Four times a year, each of California's school districts receives a check: a payment from the tickets purchased by the millions of people who hope to win the California Lottery.

The idea for a state lottery took hold in early 1984 when some entrepreneurs, matching their knowledge of how to operate a lottery with publicity from the education community about the need for more funding, put forward a plan to create a lottery with at least a third of the proceeds directed toward education. Their plan became Proposition 37, an amendment to the California Constitution, Article IV, Section 19. While opponents warned that it was a mistake to link gambling to education, voters supported the proposition by a 58% majority in November 1984, making California the 21st state to adopt a lottery.

Under the terms of Proposition 37, lottery proceeds must be divided as follows:

• A full 50% of the annual lottery proceeds must be paid out in winnings.
• At least 34% must be distributed to public education, from kindergarten through the state college and university systems.
• No more than 16% may be used for the costs of publicizing and administering the games, including commissions for retail outlets.
• Lottery payments to education may be spent only for instruction, not "acquisition of real property, construction of facilities, financing of research, or any other non-instructional purpose." In practice, school districts have used lottery funds to support such things as technology, libraries, and enrichment programs when economic times are good. However, when facing budget cutbacks, some school districts have used lottery funds for staff salaries and other fixed costs. Because lottery money is volatile, however, many educators believe that it is unwise to rely on the lottery for ongoing expenses.

• In 2000, voters passed Proposition 20, requiring that half of any increases in education's share of lottery revenues (as compared to the 1997-98 "base amount") be used only for instructional materials.

The proceeds of the lottery have fluctuated from a low of just under $90 per student to more than $175 per student. In the first several years after Proposition 37 passed, the lottery was seen by some as taking care of school funding deficits, frustrating educators who recognized that it accounted for less than 4% of K-12 education funding. (The lottery has provided between 1.5% and 3.8% of K-12 education revenues, not exceeding 2% since 1995-96.) Many educators were concerned that such a misunderstanding would hurt voter approval of local school bonds.

However, since 1998 voters have approved $35.4 billion in statewide bond monies for K-12 facilities as well as numerous local bonds and parcel taxes. And the lottery continues to generate welcome discretionary money for districts as well as restricted funds for instructional materials.