The California Lottery may be the fastest growing state lottery in the country, with recent sales exceeding $5.5 billion, for the first time in the state’s history. With all but six states having a lottery, millions of students across the country are the biggest winners. In recent years, the California Lottery has reported spending a record $1.39 billion in supplemental funding for its schools.
The history of the California Lottery
Beginning in 1985, the California Lottery has contributed in excess of $29 billion to creating educational opportunities for California’s students. With this assistance public schools, like those in Los Angeles, have been able to attract and retain more quality teachers, buy classroom supplies and state-of-the-art equipment, and keep essential programs running.
Pursuant to the California State Lottery Act, the Lottery’s mandate is to provide supplemental funding to California public education at all levels, including K-12 schools, Community Colleges, the California State University, the University of California and other educational entities.
The Lottery is a supplement to public education funding
The numbers are impressive. In the fiscal year 2014-15, the California Lottery provided more than $1 billion to schools for the 15th consecutive year. However, this staggering figure represents only 1% of the state’s public school annual budget. Indeed, lottery funds are only meant to supplement public education, not replace state and local funding.
The distribution of funds among schools
All divisions of Los Angeles public schools receive the same per pupil funding level from the Lottery, which is based on the average daily attendance of students in each school district. Since 1985, Lottery funds have been distributed as follows:
- K-12th Grade 3%
- Community Colleges 6%
- California State University System 7%
- University of California 2%
- Other Educational Entities 2%
The Los Angeles Unified School District
The Los Angeles Unified School District (LAUSD) is the largest public school system in the state and the second largest employer in Los Angeles County, second only to the county government. The District enrolls more than 640,000 students in kindergarten through 12th grade, at over 900 schools, and 187 public charter schools. The total school district operating budget for 2015-2016 is $7.08 billion.
I won the lottery, now what?
If you have had the good fortune to win a prize through the California Lottery, you first question will likely be, do I have to pay taxes on my winnings? All prizes of $600 or more are subject to Federal income taxes. There are no California state/local taxes on lottery winnings. If you are considering sharing some of your winnings with your family, you can make tax-free gifts of up to $14,000 each year to as many individuals as you want. Those gifts do not count against your estate tax exemption.
Donating your lottery winnings to charity
Some lottery winners also consider making gifts to charitable organizations. It is best to do so within the same year you collected your prize money. Done the right way, charitable deductions can reduce your taxable income by up to 50%. You may also be able to carry forward any excess deduction to future years.
Los Angeles residents can also benefit from estate planning
Estate planning is the best way to prepare yourself and your family for what happens after your death. Estate planning can also allow you to plan for unexpected incapacity when you will need someone else to handle your affairs. There are various estate planning tools at your disposal, and an experienced estate planning attorney can help you to create a comprehensive plan, based on your specific needs.
Planning for the future is important
Planning ahead gives you the opportunity to decide now who you want to inherit your property. It also gives you a great way to reduce estate taxes and protect your assets. If you are unexpectedly incapacitated, whether temporarily or permanently, your estate plan you can also provide protection for you when you are unable to make decisions on your own.
Why you need an experienced estate planning attorney
An estate planning attorney can provide the legal expertise you need when dealing with a specific area of the law. An estate plan typically requires drafting complex documents that carry serious consequences if not drafted properly. Because of the possible consequences, the American Bar Association discourages the use of do-it-yourself estate planning. An estate plan is not “one size fits all.” Consult with an estate planning attorney who has the experience and knowledge necessary to assist you.
If you have questions regarding estate taxes, charitable contributions, or any other estate planning needs, please contact the Schomer Law Group for a consultation, either online or by calling us at (310) 337-7696.