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Monday, October 10, 2011

Ind. Gov't. - The state lottery is a "a separate body politic and corporate from state government," except when it isn't ...

Today the Indianapolis Star had this editorial, headed "Lottery splurges, we lose." News stories last week reported on "the move from the Pan Am Plaza office tower to more expensive headquarters on North Meridian Street," along with nicer furniture, "coffee bars, lounges, artwork and an employee workout room with $20,000 in equipment." The editorial concludes:

The larger point, however, is that Densborn admits she and her staff didn't check state standards on spending before signing off on the $2 million office upgrade. Gov. Mitch Daniels stepped in last week, dispatching his press secretary to tour the new offices. Promises of correction have been made if the lottery did violate standards for spending public dollars.

That's a welcome, if belated, move. Too many Hoosiers already lose to the lottery the first time around; they shouldn't be treated like suckers on the back end as well.

ILB: My question is - what "standards for spending public dollars" apply here?

IC 4-30-3-1 begins: "There is created a state lottery commission as a body politic and corporate separate from the state."

IC 4-30-1-2 begins:

In construing this article, it is the intent of the general assembly that the following policies be carried out:
(1) That the lottery games be operated by the state lottery commission, which is created by IC 4-30-3 as a separate body politic and corporate from state government and should function as much as possible as an entrepreneurial business enterprise.
(2) That the general assembly recognizes that the operation of a lottery is a unique activity for state government and that policies and procedures appropriate for the performance of other governmental functions are not necessarily appropriate for the operation of a lottery.
Looking back to 2004, quasi-public entities were making news. This ILB entry from Dec. 29, 2004 includes:
Another scandal story today, this one on the front page of the Indianapolis Star, headlined "Official overbilled state for equipment, police say: Amid lax oversight, affidavit says, engineer may have triple-billed for computer gear." Again, the cause looks to include poor supervision. And again, as with many of the other recent scandals, including the BMV, the Lottery and PERF, the entities involved were not subject to the laws and review procedures of normal state agencies. Generally one of the reasons behind the creation of these quasi-publics is to "avoid red tape" -- meaning restrictions on personnel, purchasing and contracting, etc. ... The Star story today concludes:
The Solomon case is the latest in a series of incidents raising concerns about the state's ability to oversee spending, especially by groups that operate with no direct oversight from state government officials.

Earlier, the Public Employees' Retirement Fund unknowingly hired a convicted identity thief to help run the state pension fund.

In addition, the former leader of Indiana Web Academy, part of the Intelenet Commission, is under investigation for misspending.

And there have been significant fraud cases in the Bureau of Motor Vehicles and the Family and Social Services Administration.

[ILB: Note, however, that the FSSA is not a quasi-public; it is/was just, perhaps, too large.]
Despite this history, the Indiana quasi-public entities continue to exist. The Indiana Economic Development Commission (IEDC) has, I believe, been given even more autonomy since 2004. (Perhaps the IEDC too has an employees' gym or gym privileges; but there has been nothing in the news.)

It appears, unless someone can point to the standards for spending public dollars alluded to in the Star editorial today, that the Lottery Commission has operated as the law authorizes. "Red tape" applicable to state agencies does not apply to quasi-publics. Instead, as the statute provides, they are to "function as much as possible as an entrepreneurial business enterprises."

Hence the heading to this entry: "The state lottery is a 'a separate body politic and corporate from state government,' except when it isn't ...".
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[A related question is, if the state lottery is a quasi-public entity, and thus not an arm of the State of Indiana, is it entitled to sovereign immunity? Several recent federal court decisions have said "no." This is from a May 16, 2009 ILB entry:

Judge Barker's Jan. 7, 2008 district court ruling finding the Lottery is not a state agency, Burrus v. State Lottery Comm’n, is available here and is discussed in the latter part of this ILB entry from May 31, 2008.

The 7th Circuit opinion affirming Judge Barker, holding "The Lottery is not entitled to sovereign immunity because it is not an arm of the state. ," is summarized in this Oct. 6, 2008 ILB entry.]

Posted by Marcia Oddi on October 10, 2011 12:28 PM
Posted to Indiana Government