State audits are generally notable for the shortcomings they reveal in the use of taxpayer money and the administration of state agencies. A recent audit of a relatively new state operation, the lottery, is notable for the lack of problems it found.
The South Carolina Education Lottery began selling tickets in 2002, with proceeds going to college scholarships and to education programs in public school. Tickets are sold by retailers, and proceeds are delivered by the SCEL to the state, which distributes them according to the instructions of the Legislature.
The lottery had sales of $724 million in its first fiscal year and is expected to bring in somewhat less in the current year. The Legislative Audit Council found "a good system of controls over prize payments" in place, though it urged periodic audits to ensure compliance.
It also concluded that the SCEL has adequate management controls and has properly limited its administrative costs, which are less than the 15 percent allowed by law. Agency travel, for example, has to be justified prior to the trip. And office startup expenses were kept low through the purchase of furniture from the Department of Corrections prison industries program. The audit noted that Executive Director Ernie Passailaigue had lottery officials return expensive furniture they initially had purchased from a Columbia retailer.
The audit's major criticism, the lack of a program for the prevention and treatment of compulsive gambling, has been corrected with the establishment of a program by the Department of Alcohol and Other Drug Abuse Services. The SCEL generally agreed to follow recommendations, including a review of policies related to cell phone and vehicle use.
One audit finding deserves more attention in the future. The LAC noted that some of the agencies that receive lottery funds are still in the process of developing controls to ensure their appropriate use. That, of course, is an area outside SCEL's control.
The state lottery was controversial in its inception, and the wisdom of primarily using its profits for college scholarships is still questioned in some quarters. But the audit demonstrates that South Carolina residents can have confidence in its administration as the legislative debate continues over how best to disburse its proceeds.
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