Policy Statements: Lottery Budgeting and Allocation Process
l. Instruction Program
According to Government Code Section 8880.5 the use of lottery funds
are limited to instructional purposes by stating that"...no funds
shall be spent for...any other noninstructional purpose."
Currently, the support budget of the California State University is
represented by the four "Program" categories of INSTRUCTION,
ACADEMIC SUPPORT, STUDENT SERVICES, and INSTITUTIONAL SUPPORT. Lottery-funded
instructional costs can best be defined as the program categories included
in INSTRUCTION, ACADEMIC SUPPORT and in very limited instances to INSTITUTIONAL
SUPPORT, since they represent costs most directly related to classroom
instruction and systemwide implementation costs.
2. Supplemental
It is the clear intent of the California State Lottery Act of 1984 "...that
the net revenues of the California State Lottery shall not be used as substitute
funds but rather shall supplement the total amount of money allocated for
public education in California." See Government Code Section 8880.1.
Government Code Section 8880.5 states:
"It is the intent...that all funds allocated from the California
State Lottery Education Fund shall be used exclusively for the education
of pupils and students and no funds shall be spent for acquisition of real
property, construction of facilities, financing of research, or any other
noninstructional purpose." Therefore, capital outlay, research, and
noninstructional activities are specifically prohibited by the Lottery
Act.
To summarize, the most important criteria governing use of lottery revenue
are as follows:
a. Must supplement, not supplant, state funding of instruction.
b. Must be widely acknowledged as a valuable enhancement of the
instructional program.
c. Must be widely acknowledged as consistent with the provisions
of the California State Lottery Act of 1984.
d. Must not make long-term funding commitments.
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All determinations of lottery revenue usage, whether by campus Presidents,
the Chancellor, or the Board of Trustees, will employ the following principles:
1. Creation of Endowment Accounts
The creation and/or maintenance of campus lottery endowment accounts
may not occur. Lottery funds allocated to campuses are governed by state
law and CSU lottery policies. Lottery funds allocated to campuses should
be used for the purposes outlined in the lottery budget.
2. Program Expenditures
a. Funds should be allocated to a select group of instructional
activities to achieve maximum impact in enhancing instruction. This means
that lottery revenue should be used to "supplement" instruction
beyond the expected level of state support and should not be used to replace
state funding of budget.
b. Certain instructional activities should be improved and enhanced
on a systemwide basis.
c. A portion of the funds should be allocated to the campuses
to be used for campus specific needs, consistent with the criteria described
above.
d. Great care should be exercised to ensure that lottery revenue
usage is widely acknowledged as a significant enhancement of the instructional
program and is clearly consistent with the intent of the California State
Lottery Act of 1984.
e. Representatives of the faculty, students, and staff should
be involved in the campus development of specific expenditure plans for
Campus-Based Programs.
3. Fund Management
Lottery revenue collection, accounting, disbursement, budgeting, allocation,
expenditure, and reporting should be managed separately from state funds.
However, the procedures adopted by the California State University will
be the same as those existing for General Fund and Special Fund financial
management. Once allocated to campuses, lottery funds will remain at the
campus level until expended.
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l. Required by the State Budget Act
Section 24.60 of the State Budget Act requires the CSU to report to
the Governor and Legislature no later than January 15 of each fiscal year,
the amount of lottery funds received and the purposes for which the funds
were expended, including administrative costs. This report must include
proposed expenditures for the next fiscal year.
2. Required by the Board of Trustees
To satisfy the state requirement and to respond to other interests of
the Board of Trustees, the Trustees will receive a report of actual expenditures
for the past fiscal year and planned expenditures for the current fiscal
year. The annual expenditure report required to be submitted to the Chancellor's
Office on or before August 15 of each fiscal year is located under the
section entitled Annual Expenditure Report.
3. Campus Program Reporting Requirements
Following each program description are campus program reporting requirements.
All reports are due on or before August 15 of each fiscal year.
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The specific types of allocations of lottery revenue are described below.
1. Systemwide Reserve
Of the total funds estimated to be available, an amount of at least
$5,000,000 should be maintained for economic uncertainties, cash flow variations
and potential fluctuations in projected receipts and to provide funds for
projects to be determined by the chancellor. These funds will remain uncommitted
at the system level in order to allow for potential fluctuation in lottery
revenue receipts without adjusting the approved program expenditure plan.
Amounts in excess of the established Systemwide Reserve may be made available
in the next fiscal year's lottery revenue budget.
Should campuses decide to establish a campus reserve, it is recommended
that the reserve not exceed 10 percent of the prior year's level of lottery
funds received and should be maintained for cash-flow purposes only. This
section should not be construed to mean that campuses are required
to maintain or establish a lottery fund reserve.
2. Program Allocations
As set forth in the Principles section above, it is appropriate to allocate
funds to enhance instruction based on needs and opportunities unique to
individual campuses, as well as needs and opportunities common to most,
if not all, the campuses. Each year, lottery revenue funds will be allocated
to programs designated by the CSU in the Lottery Revenue Budget which will
be allocated to campuses upon adoption by the Board of Trustees.
These program allocations should be distributed on an equitable basis
consistent with Trustee policy (enrollment targets) or other stated methodology.
There will be no prescription or further subdivision or pre-audit of the
campus detailed plans for use of the funds. The allocations will require
only that the campus implementation:
a. Comply with the full intent of the California State Lottery
Act of 1984 as well as with other laws;
b. Comply with the restrictions imposed relative to all lottery
revenue use as set forth in this document;
c. Comply with the specific intent of the program for which the
funds are allocated; and,
d. Comply with year-end reporting requirements.
All systemwide program allocations will be well defined, programmatically
and budgetarily, at the time of approval by the Board of Trustees.
3. Campus-Based Program Funds
A portion of annual lottery revenue will be allocated to the campuses
and to the Chancellor's Office for discretionary purposes. These funds
are intended to permit maximum flexibility in order to meet unique campus
needs which ultimately lead to enhancing the quality of campus life. The
specific uses of Campus-Based Program Funds must be consistent with the
policies of lottery revenue as expressed in law and with the policy guidelines
and procedures adopted by the Board of Trustees. Campuses must report on
the expenditure of these funds based on project or program as contained
in the next section entitled "Campus-Based Programs.
Adjustments to these funds will be based upon campus enrollment and
available revenue.
4. Implementation Costs
The California State University Lottery Education Fund is a Special
Fund separate from the state's General Fund. Therefore, fund management
must be as separate from the management of the General Fund as possible.
Specific provision for implementation costs for systemwide purposes must
be made from lottery revenue in order to insure that the California State
University Lottery Education Fund is effectively managed consistent with
the California State Lottery Act of 1984 and with the policies of the Board
of Trustees.
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