Copyright© 2000 by School Services of California, Inc.
California Lottery Commission
Sends Extra $35 Million to Schools
A little known fact about winning lottery tickets is that a fair number of them go unclaimed each year. The proceeds from these winning lottery tickets go to schools. The Lottery Commission's past practice has been to distribute the proceeds to schools just as the winner would have received them, either as a lump-sum or as an annuitized annual pay-out.
Most winners designate an immediate lump sum, but about 20% of unclaimed tickets specify a desire for annual payments. That means that school districts have been receiving most of the money from unclaimed tickets as part of their annual per-student allocations.
Between 1987 and 1998, however, about $52 million dollars worth of unclaimed winning tickets specified annual payments. The discounted cash value of these winnings was invested in U.S. Treasury Zero-Coupon Bonds with a current market value of about $35 million. These bonds have been earning interest and are sufficient to make the annual payments.
Several weeks ago, John Schade of the Lottery Commission contacted School Services of California and indicated a willingness to change the way funds from unclaimed tickets are distributed if there was a better way for schools. He suggested that we survey school districts and offer suggestions. We did that very quickly and, as expected, we got the same answer from everyone in our limited sampling-"we want the money NOW!"
The Lottery Commission staff developed and took forward to the Commission a recommendation that both past and future unclaimed prizes be distributed as lump-sum payments to schools. School Services of California spoke in support of the staff recommendation. The Commission adopted the staff recommendation on Sept. 22, 2000, and as a result the $35 million currently held in bonds is expected to be distributed as part of the second-quarter distribution. A per-student amount for this one-time addition to the second quarter allocation has not been worked out yet since the Commission has just acted. We will provide additional information on per-student amounts later.
We want to thank the Lottery Commissioners and especially John Schade and
his staff for their initiative in inviting comments and suggestions from
school districts and for taking this recommendation forward. Once again,
the California Lottery is there for the children of California.
--Ron Bennett