Lottery Frequently Asked Questions

Frequently Asked Questions (FAQs) regarding the calculation and use of the California State lottery funds.

Lottery Background
Calculations
Charter Schools
Use of Lottery Funds
Related Links

Lottery Background

When and how was the California State Lottery (Proposition 37) established?

In November 1984, Proposition 37, the California State Lottery Act of 1984, was passed by California voters as a means to provide supplemental funding to public education programs without imposing additional or increased taxes (California Government Code (GC) Section 8880.1). Proposition 37 is one of two sources of lottery funding and is commonly referred to as “unrestricted Non-Proposition 20.” The second source of funding is discussed in Question 2 below.
In 2010, lottery statutes were further amended to modify the allocation formula with the intent to maximize the amount of funding allocated to public education (GC Section 8880.4).
When and how was the California State Lottery (Proposition 20) established?

In March 2000, Proposition 20, the Cardenas Textbook Act of 2000, was passed by California voters and amended the California State Lottery Act of 1984. Proposition 20 created restrictions for a portion of the lottery funds. More specifically, it required that beginning in 1998–99, 50 percent of the statewide growth in lottery funds for public education over the level set in the 1997–98 fiscal year be allocated on a per average daily attendance (ADA) basis to community colleges and to kindergarten and grades one through twelve (K–12) local educational agencies (LEAs), consisting of school districts, county offices of education, and charter schools for the purposes of instructional materials (GC Section 8880.4).

Which entities receive unrestricted Non-Proposition 20 lottery funds?

On a quarterly basis, the State Controller’s Office (SCO) distributes unrestricted Non-Proposition 20 lottery funds to public LEAs serving K-12 programs, community colleges, and other public and higher education systems. The chart below lists all entities that receive unrestricted Non-Proposition 20 lottery funds.

GC Section 8880.5	Entities Receiving Unrestricted Non-Proposition 20 Lottery Funds
(a)	School Districts
(a)	County Offices of Education
(a)	Charter Schools
(b)	Community Colleges
(c)	California State University
(d)	University of California
(e)	Hastings College of Law
(f)	California Department of Corrections and Rehabilitation, Division of Juvenile Justice, formerly the Department of the Youth Authority
(g)	California School for the Deaf
(g)	California School for the Blind
(g)	Diagnostic Schools for Handicapped Children
(h)	California Department of State Hospitals
(h)	California Department of Developmental Services

Do all entities receive restricted Proposition 20 lottery funds?

No. Only LEAs and community colleges receive restricted lottery funds on a per ADA basis (GC 8880.4(a)(2)).

Calculations

Which attendance reporting period is used to determine the K-12 ADA for purposes of calculating lottery?

Lottery funding is based on the Annual ADA for the current year. However, since Annual ADA is not available until after the fiscal year ends, lottery funding is initially allocated using the prior year’s Annual ADA and adjusted in the subsequent fiscal year.

What categories of ADA are included in the Annual ADA figure?

The chart below displays the Annual ADA included in the lottery calculation by fiscal year:

2007-08 and Prior Years	2008-09 Through 2014-15	2015-16 and Subsequent Years
County Offices of Education K-12	County Offices K-12	County Offices K-12
School Districts K-12	School Districts K-12	School Districts K-12
Charter Schools K-12	Charter Schools K-12	Charter Schools K-12
Adults in Correctional Facilities (AICF)	AICF	AICF
Regional Occupational Centers and Programs (ROC/Ps)	ROC/Ps*	N/A
Adult Education	Adult Education*	N/A

* As reported in 2007-08. Beginning in 2015-16, ADA for Adult Education and ROC/P are no longer included for the purpose of calculating lottery funding (GC Section 8880.5(a)(2)).

Is the ADA reported for Adults in Correctional Facilities included in the Annual ADA figure?

Yes. The Annual ADA reported for Adults in Correctional Facilities is included. As noted in FAQ 6, beginning in 2015–16 the ADA for Adult Education and ROC/Ps will no longer be included in the lottery calculation.
Does the statewide absence factor change each year?

No. The ADA is adjusted by the statewide average excused absence factor of 1.04446 which was certified in 1999 by the State Superintendent of Public Instruction due to the elimination of funding for excused absences (GC Section 8880.5(l)).
How is the lottery apportionment calculated?

At the beginning of each fiscal year lottery funding is calculated using the prior year’s Annual ADA (rounded per EC Section 46303) as adjusted by the statewide average excused absence factor of 1.04446. Each LEA’s initial entitlement is equal to its prior year Annual ADA multiplied by the Non-Proposition 20 and Proposition 20 per ADA rates determined by the SCO. When the Annual ADA is available for the respective fiscal year, the SCO adjusts LEA funding accordingly, see FAQ 10.
Beginning in the 1998–99 fiscal year, one-half of the growth in lottery funds for public education over the level set in the 1997–98 base year must be allocated to K-12 public schools and community colleges for the purchase of instructional materials. The funds are distributed based on an equal amount per ADA (GC Section 8880.4).
Does the SCO adjust prior year lottery apportionments due to revisions in the Annual ADA reported by the LEAs?

Yes. In December, the SCO makes adjustments to the prior two years of lottery funding for all entities for two purposes. The first is to reflect actual or revised Annual ADA reported by LEAs, and the second is to adjust the per ADA rate based on final lottery revenues.
For example, in December of the 2016–17 fiscal year, the SCO will make adjustments to the estimated 2015–16 apportionment based on actual Annual ADA reported, while the 2014–15 apportionment is adjusted based on revisions made to the Annual ADA. In addition, the 2014–15 and 2015–16 lottery per ADA rates are adjusted based on lottery revenue changes. An accounts receivable may be established if the prior year adjustments are negative and exceed the amount available to offset in the December quarterly apportionment.
Are lottery apportionments affected by the Local Control Funding Formula (LCFF)?

No. The LEAs will continue to receive lottery funding based on Annual ADA.
When do LEAs receive their unrestricted Non-Proposition 20 lottery apportionments?

The SCO apportions unrestricted Non-Proposition 20 funding quarterly and issues warrants to the County Treasurers Offices (at the end of the month) in March, June, September, and December. The quarterly lottery apportionments are one quarter in arrears. For example, the December apportionment is the first quarterly lottery apportionment for the current fiscal year.
When do LEAs receive their restricted Proposition 20 lottery apportionments?

Beginning in fiscal year 1998–99, Proposition 20 funds are allocated when statewide revenues for education exceed a specified level set in fiscal year 1997-1998. Proposition 20 lottery apportionments are typically issued in June and September along with the Non-Proposition 20 funds.
Who do we contact if we have not received our payment or have a change of address?

If an LEA has not received their quarterly payment or has a change in address, the LEA should contact Mike Silvera, SCO at 916-323-0704 or by e-mail at MSilvera@sco.ca.gov.
Where can I find lottery apportionment information on the California Department of Education’s (CDE) website?

Lottery Apportionment Information on CDE's Website

Charter Schools

Are charter schools eligible to receive lottery funds?

Yes. Pursuant to EC 47638, each charter school is considered a school district for purposes of receiving lottery funds. Accordingly, each charter school is entitled to its share of the lottery fund allocation. In addition, lottery funds will be allocated directly to the charter school regardless of whether the charter school is direct or locally funded.
Is a new charter school entitled to lottery funds?

Yes. However, new charter schools should be aware that lottery funding is initially allocated based on prior year Annual ADA. Therefore, in its first year of operation a new charter school will not receive funding. In its second year of operation, the charter school will receive its first lottery apportionment in December. The lottery apportionment will include the entire prior year apportionment from the charter school’s first year of operation plus the first quarterly estimated lottery apportionment for the current fiscal year.
Does a charter school’s closure impact future lottery apportionments based on the prior year Annual ADA?

Yes. Each fall, the CDE’s School Fiscal Services Division provides the SCO a listing of charter schools that have closed and will not be in operation or have converted back to regular public schools for the current fiscal year. The closed charter schools will no longer receive lottery apportionments including any prior year adjustments. The ADA for charter schools that have converted back to regular public schools will be credited to the chartering entity to the extent the chartering entity reports the ADA.

Use of Lottery Funds

Can we use unrestricted Non-Proposition 20 lottery funds for any purpose (SACS Resource Code 1100)?

No. The intent of the California State Lottery Act of 1984 is that all funds allocated shall be used exclusively for the education of pupils. Statute specifically prohibits expenditure of funds for the following (GC Section 8880.5(m)):
- Acquisition of real property
- Construction of facilities
- Financing of research
- Other non instructional purposes
What are the uses of restricted Proposition 20 lottery funds (Resource Code 6300)?

Proposition 20 lottery funds shall only be used for the purchase of instructional materials. Definitions for instructional materials and technology based materials may be found in EC sections 60010(h) and 60010(m)(1).
Does CDE provide guidance or a list of appropriate expenditures for lottery funds?

The CDE provides broad guidance on lottery, however, it does not provide advice on specific expenditures of lottery funds (EC sections 14600 and 14700). The use of lottery funds is solely at the discretion of the local governing board within broad parameters (GC Section 8880.5). LEAs should consult with their legal counsel when determining appropriate uses of lottery funds.

Lottery Frequently Asked Questions

Lottery Background

Calculations

Charter Schools

Use of Lottery Funds

Related Links