When Prop 37, better known as the California Lottery Act, was passed in 1984, taxpayers believed this was going to provide a much needed revenue infusion for our public schools.  While the state lottery has provided much needed dollars to our school funding (28 billion dollars since 1985), it has not been the financial windfall that many districts had hoped it would be and the money makes up about 2% of the annual education budget for the state.  Another aspect of the law was to add an amendment to the California Constitution that would prohibit the building of Nevada or New Jersey type casinos in California.

The State Lottery Act of 1984 was passed in an attempt to provide the state’s K-20 schools with an infusion of money without raising current or imposing new taxes on the taxpayers.  The state lottery laws set forth that operating cost cannot exceed 13% of revenues and that at 87% must go back to the public in the form of prizes and contributions to education.  Currently about 34% of each dollar spent, goes to education.  Any unclaimed prizes revert to education.  The law also provides the State controller may loan money to the General fund, these loans must be repaid with interest.  All levels of California schools were intended to benefit for the lottery proceeds and the expected distribution to education was originally 80% to K-12 schools, 13% to community colleges, 5% to CSUs, and 2% to UCs and were based on $135 per student.

In 2000, Prop 20, better known as the Cardenas Textbook Act, changed the formula for spending lottery money and created a restricted funding source that must be spent on instructional materials for K-14 institutions.  The restricted monies are calculated as 50% of the increase from 1997-98  to 1998-99 and each year thereafter.  These monies are allocated with an equal amount per student based on average daily attendance.

The impact of the lottery on education is a mixed bag and there is some confusion on how well the lottery is currently being run.  From the readings, lottery revenues are cyclical which are difficult for school districts to rely on, but in these uncertain budget times, districts have come to depend on the lottery monies as other funding categories have been decreased or withheld, even though the lottery monies have never provided the jackpot it was sold as to voters.  Tim Hern, the CBO from Lodi USD, states that the “income has stayed pretty consistent over the years but has never provided the revenue stream that was promised.”  In 2012, Lodi USD saw a 3.6 million bump to the general fund and just under $500,000 was restricted for instructional materials.

As was mentioned above, the law also amended the state constitution to prohibit the building of Nevada and New Jersey type casinos in California which has been the basis of most of the lawsuits against the lottery or lottery commission in California.  Several Indian Casinos have filed suit to block the California Lottery Commission from running Keno games as Keno does not meet the standard definition of a lottery game and there have been several other suits as well.

The relevance to funding education in California is obvious as proceeds from the lottery are distributed across the various educational entities across the state along the percentages described above.  The original funding of Prop 37 is rare for government distributions as the monies are doled out equally to all educational institutions based on the rate of $135 per student.  Larger school districts claim the lionshare of the funds and smaller schools and districts are left to scraps.  The restricted monies tied to Prop 20 however are distributed based on Average Daily Attendance numbers and which impacts larger districts and districts with higher daily attendance.

It will be interesting to see how the Local Control Funding Formula or LCFF will affect the funding model for the educational system in California.  The idea is to give greater flexibility to local districts on spending and have eliminated many of the categorical restrictions that districts have had to navigate in the past.

References

Ballotpedia.org,. (2015). California Proposition 20, Congressional Redistricting (2010) -Ballotpedia. Retrieved 13 May 2015, from       http://ballotpedia.org/California_Proposition_20,_Congressional_Redistricting_%282010%29

Ballotpedia.org,. (2015). California State Lottery Act, Proposition 37 (1984) – Ballotpedia.  Retrieved 15 May 2015, from http://ballotpedia.org/California_State_Lottery_Act,_Proposition_37_%281984%29

Calottery.com,. (2015). Lottery Regulations . Retrieved 15 May 2015, from http://www.calottery.com/media/lottery-regulations

Calottery.com,. (2015). See Where The Money Goes . Retrieved 13 May 2015, from http://www.calottery.com/giving-back/education/where-money-goes

Can’t Stop…Won’t Stop…Learning!,. (2015).Can’t Stop…Won’t Stop…Learning!. Retrieved 16 May 2015, from https://lindseyroach.wordpress.com/

Findlaw,. (2015). California State Lottery Laws – FindLaw. Retrieved 14 May 2015, from http://statelaws.findlaw.com/california-law/california-state-lotteries-laws.html

Lottery Image retrieved from http://cdn.moneycrashers.com/wp-content/uploads/2008/04/lottery-balls-cash.jpg

Static.calottery.com,. (2015). Retrieved 15 May 2015, from http://static.www.calottery.com/~/media/Publications/Lottery_Regulations/Lottery%20Act%20for%20Website%2007-14.pdf

Teacherloveslearning,. (2014).teacherloveslearning. Retrieved 16 May 2015, from https://teacherloveslearning.wordpress.com/