The savings were over five months compared to the same period in 2002.

Gov. Ted Kulongoski called the results as a "significant step forward in our goal to reduce costs and restore accountability in state government."

The 2002 audit found nearly $800,000 in questionable administrative expenses, including use of first-class airline tickets and expensive hotels for people on Lottery business.

A Lottery budget adopted in June reduced travel expenses from last year's $438,600 to $327,000.

The report found 19 of the 21 money saving measures recommended in last year's audit currently in place, with progress being made on the other two.

Lottery officials ended the practice of sending large groups of people on out-of-state conferences and adopted lodging and meal per-diem allowances approved by the state Department of Administrative Services.

Lottery Director Chris Lyons abruptly stepped down after the 2002 audit was released. Kulongoski appointed Brenda Rocklin as lottery director in January.

Rocklin set spending policies similar to those of other state agencies. Bradbury said costs have dropped 78 percent for training, 89 percent for meetings, 77 percent for travel and 50 percent for cellular phones.

The Lottery was created in 1984 and brings about $350 million a year to the state for purposes including economic development, public education and restoring and protecting parks, beaches, watersheds and habitats.

The Lottery has been exempt from some budget rules that control the rest of state government, and some legislators have attempted to rein it in.

Others contend the Lottery is a moneymaker and would not be as efficient if it had to answer to lawmakers on operational matters.