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Did you know that the only reason that the California Lottery exists, is to fund instructional materials for education.Something has gone terribly wrong!The spirit of the Lottery Act is no longer being honored. Lottery revenues have gone from $1.8 Billion at the Lottery's inception in 1985, to a projected $7.1 billion in 2018-19. During that same time, contributions to education as a percentage of revenues have declined by 14% (from 39% of Lottery revenues to 25%).
A 2003 study found that 80% of the Lottery revenues distributed to school districts were going into the districts general fund and were being used to pay employee salaries, pensions and benefits. The study concluded that most Lottery revenue was spent on adult jobs, and not to support students. In the Capistrano Unified School District it gets even worse. 86.9% of the CUSDs general fund budget goes to employee compensation (salaries, pensions and benefits). Since the Lottery's inception in 1985, CUSD has collected $193 million dollars. Of that, approximately $168 million has gone to employee compensation, while a meager $25 million has been appropriately used to purchase instructional materials for students. The truth is that the California Lottery has become another "bloated government bureaucracy" that has forgotten its purpose. Legislative amendments to the California Lottery Act have allowed more and more lottery revenue to be diverted away from education to support a growing government jobs program. The most destructive was AB 142 which was enacted in 2010. AB 142 amended the Lottery Act to allow greater flexibility to pay out more money in prizes. Once AB 142 passed, staff grew from 141 employees to 341 and the Lottery built a brand new office building at a cost of $58 million dollars.
California State Lottery Headquarters Source: Architect Magazine
Recently, the organization has been plagued with lawsuits, and now an investigation by the Attorney General after an anonymous whistleblower sent a letter and several photos to Governor Brown alleging that state Lottery employees got drunk and acted inappropriately while on the taxpayer dime. The Sacramento Bee: Drunken, bawdy behavior at California Lottery alleged in letter, photos to Jerry Brown by Adam Ashton and Taryn Luna Yes that is a lottery official with his head up a lady's shirt in a public place!
In addition to investigations into the conduct of Lottery employees, the State Legislature should request an audit, and analyze the cost vs benefit of keeping this entity going. Taxpayers are on the hook for the 341 pensions of these employees. With the percentage of revenues going to education is such steep decline, it may be financially prudent to shut the California Lottery down. To Honor the Spirit of the original Lottery Act, the percentage going to education should be a minimum 34%. |
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BackgroundOn November 4, 1984, Proposition 37 entitled "The Lottery Act" amended the California Constitution to authorize the establishment of a statewide lottery. As an initiative statute, the California State Lottery Act of 1984 created the California State Lottery Commission and gave it broad powers to oversee the operations of a statewide lottery. The purpose of the Lottery Act was to provide supplemental monies to benefit public education (specifically to provide guaranteed funds for textbooks and supplies) without the imposition of additional or increased taxes. The Lottery Act initially required that 50% of total annual revenues be returned to the public in the form of prizes with at least 34% of total revenues being allocated to the benefit of public education. No more than 16% of total revenues were to be used for administrative costs. 50% to Prize Winners 34% to benefit Public Education 28% to K-12 Public Schools 6% to Colleges and Universities 16% to Administrative Costs Lottery revenues paid to benefit education are placed in a special fund known as the California State Lottery Education Fund. This fund holds revenues until they are allocated on a per capita basis using prior year certified average daily attendance data. In 1984 ADA was calculated based on attendance at:
Once a quarter, the Lottery sends its educational supplemental dollars to the State Controller’s Office (SCO) who then audits those contributions. The SCO in turn distributes them to County Treasurers who then sends the money to County Offices of Education, School Districts and the administrators of higher education. Those entities determine how Lottery funds are distributed and spent within their systems. The Lottery is not involved in this decision-making process. Lottery Revenues and ExpensesSources: CALIFORNIA LOTTERY REPORTS TO THE PUBLIC 1999 - 2017 DATA FOR 1985- 1999 WAS RECEIVED VIA A PUBLIC RECORDS REQUEST |
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Date |
Revenues/Sales |
Prize Expense |
Administrative Expense |
Revenues to All Education |
Revenues to K- 12 Education Per CDE |
$/pupil per CDE |
| 1985 | $1,765,571,558.00 | $886,333,761.00 | $202,851,581.00 | $692,695,676.00 | $555,457,022.00 | $125.67 |
| 1986 | $1,392,226,457.00 | $693,188,480.00 | $208,951,156.00 | $504,289,009.00 | $410,880,929.00 | $ 89.68 |
| 1987 | $2,106,492,471.00 | $1,047,890,943.00 | $276,639,427.00 | $804.794.652.00 | $647,361,315.00 | $138.78 |
| 1988 | $2,628,873,495.00 | $1,314,091,762.00 | $323,327,375.00 | $1,035,017,948.00 | $843,557,516.00 | $176.08 |
| 1989 | $2,479,661,072.00 | $1,240,410,295.00 | $339,415,109.00 | $980,508,248.00 | $783,026,959.00 | $154.47 |
| 1990 | $2,131,921,349.00 | $1,061,545,041.00 | $323,141,161.00 | $803,111,113.00 | $645,693,335.00 | $128.64 |
| 1991 | $1,358,651,081.00 | $669.199,202.00 | $237,714,903.00 | $493,743,911.00 | $400,869,886.00 | $76.55 |
| 1992 | $1,759,494,635.00 | $880,954,435.00 | $281,154,761.00 | $625,882,579.00 | $495,625,449.00 | $92.51 |
| 1993 | $1,931,030,334.00 | $964,306,501.00 | $303,763,410.00 | $692,113,518.00 | $556,290,312.00 | $101.63 |
| 1994 | $2,166,121,379.00 | $1,075,188,767.00 | $336,123,280.00 | $791,527,468.00 | $642,689,584.00 | $115.83 |
| 1995 | $2,292,324,933.00 | $1,128,453,142.00 | $365,435,067.00 | $841,880,611.00 | $691,363,263.00 | $120.71 |
| 1996 | $2,063,134,691.00 | $1,030,535,482.00 | $320,697,872.00 | $756,725,832.00 | $610,907,801.00 | $105.10 |
| 1997 | $2,294,423,822.00 | $1,030,535,482.00 | $326,573,515.00 | $834,748,454.00 | $675,117,674.00 | $113.67 |
| 1998 | $2,498,298,487.00 | $1,307,442,871.00 | $341,075,721.00 | $899,349,946.00 | $727,633,935.00 | $119.19 |
| 1999 | $2,498,298,488.00 | $1,307,422,871.00 | $341,075,721.00 | $899,349,947.00 | $769,408,464.00 | $122.98 |
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On March 7, 2000, voters passed Prop 20 known as AB 453 "Cardenas Textbook Act of 2000" which changed the way Lottery funds were allocated. Under Prop 20, K-14 (K-12 + Community College) schools were getting a much larger slice of the pie. Prop 20, required that 50% of the Statewide growth in the lottery fund will first be distributed to K-14 schools to be earmarked for instructional materials. Then, remaining funds would be distributed equally based on ADA. That meant that higher education and other state operated schools would no longer receive a share of the first 50% of growth in Lottery Revenues. See: May 10, 2000 Letter from State Superintendent of Public Instruction, Delaine Eastin |
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| 2000 | $2,598,378,990.00 | $1,369,435,482.00 | $343,181,662.00 | $948,036,660.00 | $901,870,019.00 | $141.48 |
| 2001 | $2,894,841,523.00 | $1,503,768,458.00 | $385,473,932.00 | $1,111,635,107.00 | $853,747,149.00 | $131.37 |
| 2002 | $2,896,372,533.00 | $1,502,966,618.00 | $382,897,745.00 | $1,064,064,146.00 | $806,386,388.00 | $123.36 |
| A 2003 study entitled "California Contributions to Public Education" concluded that 80% of Lottery Funds for public education were in fact going to employee salaries, pensions and benefits and not to the voters intended, to funding textbooks, materials and supplies. | ||||||
| 2003 | $2,781,569,856.00 | $1,451,804,079.00 | $362,342,273.00 | $1,019,816,972.00 | $872,987,663.00 | $132.23 |
| 2004 | $2,973,975,717.00 | $1,566,027,494.00 | $370,821,346.00 | $1,094,256,988.00 | $948,134,123.00 | $142.33 |
| 2005 | $3,333,620,669.00 | $1,795,254,439.00 | $400,439,862.00 | $1,175,794,256.00 | $1,039,970,015.00 | $156.55 |
| 2006 | $3,584,996,251.00 | $1,932,721,443.00 | $413,062,844.00 | $1,287,998,079.00 | $960,270,123.00 | $145.32 |
| 2007 | $3,318,346,505 .00 | $1,765,643,368.00 | $400,270,448.00 | $1,206,147,082.00 | $876,559,341.00 | $130.26 |
| 2008 | $3,049,620,915.00 | $1,619,473,498.00 | $380,245,309.00 | $1,094,945,310.00 | $817,777,318.00 | $123.33 |
| 2009 | $2,970,971,277.00 | $1,556,120,634.00 | $396,190,567.00 | $1,048,693,816.00 | $854,877,778.00 | $128.71 |
| 2010 | $3,086,210,845.00 | $1,611,371,074.00 | $405,357,465.00 | $1,089,747,218.00 | $884,164,608.00 | $134.07 |
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In 2010, AB 142 amended the Lottery Act to allow the Lottery flexibility to pay out more money in prizes and reduce the administrative cost limit to 13% of total revenues instead of 16%. Along with that flexibility, the new law required the Lottery to meet minimum levels of contribution to public education. Limited Administration Expenses to 13% of revenues. Required that 87% of sales must be returned to the Public in the form of prizes or contributions to education. The law gave the lottery flexibility to pay out a higher percentage of its revenues in prizes, but only if it does so in a way that increases the total amount of money that goes to education. 87% to Prize Winners and to Benefit Public Education 13% to Administrative Costs |
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| 2011 | $3,438,577,998.00 | $1,904,787,955.00 | $432,982,150.00 | $1,128,551,245.00 | $1,051,322,696.00 | $158.60 |
| 2012 | $4,371,491,746.00 | $2,560,306,589.00 | $512,822,653.00 | $1,320,726,555.00 | $1,038,022,637.00 | $154.73 |
| 2013 | $4,445,870,040.00 | $2,652,095,102.00 | $532,961,588.00 | $1,284,370,779.00 | $1,088,290,145.00 | $161.54 |
| 2014 | $5,077,977,283.00 | $3,082,376,405.00 | $625,621,621.00 | $1,326,663,398.00 | $1,110,456,795.00 | $166.04 |
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Beginning in 2015-16, Adult Education and Regional Occupational Centers and Programs ADA were no longer be included for purposes of calculating lottery funding (Government Code 8880.5(a)(2)). Effective 2015-16 ADA will be based on the number of pupils in:
The estimated per ADA rate increase from $166.04 to $181 is largely due to the change in the ADA used to calculate lottery (less pupils means a higher $/per pupil) it does not mean that the Lottery is giving education a higher percentage of the Lottery revenues. |
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| 2015 | $4,445,874,040.00 | $2,652,095,102.00 | $532,961,588.00 | $1,284,370,779.00 | $1,127,956,335.00 | $181.00 |
| 2016 | $6,275,597,288 | $3,955,791,373.00 | $852,429,352 | $1,559,681,787.00 | Not Available Yet | |
| 2017 | $6.8 billion Projected Revenues with $1.53 billion going towards education (23%) See: June 29, 2018 CDE Letter | |||||
| 2018 | $7.1 billion Projected Revenues with $1.6 billion going towards education (23%) See June 29, 2018 CDE Letter | |||||
How Much Lottery Money has the Capistrano Unified School District Received Since the Lottery's Inception? |
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Source: California Lottery: See Where the Money Goes CUSD has received $193 million in Lottery funds since its inception. Of that 86.9% ($168 million) has gone to employee compensation while a meager 13.1% ($25 million) has been appropriately used to purchase textbooks and supplies.
Capistrano Unified 2018-19 Adopted BudgetJuly 1, 2018 Budget Adoption June 20, 2018 CUSD BOT Meeting Agenda Item #48 Board Agenda at page 1057
Board Agenda at page 915
Board Agenda at page 1019 CUSDs' Ratio of Unrestricted Salaries and Benefits to Total Unrestricted General Fund Expenditures is 86.9%. This means that 86.9%, the "Unrestricted" portion of the Lottery money is going to employee salaries pensions and benefits. Salaries Pensions and Benefit: $6 million Instructional Materials: $3.2 million
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Data from California Lottery's Comprehensive Annual ReportsSource: CA Lottery Reports These numbers are taken from the Comprehensive Annual Reports and show that Since 2010 the percentage of Revenues from the Lottery going towards education have declined 10%.
Prize Expenses
Game Costs
Operating Expenses
Allocations to Education
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