COLUMBUS - Ohio should convert its lottery into a quasi-public corporation with a commission that would have the power to hire and fire its executive director, a much-anticipated state audit proposed Tuesday.
If the Cleveland-based lottery does not move toward a more privatized entity, its governing commission would be redundant and should be eliminated, the audit said.
This is the performance audit the commission has been bracing for since State Auditor Mary Taylor's decision to take a closer look at its operations.
Ms. Taylor's presence on the Republican gubernatorial ticket as John Kasich's running mate also resulted in suspicions from the lottery and Democratic Gov. Ted Strickland that the audit might be politicized. The governor now has the power to hire and fire the lottery director.
"Unlike virtually every other state agency and commission, the purpose of the Ohio Lottery is not to provide a service, but to generate a profit,'' Ms. Taylor's audit reads. "This mission, to generate revenues which support education, is achieved through promoting a product in the marketplace and is more similar to a business enterprise than a government agency. However, OLC's status as a cabinet-level state agency hampers its ability to operate most effectively.''
Such a change in structure of the voter-approved lottery would require legislative approval.
The audit generally praised the lottery's operations, finding that its performance has been on par with that of other lotteries in the country.
Last year, after record sales, the Ohio lottery transferred $728.6 million in profits to the state general fund for spending on K-12 education. That was $26.3 million more than in the prior year and was the second-highest profit in the commission's 36-year history.
The audit, however, identified several areas, including elimination of a number of jobs, it said could save $2 million a year and increase profits for education.
It noted that most policy decisions are made outside the lottery's governing commission, largely limiting its functions to rule-writing authority for the operation of new games.
During a meeting Tuesday with The Blade's editorial board, Mr. Strickland said he hadn't had a chance to fully read the report.
"Based on what my staff has told me … I do have some concern, given that we're this close to the election, that she and Kasich are promoting privatization, that this could be an example of her using her responsibilities as state auditor to promote a political agenda right now," he said.
Recently, Mr. Kasich proposed eliminating the Department of Development and giving its economic development functions to a nonprofit organization headed by business types appointed by the governor.
"I think we've got a wonderful lottery director,'' Mr. Strickland said. "She has a sterling reputation and is an accomplished attorney, and I think when an operation is public you have more control over it, and quite frankly there's usually more transparency. Public functions by their very nature have to be transparent, or should be transparent, and private operations I think are less so."
Lottery Executive Director Kathleen Burke, without commenting specifically on the incorporation proposal, said the commission will review the recommendations.
Staff writer Tom Troy contributed to this report.
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