Davis Vows Court Fight to Give Schools $5.9 Million in Lotto Funds

SACRAMENTO —  State Controller Gray Davis pledged Thursday to go to court if necessary to block what he said was an “illegal” diversion by the California Lottery of $5.9 million that should have gone to public schools.

Davis, releasing a recently completed audit, estimated that the lottery would have improperly transferred $140 million from school funds into the games’ pool of prize money over the next five years.

“The lottery cheated California school kids out of $5.9 million last year,” Davis said. “This money could have put 196 new teachers in our classrooms, purchased 390,000 new textbooks or given our students 5,000 new computers.”

The money in question came from unclaimed $5 prizes in the Lotto 6/49 game. Last year, instead of turning the money over to the schools, lottery officials began allocating the money for future prizes.

Lottery Director Chon Gutierrez said the dispute stems from a disagreement over interpretation of the law that governs what should be done with unclaimed prize money.

He said the Lottery Commission, following the advice of its attorneys, acted legally in transferring the funds back into the prize pool because the commission had discretion over what to do with the money.

Now, in light of the controller’s audit, the lottery has asked Atty. Gen. John K. Van de Kamp to issue an opinion interpreting the law. Until Van de Kamp decides, Gutierrez said, the lottery will not transfer any future unclaimed money into the prize pool.

“We try to interpret the law as fairly as we can,” Gutierrez said. “We’re setting the money aside waiting his decision.”

Gutierrez noted that the lottery has raised $2.9 billion for education since it began in 1985. By law, the lottery is required to give 34% of its revenue to public education. Gutierrez said that in the last fiscal year, even though the disputed $5.9 million was converted back into prizes, the lottery exceeded the 34% quota by $105 million.