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Audit: California Lottery Owes Public Education $36 Million

LOS ANGELES (CBSLA) — California's state auditor says the California Lottery owes schools a whopping $36 million.

An audit released Tuesday says an assessment of the California State Lottery found the agency has not been increasing its funding for education in proportion to its increases in net revenue, and as a result, did not pay $36 million to California schools for the fiscal year 2017-18.

"It is critically important that the Lottery adhere to these requirements because they are safeguards that ensure that the Lottery's education funding increases as the Lottery's revenues increase and that the education funding is at its highest possible level and does not decline sharply from one year to the next," the report said.

Education funding is an ongoing issue in California. Last year, teachers from the Los Angeles Unified School District staged its longest strike in 30 years, costing the district $151 million in attendance revenue. In March, voters will weigh in on Prop. 13, which in 2020 calls for a $15 billion bond to build schools, and ironically shares a name with a 1978 property tax cap that has been largely blamed for strangling California's ability to fund education.

The audit also found the agency entered into eight noncompetitive agreements totaling $5.7 million, and did not appear to accept the lowest bid for 17 other agreements valued at about $720,000. The State Controller's Office was also taken to task for lax oversight of the State Lottery, removing a significant finding from a recent audit report after the Lottery disputed the finding and allowing the agency to submit a report to the Legislature that was actually written by the Lottery, without analysis from the State Controller's Office, according to the audit's summary.

The audit is recommending that California State Lottery pay the $36 million it owes to education and require the State Controller's Office to conduct regular audits of the agency's procurement process.

The director of California Lottery pushed back, calling it a "fundamental difference of opinion."

The State Controller is also investigating 30,000 scratchers that were given as a gift to "The Ellen DeGeneres Show."


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