission's efforts to 
          boost income for public education, as defined.  Specifically, 
           this bill  :  

          1)  Changes the reporting date for the California State 
          Controller (Controller) to make specific reports to the 
          Legislature from December 31 to April 1, for each of the next 
          five years, regarding the State Lottery's efforts to boost 
          income for public education. 

          2)  Extends the operation of the change described above until 
          April 1 of the year following notification of the Legislature 
          and the Governor by the Controller that 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.

           EXISTING LAW
           
          1)  The California State Lottery Act (Lottery Act or Act) of 
          1984, enacted by initiative, authorizes a California State 
          Lottery and provides for its operation and administration by the 
          California State Lottery Commission (Commission) and the 
          Director of the California State Lottery, with certain 
          limitations.

          2)  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.  

          3)  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 








                                                                  AB 363
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          have occurred and, if so, to notify the Legislature and the 
          Governor 

          4)  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 Act of 1984.  

          5)  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.  

           FISCAL EFFECT  :  This bill has been keyed non-fiscal by 
          Legislative Counsel. 

           COMMENTS  :   

           Purpose of the bill  :  AB 363 would extend the amount of time (by 
          4 months and 2 months, respectively) the Controller has to 
          complete reports as required by AB 142 (Hayashi), Chapter 13, 
          Statutes of 2010, which enhanced the funding benefit for 
          education through the California State Lottery Act.

          The California State Lottery Act was passed by the voters in 
          November 1984.  The passage of the Lottery Act created the 
          California State Lottery Commission to oversee the lottery, 
          ensuring the integrity, security and fairness of the lottery 
          system and its games in California.

          AB 142 (Hayashi) of 2010 required revenues of the state lottery 
          to be allocated to maximize the amount of funding allocated to 
          the public education system in California.  The bill also 
          required the Controller to report to the Legislature whether 
          specified events relating to the total net revenues allocated to 
          the benefit of public education have occurred and whether 
          certain provisions have furthered the purpose of the California 
          State Lottery Act of 1984 by September 1 and December 31, 
          respectively, following the final fiscal year of that 5-year 
          period.

          However, completing the review by the dates required has been 
          problematic for the Controller's Office, as the Division of 








                                                                  AB 363
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          Audits only receives the information necessary to conduct the 
          reports during the last week of August and the last week of 
          October, respectively.  This bill would give the Division of 
          Audits the necessary time to perform a quarterly review and to 
          determine if the Lottery complied with AB 142 by extending the 
          reporting deadlines.
           
           Prior legislation  :  AB 142 (Hayashi), Chapter 13, Statutes of 
          2010.  Modified the allocation formula of the Act of 1984, also 
          known as Proposition 37.  Repeals the modifications to the 
          allocation formula if it is determined by the Controller that 
          the amount of revenues allocated to the benefit of public 
          education by the Lottery is less than what would have been 
          allocated if the law were not changed, as specified.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file

           Opposition 
           
          None on file
           

          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531