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Officials in two states are stewing over alleged shortchanging of public revenues from the lottery.

In California, State Controller Gray Davis last month blasted the lottery system for spending too much on administration and failing to give education its share.

By law, public education must receive 34 percent of lottery revenues, with 50 percent going out as prizes and 16 percent available for administration.

Because of falling ticket sales and cost overruns, Mr. Davis charged, the lottery system last year spent 17 percent on administration, thus cutting into prize money and underpaying the schools by $10 million.

To meet the required minimum, the lottery company gave the schools interest and unclaimed-prize funds that, Mr. Davis contended, should have belonged to the schools on top of the 34 percent.

"I am putting the lottery on notice,'' Mr. Davis told reporters. "I'm not going to allow them to dip into this interest fund and use it as a slush account for any purpose they want.''

Company officials said reviving ticket sales should prevent any repeat of the situation this year.

In Kentucky, meanwhile, a legislative panel held a hearing to ask why a surge in lottery sales wasn't yielding similar growth in state revenues.

Although sales went from $427 million to $485 million, the state's share will remain at $100 million, the same as last year.

Pressed by lawmakers, lottery officials said they were doing all they could.

"I can assure you that we've squeezed every drop of juice out of the lemon to get $100 million,'' said the lottery's president.


In the few months since he was appointed Wisconsin's interim state schools chief, former Gov. Lee S. Dreyfus has managed to clash with several key education players.

Mr. Dreyfus put himself at odds with Gov. Tommy G. Thompson, who named him to the post, by putting forward an alternative to Mr. Thompson's proposed property-tax freeze.

But the colorful and controversial former Governor also appears to have angered Mr. Thompson's frequent antagonists, the teachers' unions.

Three union locals last month filed suit against Mr. Dreyfus for a letter he wrote to school districts suggesting they postpone contract talks until the state budget is approved.

Saying the letter had chilled negotiations and encouraged districts not to bargain in good faith, the unions asked that the schools chief be forced to send a letter admitting that his advice was "erroneous, inappropriate, and a violation of law.''--H.D.

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