BILL ANALYSIS Ó
AB 2215
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Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Jose Medina, Chair
AB 2215
(Medina) - As Introduced February 18, 2016
[Note: This bill was heard in the Assembly Governmental
Organization Committee on April 6, 2016, and approved by a vote
of 18-0.]
SUBJECT: California State Lottery Act: California State
University Lottery Education Fund: California State University
Trust Fund
SUMMARY: Would require the Board of Trustees of the California
State University to deposit funds received from the California
State Lottery Education Fund in the California State University
Trust Fund instead of the California State University Lottery
Education Fund.
EXISTING LAW: 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.
1)Requires the Commission to establish the percentage of total
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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.
2)Requires that no more than 13 percent of the total annual
revenues be used to pay Lottery expenses and that those
expenses 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.
3)Establishes the California State Lottery Education Fund and
provides for direct payments from the fund to various
entities, including the Board of Trustees of the California
State University (trustees).
4)Requires funds received by the trustees to be deposited in,
and expended from, the California State University Lottery
Education Fund or, at the discretion of the trustees,
deposited in local trust accounts.
5)Establishes the California State University Trust Fund and
specifies its sources of revenue.
6)Provides that all money received by the Fund shall augment the
support appropriation to the California State University for
the fiscal year to which the collections apply.
FISCAL EFFECT: Unknown.
COMMENTS: Background. State Lottery Act of 1984 (Act) was
created by a ballot measure, Proposition 37, which was approved
by 58 percent of voters on November 6, 1984. The Act gave the
Lottery a mission to provide supplemental funding for public
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schools and colleges. The Act specifies that the Lottery be
operated and administered by a Commission appointed by the
Governor. The Legislature has the authority to amend the Act
if, by doing so, it furthers the purposes of the Act.
In April 2010, the Legislature passed Assembly Bill 142, which
changed the Lottery's funding formula to follow best practices.
Those practices have helped lotteries throughout the nation
increase sales and earn more money for their beneficiary. AB
142 limits administrative expenses to 13 percent of sales, while
requiring that 87 percent of sales go back to the public in the
form of prizes and contributions to education. The law gives
the Lottery the flexibility to pay out a higher percentage of
its revenues in prizes than it has in the past, but only if it
does so in a way that increases the total amount of money that
goes to public schools and colleges.
California State University Lottery Education Fund. Under
current law, funds from the California State Lottery Education
Fund are distributed quarterly by the State Controller's Office
into the California State University Lottery Education Fund,
which serves as the depository account for CSU lottery funds.
CSU accounting staff then must submit quarterly transfer
requests to move these funds into the California State
University Trust Fund. They must also submit similar quarterly
forms to move the associated interest accrued from lottery
revenues. From their funds are distributed to various State
Universities for programs and uses that are consistent with the
Lottery Act.
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According to the CSU Chancellor's Office, in recent years,
annual CSU Lottery Fund receipts have averaged around $45
million per year. Approximately 80 percent of funds are
allocated directly to campuses for instructionally related
programs and activities. The remaining funds are allocated for
CSU programs that assist student education, such as the Summer
Arts, Pre-Doctoral, and Doctoral Incentive programs.
Approximately 1.2 percent of lottery resources are used by the
CSU Chancellor's Office to administer lottery fund operations
and reporting requirements. The CSU sets aside $5 million for
reserves, to prepare for cash-flow variations and other
year-to-year economic uncertainties that could impact future
fund receipts.
The 2016-17 lottery budget for CSU is estimated to be $49.2
million; the allocation would be as follows:
------------------------------------------------------------
|$5 |Set aside for cash-flow variation and |
|million |fluctuations |
| | |
| | |
|---------+--------------------------------------------------|
|$39.5 |$31.5 million for campus-based programs |
|million | |
| | |
| |$8 million for increased financial aid for the |
| |Early Start program (in the form of fee waivers) |
| | |
| | |
|---------+--------------------------------------------------|
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|$4 |System-designated programs, including: |
|million | |
| | |
| | $2 million for the Chancellor's Doctoral |
| | Incentive program |
| | $1.2 million for the CSU Summer Arts |
| | program |
| | |
| | |
| | $814,000 for the California Pre-Doctoral |
| | program |
| | |
| | |
|---------+--------------------------------------------------|
|$607,000 |Administrative costs associated with the fund and |
| |system programs |
| | |
| | |
------------------------------------------------------------
Purpose of this bill. According to the author, this bill will
allow the State Controller's Office (SCO) to directly deposit
lottery funds into the California State University Trust Fund.
This will eliminate unnecessary administrative processes and
streamline the accounting processes associated with utilizing
the funds from the California State University Lottery Education
Fund.
REGISTERED SUPPORT / OPPOSITION:
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Support
Betty Yee, California State Controller
California State University
Opposition
None on File
Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960