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Audit: S.C. lottery leaders paid more than those in other states

Dec 16, 2005, 9:18 am

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South Carolina Lottery

Top South Carolina lottery officials are being paid more than those in many other states, according to an audit released Thursday.

In its 57-page report, the Legislative Audit Council said the South Carolina Education Lottery is paying its executive director more than at least 16 other states. In the council's survey of 18 state lotteries, Tennessee's executive director garnered the highest salary, at $350,000, and West Virginia's executive came in lowest at almost $97,000.

South Carolina's executive director Ernie Passailaigue makes $196,738 a year, according to the audit. The second highest-paid lottery official in the state earns $166,350 a year, which is more than the executive directors of 14 of the state's surveyed.

There are lotteries in 42 states, as well as in the District of Columbia and the U.S. Virgin Islands.

Gov. Mark Sanford's spokesman said the salary findings were a concern.

"When we have a lottery director that is third highest-paid among the states this audit reviewed, that raises some serious questions about whether we're getting enough dollars to education," said Sanford's spokesman Joel Sawyer. "It's something the governor has raised a number of times in budget hearings."

South Carolina Education Lottery Commission Chairman John C.B. Smith Jr. said the executive director's compensation package compares very favorably to other lotteries in the country.

"This is really a top-notch lottery," Smith said. "We try to compete in a national arena, and our staff is national class."

The state lottery is prohibited from paying performance-based bonuses, Smith said, and South Carolina's salary structure is "quite a bit low" when compared to some modern lotteries.

The report also said the commission "has not adequately communicated the odds of winning" to lottery players.
Smith said this issue is something "we continually try to work on." He said the commission feels point-of-purchase notifications are more effective than other methods, like radio spots, and said the lottery would use more in-store displays.

Smith also said the audit's concern that nearly $20 million in scratch-off tickets were sold after the contests' top prizes had already been claimed was not a big deal.

"We have a rich lower-tier prize structure, and we find that most players are playing the scratch off games for the lower-tier prizes," he said.

The report also recommended the lottery rely more on in-house staff to purchase these point-of-purchase displays, rather than using its advertising contractor.

In his written response, Smith agreed with this recommendation and said the commission would continue to "closely monitor" its contract with Chernoff Newman to ensure efficiency.

Passailaigue deferred all comment to Smith Thursday.

Overall, Smith said he was happy with the report.

"We try to take these recommendations to heart and try to work to make our lottery better," he said. "We want to go from good to best."

The report came as SCEL announced that more than $1 billion of net lottery proceeds had been deposited into an account used to fund educational initiatives. According to a release, net proceeds of $1.154 billion have been appropriated to higher education, K-12 programs and other initiatives through the end of fiscal year 2006.

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