COLUMBIA - The S.C. lottery got a glowing performance review Tuesday from state auditors, who said lottery officials had kept administrative costs under control while exceeding the lottery's profit goal.

The lottery spent 7.6 percent of its ticket revenues on operating expenses, compared to an average 8.5 percent for 19 other states whose lottery spending is similar to South Carolina's, according to the report by the Legislative Audit Council.

Cost-cutting measures the auditors cited included requiring advance justification, including detailed expense estimates, for all staff travel; using prison-made furniture, and canceling its coffee service.

The lottery produced $220 million in profits during its first full 12 months of operation within the state budget year, from July 1, 2002 to June 30 of this year, the report said. Prior to the lottery's launch on Jan. 7, 2002, the state Board of Economic Advisors had predicted first-year profits of $150 million.

S.C. voters approved the lottery in a 2000 referendum.

Lottery officials on Tuesday said they were pleased with the report.

"It shows that we've done a really good job of managing our business and operating appropriately," said John C.B. Smith, chairman of the lottery's governing commission.

But the audit council's report was less positive about how lawmakers and state agencies used the money.

State law governing distribution of lottery profits limits their use to educational purposes and says they must be used to supplement -- not replace -- existing funds.

However, said the report, "in some cases the General Assembly released agencies from the statutory requirements, due to the state's budget situation. ...Both the local school districts and South Carolina State University were able to use lottery funds not for the original stated purpose, but for general operating expenses."

Some lottery opponents in 2000 had predicted that lawmakers would eventually be tempted to raid the lottery fund to avoid having to choose between cutting regular state funds and raising taxes.

The legislation setting up the lottery gives higher education first claim on the profits, followed by the public schools, then public libraries. The rest is split among a wide variety of programs. Lawmakers decide in each year's state budget bill which specific programs will receive money, and how much.

Since the lottery's inception, higher education has gotten 60 percent of lottery profits, while the public school system received 32 percent. The rest has been split among a wide variety of programs.

The largest amount -- $85 million -- has gone toward college scholarships and tuition assistance at two-year colleges. The biggest category of money for the public school system has been $33 million for grades K through 5 to develop programs in reading, math, science and social studies.

Tuesday, a spokesman for Gov. Mark Sanford said the report showed why Sanford and other opponents of having a state lottery had been right all along. The lottery's biggest supporter was former Gov. Jim Hodges, whom Sanford defeated in 2002.

"The fundamental issue with the lottery remains the way it was sold to the people," said Sanford's press secretary, Will Folks.

"If you see a sticker that says `Lottery equals Education' you're immediately going to think of your local high school or your local middle school or your local elementary school. The governor has said from day one that ... we shouldn't ever count on surplus lottery revenue. If we end up having it, those dollars should go to K-12 where they're needed most."