Senator Chang Responds to Audit Results of the California Lottery

Press Release

16

SACRAMENTO, CA —  Senator Ling Ling Chang (R-Diamond Bar) made the following statement in response to the California State Auditor’s report of the California Lottery:

“The findings today demonstrate what we suspected all along. That the California Lottery has a culture of profits first and schools last.  They owe our schools millions of dollars and I will be introducing legislation to ensure our schools get what they are owed.”

Last year The Joint Legislative Audit Committee approved Senator Chang’s request to audit the California Lottery who has history of controversy.  After analyzing their profits and expenditures Senator Chang believed schools were not getting enough funding in proportion to skyrocketing lottery profits.

FACT Sheet (CLICK FOR PDF):

Our Key Recommendations

  • The Legislature should require the Lottery to pay $36 million it owes to education and the SCO to conduct regular audits of the Lottery’s procurement processes.
  • The Lottery should do the following:

» Determine optimal prize payout rates and use them when setting its future budgets.

» Develop procurement procedures that fully explain exemptions for noncompetitive bidding and identify the necessary justification and documentation to support noncompetitive bidding.

  • The SCO should develop protocols to ensure that it reports all relevant findings in its audits and conducts effectiveness and efficiency reviews of the Lottery.

Key Findings

  • Although it is required to maximize funding for education, the Lottery has not prioritized this funding when setting its budgets and, thus, has not funded education at the required level.

» In fiscal year 2017–18, it should have provided education with $36 million more than it actually did because its budgeting process is not designed to meet the education funding requirements.

» It does not have an up‑to‑date analysis of the optimal balance between prize payouts and education funding and, therefore, does not know if it is diverting too much funding to prize payments—its most current analysis is 10 years old.

  • The Lottery may not have always received the best value on its procurements, which could reduce the funding it provides to education—it does not have current guidance for conducting procurement activities and lacks sufficient safeguards for using noncompetitive procurements.

» Our review of a selection of procurements disclosed that it often entered into noncompetitive agreements without adequate justification, raising concerns about the agreements—nearly 40 percent of its agreements over the past three fiscal years were noncompetitive.

» It entered into 17 agreements with hotels for its retailer trade shows but cannot show that it evaluated other options before entering into these agreements, some of which contained excessive costs for food and beverages.

  • The SCO’s oversight of the Lottery’s performance has been ineffective, and its current approach to auditing the Lottery will not identify shortcomings in the Lottery’s performance.

» It inappropriately removed a significant finding, which questioned hotel costs of about $720,000, from a recent audit report after the Lottery requested changes.

» It did not adequately assess or report to the Legislature about the Lottery’s performance after significant changes were made to the law. Instead, the SCO submitted a report written by the Lottery about whether the Lottery was adequately fulfilling its mandate.

Full Fact Sheet, click here.

16 COMMENTS

    • The Multi-State Lottery Association (MUSL) is an American non-profit, government-benefit association owned and operated by agreement of its 34-member lotteries. MUSL was created to facilitate the operation of multi-jurisdictional lottery games, most notably Powerball.

  1. And now they want to add another tax for schools. How about you use the money appropriately that you already receive for the schools!!!

  2. Well, now. So far the people who have commented on this story are racist, sexist, and uneducated. Nice mix here. The California Lottery was approved by voters with the promise that proceeds would go to the schools. Anyone with a brain knew that ” administrative costs” would eat up a lot of the money. The lottery isn’t government run, and the school system doesn’t totally depend on lottery funds to operate.

    • Not one single racist word in any of the comments. Sounds like the apple doesn’t fall to far from the tree after all.

      • Uh huh….” ling, ling”? Nope. Nothing racist about that. Not very subtle, friend

        • Her name is Senator Ling Ling Chang (R-Diamond Bar) George Robert Mathews Jr. Nothing racist. Just sit back in your cute little blue house and throw stones.

  3. I agree TSG. The only California Politician actually working for us the people! She needs to run for President.

  4. ……..at least take Newsom’s job. He’s going to get us in a financial free fall, then ask for more tax money.

  5. Instead of using the funds generated by the state lottery, these wetbrains are trying to push Measure J to take more of our money and squander it on this imaginary traffic congestion “problem.” The reason it’s a problem is because companies don’t operate in the areas where their employees live. I worked for one firm in San Francisco where none of the employees lived in the city. They lived in East Bay (Antioch, Pittsburg, Brentwod, Discovery Bay and beyond) ….. yet all had to commute those ridiculously long distances. With today’s technology, people can work out of their houses. If the are manufacturing something, then have satellite facilities close to where they live. That will cut down on this horrendous traffic or force people to ride BART and get to experience a good whiff of the homeless sanitary “practices.”

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