Audit: Problems With Lottery Funding

BUT THERE’S A BIGGER ISSUE … By FITSNEWS || A legislative audit has found problems with the way the S.C. Department of Education (SDE) administers funding from the state’s government-run gambling monopoly – a.k.a. the “S.C. Education Lottery.” According to a report released this week by the S.C. Legislative Audit Council…


By FITSNEWS || A legislative audit has found problems with the way the S.C. Department of Education (SDE) administers funding from the state’s government-run gambling monopoly – a.k.a. the “S.C. Education Lottery.”

According to a report released this week by the S.C. Legislative Audit Council (SCLAC), the agency is failing to administer its small slice of lottery revenues in a manner consistent with state law.

“SDE has not followed state law for distributing lottery funds to school districts,” the audit found. “Funds are awarded based on SDE’s funding formula, which does not involve a grant process.  SDE does not use an evaluation component in disbursing the funds.  Although SDE does provide funds to every school district, it does not give first priority to schools rated as below average or unsatisfactory.”

The report goes on to say the funding mechanism is “not consistent” and suggests that “a program to monitor the spending of lottery funds sent to the school districts and other recipient institutions could ensure that the funds are being spent according to the law and SDE guidelines.”

You know what? We’ve got a better idea: Get government out of the gambling business altogether.

In the last budget year, the lottery provided $30 million to the government’s K-12 system – an infinitesimally small amount next to the $9-10 billion the state spends annually on what is widely regarded as the worst government-run school system in America.

Most of the lottery’s proceeds – $260 million – go to the state’s “higher education” institutions in the form of scholarships and funding for specific projects.  Again, that’s a small fraction of the hundreds of millions taxpayers shell out each year on the state’s excessively large network of government-run colleges and universities.

The audit found problems with these disbursements, too …

According to the report, the state’s Commission on Higher Education (CHE) “does not currently have a regular program to verify that lottery-funded scholarships are going to students who are eligible to receive them.”

Accountability is also lacking in non-scholarship expenditures.

“There are no procedures in place for … when funds are transferred to technical or community colleges for capital projects,” the report found.

To read the report for yourself, click on the links below …

As noted in our preview of this audit, this website has repeatedly argued in support of private sector gaming … and in opposition to the state’s government-run gambling monopoly (which has been embraced by Gov. Nikki Haley and the state’s “Republican” General Assembly).

In fact we find it highly hypocritical how our state’s leaders rail on the social evils of gambling … while at the same time running a gambling operation.  How does that work, exactly?

Easy: The state’s full-fledged assault on gambling isn’t about preserving morality in South Carolina … it’s about preserving a government monopoly.


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HawaiianShirtFridays October 30, 2014 at 9:11 am

I’m sorry, but am I the only one who isn’t shocked and just doesn’t give a sh*%? The lottery has some problems keeping track of their money: you just described every single state and federal agency in this country. This audit report is a joke and if this is the kind of crap the legislative audit council spends their time doing, I say we give their funding to a more deserving agency that may actually put it to good use.

The Colonel October 30, 2014 at 9:48 am

What a wonderful idea – screwed up by idiot bureaucrats.

I talk to high school students all the time about the Life Scholarship program (actually there are several different scholarship programs referred to generally as the Life Scholarship). A student who wants to go to college will have between $2,800 and $7,500 a year available to them based on their academic achievement. Most could easily earn an associates or tech degree and not pay a dime out of pocket. Those pursuing a four year degree will need more than just the Life or Palmetto Fellows scholarship but $5,000 – $7,500 is a big dent in the average $25,000 per year needed to attend college.

The money that is slated to go to high schools is supposed to be paid out under a relatively simple formula and our bone head bureaucrats can’t even manage that. Wanna fix education at the “state level” – start here.

It’s taken the Commission on Higher Education 10 years to finally get the web site organized in a useful manner – if you have a student looking to go to college and wondering what monies are available to them refer them here:,FamiliesMilitary/PayingForCollege/WhatFinancialHelpIsAvailable/ScholarshipsGrantsforSCResidents.aspx

Deo Vindice SC October 30, 2014 at 10:26 am

What I like about it is most of the money comes from uneducated, unemployed, worthless dirt bags like Tango and friends.

Sandi Morals October 30, 2014 at 10:30 am

Man, you were on quiet a drunk last night in the “barnyard”.

Deo Vindice SC October 30, 2014 at 10:38 am

had me confused for a moment. Quite, I think you mean. And it was good also. What do you prefer ?

Sandi Morals October 30, 2014 at 10:30 am

Man, you were on quiet a drunk last night in the “barnyard”.

E Norma Scok October 30, 2014 at 3:25 pm

Well them, and the disgusted, overworked middle/upper mgt like myself that at the end of a week are either looking for a miracle, a good drunk, or to be struck by lightning.

I tell you, when I’m in line buying a 12 pack and powerball shot, I ain’t the only one who looks just like me.

Mark Petereit October 30, 2014 at 10:44 am

Lotteries, and for the most part, college spending, are both marketed to people who are tragically bad at math.

According to a recent study, “Compared to high school grads, workers with bachelor’s degrees earn about $1 million more, and workers with associate’s degrees earn about $325,000 more over a lifetime.”

Then consider this:

“In its most recent survey of college pricing, the College Board reports that a “moderate” college budget for an in-state public college for the 2013–2014 academic year averaged $22,826. A moderate budget at a private college averaged $44,750.”

Now let’s plug those numbers into a basic future value calculation and see what that same money would earn between the ages of 20 and 65, invested at an average rate of return of 12%:

4 years of in-state public college, $91,304 invested for 45 years at an average 12%* rate of return = $14,972,724.18.

4 years of private college, $179,000 invested for 45 years at an average 12%* rate of return = $29,353,781.09.

So spend the money on college and earn $325,000 to $1 million more, or invest the same money and earn $15 million to $29 million more?

*Spare me your “You can’t count on 12% returns!” objections. Study it. I have. The average returns over a 45 year period are actually higher. 12% is actually quite conservative.

Spare This.. October 30, 2014 at 11:16 am

The past is not a true indicator of future performance, especially anything related to the US economy.

Mark Petereit October 30, 2014 at 1:06 pm

True. My investments are earning 18.5%. Over 30% since Obama took office (thank you Quantitative Easing!)

E Norma Scok October 30, 2014 at 3:22 pm

“…college spending, are both marketed to people who are tragically bad at math.”

Did I misread your intent in this?

Mark Petereit October 30, 2014 at 5:46 pm

That depends. How are you math skills?

E Norma Scok October 30, 2014 at 11:22 am

What is the average high school grad, who has absolutely no marketable skills, going to do that he can invest (not earn, but invest) $22,826 per year net( negated any tuition assistance the student may get)?

And since I’m not going to be working and will be borrowing a majority of that that money to invest..have you taken into consideration my lack of spending power due to payments and a lower salary, inflation, and the simple ability to sustain myself (and a family on a high school diploma)at a lower earning rate when figuring how much money I will have when I’m 65?

My point is: your calcs (and I’ll take them at face value, but if I average my last 17 years or so of investing, I’m closer to 7-8% ROI), I might live better when I’m 65, but the first rule of finance is more money now is always better than a promise of more money later. There are a lot of “what if’s” in your plan, and you completely negate the ability to make more money now (well, 4 years from now) as a higher paid college graduate.

College isn’t for everyone. But telling everyone not to go to college for your reasons is pretty stupid IMO.

Mark Petereit October 30, 2014 at 1:05 pm

I’m sorry, where did I tell everyone not to go to college?

Mark Petereit October 31, 2014 at 11:29 am

If a child graduates from high school with “absolutely no marketable skills” then their parents and every educational institution they have attended are complete failures.

Where would they get the money to invest? If the premise is that they’re attending college, the money is coming from somewhere. If they’re borrowing the money, then they’re simply compounding their problems by foolishly plunging themselves into debt.

Yes, there ARE a lot of “what ifs” in my plan: What if schools taught basic personal finance? What if parents taught their children how to handle money? What if people learned math? What if people realized how stupid debt is? What if people saved a portion of every dollar they ever made instead of spending it all? What if parents invested for themselves and their children’s future? What if people who didn’t know anything about math, finance or investing weren’t so proudly ignorant?

But then, I suppose that’s why wealthy people in this country are “1%”.

SC Is All Fucked Up October 30, 2014 at 11:15 am

The entire state government is run by crooks, liars, cheats, and felons.

LD October 30, 2014 at 12:25 pm

Let organized crime and/or the Republican Party administer the lottery. That way we know the funds will be properly used.

CorruptionInColumbia October 30, 2014 at 1:55 pm

Interesting, they found nothing (or didn’t care to look) wrong with the shady dealings of the SC-based games under Paula Harper Bethea’s watch?
Nothing much to see here, folks. Please move along.

Lennon Durden October 31, 2014 at 11:05 am

The government has been in business as worse than the mafia for many many years. If you tangle with the mob you might get something broken. If you tangle with sc government you’ll wish you’d only gotten a broken bone
The sc government wants a poorly educated population (take that democrats) because they know they’d all be voted out of office if the electorate were well educated…
If South Carolinians wanted to truly change, they’d vote November 4th and get rid of the rabble from the Harrell’s on down.
Unfortunately. Dumb people do not know they’re dumb. Thanks South Carolina public edumacation system
And by allowing legalized theft (a/k/a education lotteries) you’re actually taxing dumb people in to thinking they will win money. I laugh in your general direction. South Carolinians are losers. Losers to the elected politicians and their corruption !!!

ELCID November 1, 2014 at 2:16 pm

OH, the State does it’s own Gambling “Number’s Running,” game and it’s not done legally?? History Repeats itself again and again.

Just like all the other State Run Lottery Schemes that were shut down in the late 19th and early 20th centuries in the USA. This one is crookedly run too, paying 6 figure salaries to people who couldn’t make 10% of that on their own.


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