After being directed by Gov. Tim Pawlenty, the state's finance commissioner has worked with the Minnesota State Lottery since last spring to tighten operations, but enough lapses continued that a strongly worded letter was sent to lottery director George Andersen shortly before his death, the Pioneer Press reported.
Andersen resisted one of the Finance Department's key recommendations and did not address another major shortcoming identified by the agency. That led, in part, to the letter by Finance Commissioner Dan McElroy on Jan. 15 to Andersen, less than two weeks before he committed suicide, the newspaper reported today.
McElroy questioned the lottery's sponsorship of a bass fishing tour, the number of cars in its fleet and the size of its Roseville offices, according to a copy of the letter obtained by the Pioneer Press.
The letter concluded with the warning that the lottery's status as a semi-public agency "did not give license to the lottery to shirk public accountability or efficiency."
The concerns outlined by McElroy are separate from an investigation of the lottery by the Office of the Legislative Auditor, which is expected to issue a report next week.
Andersen was found dead outside his Hugo home Jan. 27, a day after he met with legislative auditors.
Under Minnesota law, the lottery director can be removed by the governor only for cause, which could include poor revenues and inefficient administration.
McElroy said Andersen knew that if he failed to respond to McElroy's suggestions or major problems were discovered by the legislative auditor, Pawlenty could force him out.
"George is so smart. You didn't have to write between the lines for him," McElroy told the Pioneer Press. "He knew what the statute said. I never threatened him or implied a threat."
McElroy said he didn't think his questions "added to his stress level" and that he had been working with Andersen since April to make the lottery more efficient. McElroy said his questions were likely to be different from those raised by the auditor.
"He didn't delegate," McElroy said of Andersen. "He was a merchandizing/sales guy, rather than a business guy. What we were working on was getting solved."
Andersen responded to McElroy's letter on Jan. 20, saying he was "immersed in reviewing the draft" of the legislative auditor's report and would discuss it with McElroy as soon as the auditors allowed him to do so.
McElroy said Pawlenty asked him to work with Andersen after the Minnesota Center for Environmental Advocacy reported that Minnesota was last on a number of measures, including revenues as a percentage of sales, when compared with nine other similar state lotteries. Minnesota also had the highest administrative costs, it said.
McElroy said he met with Andersen about six times and that others from his department met with Andersen at least monthly. Still, by mid-January, there were a number of unresolved issues.
Andersen had contended it was impossible to compare the Minnesota Lottery to those in other states, a position McElroy rejected in his letter to Andersen.
McElroy told the Pioneer Press that Andersen kept saying Minnesota's numbers looked worse because they sell more scratch-off games, while other states do more of the less expensive online games.
Still, McElroy said, Andersen either was procrastinating or did not know how to do a more detailed comparison. The second concern McElroy raised was over some of the lottery's promotions, particularly the bass tour for which the lottery was the chief sponsor.
"Were we doing this because George liked to bass fish or was there a return on the investment?" McElroy asked.
McElroy also suggested the lottery move into state-owed buildings, and said the lottery's car fleet was too large.
Andersen's three-page response conceded the lottery rented more space than it needed and said he would look at other options. Likewise, he said, many of the lottery's cars would be auctioned.
McElroy noted that Andersen did take steps, though sometimes reluctantly, to cut costs. For example, a telemarketing center was closed, some scratch-off games were dropped and advertising and promotion expenses were trimmed.
Lottery statistics show that sales from July through December were $199.5 million, a 6.6 percent increase over the same period a year earlier. In addition, lottery proceeds to the state were up 25.6 percent over the same period a year ago.