BILL NUMBER: AB 142	AMENDED
	BILL TEXT

	AMENDED IN SENATE  FEBRUARY 1, 2010
	AMENDED IN SENATE  AUGUST 25, 2009
	AMENDED IN ASSEMBLY  APRIL 13, 2009

INTRODUCED BY   Assembly Member Hayashi
   (Principal  coauthors:   Senators
  Lowenthal    and
Hancock   coauthor:   Senator  
Maldonado  )
    (   Coauthors:  
Assembly Members   Block,  
  Blumenfield,    
Coto,     Davis, 
   De La Torre,   
Evans,     Mendoza,
    V. Manuel Perez, 
   Skinner,   
 Solorio,     Swanson,
    and Torlakson 
 ) 
    (   Coauthor:   Senator
  Price   ) 

                        JANUARY 22, 2009

    An act to amend Section 101012 of, and to add Section
17077.36 to, the Education Code, relating to school facilities, and
declaring the urgency thereof, to take effect immediately. 
 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, as amended, Hayashi.  School facilities: Energy
Cost Savings Stimulus Program.   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 its 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 Constitution authorizes the Governor to declare
a fiscal emergency and to call the Legislature into special session
for that purpose. The Governor issued a proclamation declaring a
fiscal emergency, and calling a special session for this purpose, on
January 8, 2010.  
   This bill would state that it addresses the fiscal emergency
declared by the Governor by proclamation issued on January 8, 2010,
pursuant to the California Constitution.  
   (3) 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.  
   (4) This bill would declare that it is to take effect immediately
as an urgency statute.  
   The Kindergarten-University Public Education Facilities Bond Act
of 2006 (bond act), approved by the voters as Proposition 1D at the
November 7, 2006, statewide general election, authorizes the issuance
and sale of a total of $10,416,000,000 in general obligation bonds.
The bond act requires that $3,300,000,000 of the proceeds from the
sale of those bonds be allocated for purposes of the modernization of
school facilities pursuant to specified statutory provisions. The
bond act authorizes the Legislature to adjust the funding allocations
specified by the act only by a statute that is consistent with and
furthers the purposes of the act and is approved by at least 2/3 of
the Members of the Senate and the Assembly, or by a statute that
becomes effective only when approved by the voters. 

   The Leroy F. Greene School Facilities Act of 1998 (Greene Act)
requires the State Allocation Board to allocate to applicant school
districts prescribed per-unhoused-pupil state funding for
construction and modernization of school facilities. The Greene Act
authorizes a modernization apportionment to be used for an
improvement to extend the useful life of, or to enhance the physical
environment of, a school, as specified.  
   This bill would establish the Energy Cost Savings Stimulus
Program, to be administered by the board. The bill would make
$320,000,000 out of the $3,300,000,000 in bond proceeds that the bond
act allocated for purposes of modernization available to fund the
program. The bill would authorize a school district to apply to the
board for funding pursuant to the program if the applicant district
self-certifies in the project application that it meets specified
conditions. The bill would make the program inoperative 3 years after
the date the bill becomes effective. The bill would require that the
portion of the $320,000,000 that remains unencumbered when the
program becomes inoperative be used for purposes of the modernization
of school facilities.  
   The bill would state findings and declarations of the Legislature
that the bill is consistent with, and furthers the purposes of, the
bond act.  
   This bill would declare that it is to take effect immediately as
an urgency statute. 
   Vote: 2/3. Appropriation:  no   yes  .
Fiscal committee: yes. State-mandated local program: no.


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,
 as follows:
   (a) Not less than  84   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)  Fifty percent of the   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  , provided that the
percentage shall not be less than 50 percent of the total revenues
 .
   (2)  At least 34 percent   (A)  
  The percentage  of the total annual revenues 
shall  to  be allocated to the benefit of public
education, as specified in Section 8880.5  . However
 ,  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 34 percent of
 the total annual revenues that  is  
are  required to be allocated for the benefit of public
education as specified in paragraph (2).
   (5) No more than  16   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  16   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  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 remain in effect only until December 31 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 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
lottery 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 its
Internet Web site, and on January 1 of the following year, both of
the following shall occur:
   (1) The amendments of Sections 8880.4, 8880.63, and 8880.64 made
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 by 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 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 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 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 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 for 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   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 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 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 for 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.    This act addresses the fiscal emergency
declared by the Governor by proclamation on January 8, 2010, pursuant
to subdivision (f) of Section 10 of Article IV of the California
Constitution. 
   SEC. 9.    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. 10.    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.  All matter omitted in this version of the
bill appears in the bill as amended in the Senate, August 25, 2009.
(JR11)