Huge Scandal Erupts over Oregon Lottery's Handling of $ 800,000 in Free-Spending Perks

Huge Scandal Erupts over Oregon Lottery's Handling of $ 800,000 in Free-Spending Perks

SALEM -- As the Oregon State Lottery's No. 2 director, Lee Moore signed off on many of the free-spending perks that have embarrassed the agency in recent months.

In fact, Moore outpaced lottery Director Chris Lyons in approving expenses for support services, an area that state auditors focused on in a recent report listing nearly $800,000 in "questionable" expenses for 2001. The Oregonian examined Moore's expense sheets, as well as consulting contracts and employee gifts under his division, and found similar expenditures for 2002.

Records show Moore this year approved: nearly $120,000 for a consultant to facilitate meetings; $17,000 for employee gifts, such as Waterford crystal; and about $3,100 for snacks and mileage reimbursement for senior staff meetings at his Portland home. Money for an $11,000 motivational speaker also came from his training budget this year.

The amounts are relatively small, compared with the $1.5 billion generated by the agency last year and the $330 million profit it funneled to state programs.

But critics -- including state legislators, Gov. John Kitzhaber and outside government watchdogs -- are complaining that much of the $800,000 should have gone to schools and economic development projects.

Now, legislators are demanding reform of the semipublic agency, which is exempt from some state rules because it doesn't receive taxpayer money.

Lyons, the lottery director, and agency spokesman David Hooper have resigned, but lawmakers say the root problem isn't with individuals.

It's in a "we deserve this" attitude that Sen. Bill Fisher, R-Roseburg, says permeates the agency -- a mindset Moore helped cultivate with his spending practices.

"How many people have to be purged to make the program acceptable to the public? I don't know," said Fisher, co-chairman of this year's joint legislative audit committee.

"I would be a whole lot more pleased if somebody said, 'OK, fine, I see where we could save the state a little more money and start acting like the rest of government agencies,' " he said.

That's Brenda Rocklin's job. The former assistant attorney general started as interim director of the 18-year-old lottery a few weeks ago and says staff members are evaluating every concern raised by auditors.

"We're not going to study this for six months," Rocklin said. "We're going to make the changes we need to make and move on."

Moore, 56, said the audit pointed out that he had not sufficiently considered public perception when he encouraged some of the practices now under attack, including employee rewards and staff training.

"The one thing that was really absent was . . . how this would look to the citizens of the state," he said.

"I understand that I'm the deputy director and that I have responsibilities and I have to be held accountable, and I'm trying to honor that accountability by talking with you (The Oregonian) and basically saying, 'Here's what we did; here's why we did it,' " he said.

Expensive consultants questioned As head of the lottery's support services, Moore oversees human resources, training, facilities, information technology and purchasing and contract administration.

Since his arrival at the lottery in 1996, he's increased spending on outside consultants for training, though some critics say he could have saved money by using the state's central Department of Administrative Services.

For example, Moore has paid Corbett-based management consultant Sara Grigsby $320,000 -- about $175 to $190 an hour -- since 1999 to run smoother lottery meetings, teach team-building, and just recently, develop training programs. The current contract has $460,000 remaining on its limit, although Moore says that is a mistake and the agency probably won't use her beyond this year.

Rocklin, who is reviewing the consulting agreements, said she would have first looked to the administrative services department and other state agencies for help.

Moore said he also bypassed administrative services and other agencies when he set up the lottery's first support services division.

In 1997, he hired independent contractor Beatrice Magee to help him beef up the human resources office and centralize purchasing. Magee received $56,000 during a two-year period, nearly half of which went to coach Moore specifically on "organizational structure, and behavioral and strategic issues," according to the contract.

The state's administrative services department also could have trained a lottery facilities employee who, instead, took a $3,600 interior design course last year, an expense authorized by Moore and criticized by auditors.

Lottery officials said the course improved the employee's space planning skills. Yet most of the eight-week daytime course at Beaverton's Heritage School of Interior Design appeared to include lessons in marketing, career guidance, creative window treatments and accessorizing.

Employee training and gifts In fact, lottery officials frequently said in their response to the November audit that they would not skimp on training and morale-boosters for employees.

Other state agencies -- even the other semipublic agency, SAIF Corp., which provides workers' compensation insurance -- do not spend the kind of money the lottery did on staff training, employee gifts and motivational speakers, state auditors noted.

In 2001, the lottery spent about $1,550 on training per employee -- more than 21/2 times the cost at other state agencies. Expenses cited in the audit included an eight-day course on difficult conversations that cost nearly $100,000, and $18,500 to send an employee to Northern California for a series of information technology classes offered online for half the price.

The agency also doled out big dollars for motivational speakers at its annual meetings. This fall, the lottery paid $11,000 for an hourlong speech titled "Managing to Have Fun: Teamwork and Recognition." The talk was given twice, to groups of about 200 staff members.

Although this year's speaker was cheaper than last year's -- $20,000 for the keynote speaker -- Mike Greenfield, the state's administrative services director, said other agencies do not host annual all-staff conferences and certainly not with such expensive speakers.

SAIF, for example, hosts an annual meeting for agents who sell its insurance. Last year, the agency paid $500 for its speaker, spokesman Cecil Tibbetts said.

Auditors also noted that lottery employees received retirement parties and relatively lavish anniversary gifts for years worked, regardless of performance.

This year, the lottery handed out 142 anniversary gifts. Workers who hit the five-year mark got $35 Cross pens, 10-year employees got $146 pen-and-pencil sets and 15-year employees received $223 Waterford vases. Three workers received watches ranging from $275 to $325 at retirement.

In contrast, most Oregon agencies operate similarly to the Department of Transportation, which rewards longtime employees with lapel pins and a plaque on retirement.

Staff meetings held at home One of Moore's primary goals at the lottery, he said, was to boost camaraderie.

To that end, Moore often used a lottery credit card to buy sodas, bottled water, cookies and brownies for his weekly support services staff meetings, about 75 percent of which were held at his Southwest Portland home. Until recently, Moore typically worked at home on Fridays.

The meetings were criticized by auditors, and Rocklin has stopped the practice of providing snacks. She also ordered the group to meet at the lottery's Salem headquarters, like employees of other agencies.

This year, Moore spent about $1,600 on refreshments for the Friday get-togethers. The average attendance was eight workers, and the meetings lasted two to three hours. Auditors estimated Moore spent at least $2,600 on treats for the meetings in 2001.

Additionally, employees who lived in Salem were reimbursed about $1,500 this year for driving to the Portland meetings.

Moore said he offered his home since most of his senior staff live in the Portland area, and the governor had called for reduced traffic on Interstate 5.

"It's a lot cheaper for me to volunteer the use of my home than holding it in a commercial facility," he said.

Legislators promise inquiry Moore, often the lottery's public face at scholarship banquets and community money-raisers, juggles 60-hour work weeks for the lottery with a side business and college.

The self-described "education junkie" takes classes at Marylhurst University, where he is working toward a bachelor's degree in management. The lottery has reimbursed about $4,300 in tuition and books to Moore, who has a two-year degree from Portland Community College.

Moore uses personal time, unpaid leave and vacation days for his consulting firm, which brings in about $10,000 to $15,000 a year in addition to his $112,272 annual salary at the lottery. He specializes in behavioral coaching and disciplinary issues. In 1999, for example, TriMet paid Moore nearly $11,000 for presenting at least 13 seminars on equal employment opportunity issues.

"Some people play golf and go fishing," he said. "This is where I get my enjoyment."

Several legislators say they intend to grill the five members of the Oregon Lottery Commission, which has oversight authority, on why they didn't curtail the agency's spending.

Chuck Sheketoff of the Oregon Center for Public Policy, a frequent government critic, said Gov.-elect Ted Kulongoski "needs to bring in a commission that's going to manage the lottery in a way that will build public confidence."

E.D. "Debbs" Potts, 93-year-old chairman of the Lottery Commission, said he does not plan to step aside unless asked.

Neither does Moore, who says the agency needs his expertise now that Lyons has left. He wants critics to remember that he was not the director of the agency, only part of a management team. His deputy director status in some ways was "just a title," he said.

"I don't dictate to the team," Moore said. "I also know that being part of a team, I'm not always going to prevail."

Abolish the Oregon Lottery, privatize the state run liquor stores, start logging state and federal land, abolish the ESA ... drill for oil and gas in ANWR.

Do it now!

Be Well - Be Armed - Be Safe - Molon Labe!

Now, legislators are demanding reform of the semipublic agency, which is exempt from some state rules because it doesn't receive taxpayer money.

So, where is the URL that lists the income versus the payout stats?

The real question, is who are Moore's politico friends? If the Oregonian had any real investigative journalists on its staff, they'd explore that question. Of course, if pigs had wings . . .

Thanks for the post and the ping!

"But critics -- including state legislators, Gov. John Kitzhaber and outside government watchdogs -- are complaining that much of the $800,000 should have gone to schools and economic development projects."

Include me in those critics. This is the first time Taxhaber and I have been on the same page. Wonders never cease...

Learning creative window treatments and handing out Waterford crystal? Sheesh!

Some heads need to roll!

Happy New Year to you both!

"Abolish the Oregon Lottery, privatize the state run liquor stores, start logging state and federal land, abolish the ESA ... drill for oil and gas in ANWR."

Bumpity bump bump!

Happy New Year, blackie!

You may be right that this is good investigative reporting, but the Portland Oregonian is a Democrat-House-Organ, and would not be reporting this unless the Democrats had an axe to grind here.

>> Or am I missing something?

Yup. Marketing is probably a bigger part of it. People aren't naturally stupid enough to blow the sums of money they do on this con. I takes advertising to dumb them down. A lot of it.

Dave in Eugene

>> The money was originally to go towards economic stimulous projects.

That's correct. In the early days, lottery money was used to build what I called streets to nowhere. The streets are still there, being swept every week, and they still go nowhere.

>> The teacher's union later pushed for schools to get it - and they want it all.

Yup, and it had to be approved by voters. IIRC, it was approved at the same time the addition of the video poker was approved. I voted for the original measure that authorized the regular scratch off games and the Megabucks lotto. I realized I had made a mistake by the time the vote for the expansion came along. I wish more voters realized that this really does no good for the state. The $330 Million "profit" is money that wouldn't be spent if it wasn't there - it doesn't offset a nickel of other taxes.

Dave in Eugene

>>This is the first time Taxhaber and I have been on the same page.

No kidding. I disagree with him on just about everything, but but he has consitently shown dislike for the lottery in general, and downright hostility towards any expansion of it. Gotta say he's right about that one issue.

Dave in Eugene

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