BILL ANALYSIS Ó Bill No: AB 363 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2011-2012 Regular Session Bill Analysis AB 363 Author: Hayashi As Amended: April 14, 2011 Hearing Date: June 14, 2011 Consultant: Paul Donahue SUBJECT : California State Lottery; Reports SUMMARY : Extends the due date from December 31 to April 1 for each of the next five years on the State Controller's reporting requirements on the California State Lottery Commission's efforts to boost income for public education. Existing law : 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. 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 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, AB 363 (Hayashi) continued Page 2 on whether certain provisions have furthered the purposes of the Lottery Act. 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. This bill : 1) Changes the reporting date for the California State 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. COMMENTS : 1) Purpose of the bill : This measure would extend the time within which the Controller may complete reports required by recent statutory changes to the Lottery Act that enhanced the funding for education. In support of the bill, the Controller states that this bill would provide his office with additional time to review and report on the State Lottery's allocations to public education by extending the deadline to determine whether total net revenues allocated by the State Lottery has increased or decreased for the next 5 years, beginning in 2010. 2) Background : AB 142 (Hayashi) of 2010 required the State Lottery to allocate revenues 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 AB 363 (Hayashi) continued Page 3 public education have occurred, and whether certain actions have furthered the purpose of the California State Lottery Act. The reports are due September 1 and December 31, respectively, following the final fiscal year of that 5-year period. The State Controller's office reports that completing the review by the dates required by law has been problematic because the Division of Audits only receives the information necessary to conduct the reports during the last week of August and the last week of October, respectively. By extending these deadlines a few months, this bill would provide the Division of Audits with the necessary time to perform a quarterly review and to determine if the Lottery is in compliance with AB 142. 3) Related legislation : AB 142 (Hayashi, Stats. 2010, ch. 13) modified the allocation formula of the Act of 1984, also known as Proposition 37. Repeals the modifications to the allocation formula if the Controller determines that revenues allocated to the benefit of public education by the Lottery are less than what would have been allocated if the law were not changed. SUPPORT: John Chiang, California State Controller (source) OPPOSE: None on file FISCAL COMMITTEE: No **********