Lottery sales to hit $6b; record contribution set for schools

Lottery sales to hit $6b; record contribution set for schools

(Calif.) Surging revenues haven’t just been limited to the state’s general fund – the lottery has had a healthy upswing this year, too, and is expected to provide nearly $1.5 billion to public education next year.

Preliminary sales numbers suggest that the lottery will generate more than $6 billion in the 2015-16 fiscal year, which would set a new high, three decades after the games were approved.

The lottery closed 2014-15 with $5.5 billion in sales and a contribution to schools of close to $1.3 billion.

The news comes as an improving overall economy lifted state revenues in June by $815 million above the month’s $16.1 billion forecast.

Leading the way was personal income tax collection, which came in $737 million above the June expectation of $10.2 billion. Sales and use taxes combined for almost $2.5 billion – about $35 million ahead of projections, while corporate taxes came in almost exactly as predicted at nearly $2.7 billion.

The governor’s Department of Finance reported that the state’s year-to-date revenues are running $732 million above the forecast of $114.1 billion.

The state lottery, ushered in by voter initiative in 1984, had been required to share a flat 34 percent of its sales with K-12 schools, community colleges and state universities. As a result, the contribution it made to schools remained fairly constant at about $1 billion.

But legislation approved in 2010 gave the California Lottery Commission authorization to set higher payouts and ensure maximum awards to schools – with the regulation that administrative costs cannot exceed 13 percent of sales.

In a presentation last month to the commission, Nick Buchen, deputy director of finance for the lottery, said improvements to the “Scratchers®” product line accounts for the lion’s share of the growth in sales. He said the $6 billion sales projection in the coming fiscal year would represent a 10.5 percent increase from current year estimates.

Buchen estimated that the total contribution to education in 2015-16 will come close to $1.435 billion – almost $85 million above forecasts.

“I’m pleased to say that the proposed fiscal year contribution to education is the highest in the Lottery’s history, as well as the $6 billion – those are both the highest since the Lottery began almost 30 years ago.”

Based on those projections, the California Department of Education reported earlier this month that districts can assume a 2015-16 lottery contribution of $181 per unit of average daily attendance. That is broken down into $140 per ADA for unrestricted uses and $41 for instructional materials as required under Proposition 20.

The CDE reported that final accounting on the lottery’s 2014-15 fiscal year will provide $161.85 per unit of ADA, which breaks down into $127.98 for unrestricted revenues and $33.87 for Proposition 20 revenues.

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