A new audit has found that South Carolina education officials are not following up on lottery money to make sure that it is being used correctly for college scholarships or elementary and middle-school education.
The report released Wednesday by the Legislative Audit Council (LAC) examined how revenues from the South Carolina Education Lottery are handled once they are transferred into the state budget. Auditors found a lack of oversight by the two agencies which handle most of the funds, raising the risk that the money could be spent improperly.
The report noted few controls are currently in place to ensure that students receiving more than $222 million in lottery-funded scholarship funds are actually eligible to receive them. Students receiving the Palmetto Fellows, LIFE, HOPE, and other lottery tuition assistance must be U.S. citizens or lawful residents and residents of South Carolina at the time of their graduation from high school. Those students must also maintain a 3.0 GPA while in college to keep their merit-based scholarships.
But the Commission on Higher Education (CHE) has no way to measure if the amounts of scholarships requested by the state’s institutions are accurate, beyond matching the college’s ledger with its student rosters, according to LAC director Perry Simpson.
“We want to make sure that the people who are getting the scholarships are eligible for the scholarships,” Simpson said.
CHE officials said they used to review the scholarship distributions until they stopped due to budget cuts after the 2008 recession. However, they never requested additional funds to start again once the budget recovered in recent years.
The audit made similar recommendations for the State Board on Technical and Comprehensive Education (which oversees the state’s two-year technical colleges). Both agencies agreed with the recommendations.
The LAC report also noted a similar lack of oversight at the state Department of Education, which distributed nearly $30 million to South Carolina’s public schools last budget year. Under state law, the money is only allowed to be spent on items such as instructional salalries, teacher stipends, and materials. It is cannot be used for building construction and maintenance, furniture, or expenses incurred at school district offices.
But the Department of Education has no way of tracking the expenses to make sure school districts are following these rules, the audit notes. Instead, it relies on districts self-reporting how it spent the money and how it intends to use lottery funds for the upcoming budget year. But Simpson said only half of school districts are even doing that.
“The only way we know whether the districts are spending the money appropriately or not is if they self-report,” Simpson said. “And in only half the cases are they self-reporting.”
In fact, the agency did review a private institution (Southern Wesleyan University) which annually receives $500,000 in lottery proceeds to pay for elementary school teachers’ staff development. An external review of the program’s funds in August found the school needed to repay more than $10,000 in mileage reimbursements due to a lack of documentation. Simpson said the Department of Education’s current lack of monitoring means the same problems could be occurring at other schools.
The Department of Education did not respond publicly to the audit’s findings.