California lottery demands workers repay 3-year-old travel claims after expense audit

A group of California State Lottery employees got letters in the mail last week saying they were overpaid for mileage, lodging and other expenses and have to pay the money back.

The lottery is recouping improper expense payments to employees based on the findings of a State Controller’s Office audit from April of last year, lottery spokesman Jorge DeLaCruz said in an email.

The audit found the department had inappropriately spent about $300,000 on travel, food and accommodations at sales conferences over four years. The lottery came under scrutiny on several fronts after anonymous employees submitted a whistleblower complaint in 2018 complaining about rowdy behavior by top department officials at out-of-town sales events.

The lottery is recouping about $15,700 from 67 employees who “received reimbursements on past travel expenses that were inconsistent with state travel rules,” DeLaCruz said in the email.

The audit covered a broad range of expenses including big payments to hotels and other vendors for the sales conferences. The lottery has recouped some of those vendor payments, DeLaCruz said.

The improper payments being recovered now covered personal vehicle mileage, lodging, per diem and parking expenses, he said. Not all of the expenses were related to sales conferences. DeLaCruz declined to provide a range of amounts individual employees must repay.

The lottery reviewed expenses from 2017 through 2019, according to one of the notices. The letters, sent Oct. 1, say employees must pay the money back within 15 days or set up a payment plan.

The 2019 audit described managers with long commutes who’d stop by retailers and claim “unallowable” mileage.

One manager with a 75-mile drive would report 95 miles worth of mileage expenses. The manager should have claimed only 20 miles, which is the difference between the manager’s commute and the manager’s actual work-related expenses, according to the audit. The controller found the manager was paid more than $14,000 in what should have been “unallowable” expenses.

The lottery disagreed with the Controller’s Office over some of the payments the audit identified as unallowable or questionable. The department is not recovering some expenses for which Lottery leaders granted exemptions to state rules, and is not recovering spending on “non-traditional commutes” by some recruiters who pitch new retail partnerships and lack traditional offices, DeLaCruz said.

“The lottery took these findings very seriously and reviewed every dollar cited in the SCO report,” he said in an email.

The Controller’s Office regularly reviews lottery expenses, but the office expanded the scope of its audit after 2018’s anonymous complaint to the Governor’s Office.

Following an internal review, the Controller’s Office audit and a report by the California State Auditor, the lottery made changes including substituting out-of-town sales conferences with webinars and training at local venues.

The department took other actions to tighten spending controls and improve training.

This story was originally published October 8, 2020 at 12:16 PM with the headline "California lottery demands workers repay 3-year-old travel claims after expense audit."