State to Audit Gaming Regulatory Agency’s Management of Tribal Revenue Sharing Fund

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State to Audit Gaming Regulatory Agency’s Management of Tribal Revenue Sharing Fund

August 16, 2003

The Joint Legislative Audit Committee of the state Legislature on Tuesday voted unanimously to seek an audit of a tribal Revenue Sharing Trust Fund (RSTF) and the California Gambling Control Commission’s management of the fund.

The Bureau of State Audits will conduct the audit and review of the regulatory agency’s management of the fund, which was established by tribal-state compacts for gaming tribes to share revenues with non-gaming tribes and those with very limited gaming.

Member tribes with the California Nations Indian Gaming Association late last year called for an audit and investigation of the commission’s handling of the fund, claiming checks were being delayed and in some cases mailed to tribes that were not eligible to receive funds.

The request was brought forward by Sen. Jim Battin, R-Palm Desert, and Sen. Jim Brulte, R-Rancho Cucamonga, on behalf of an October motion by CNIGA's membership seeking the audit and investigation.

“It is clear the commission went far beyond the scope of its fiduciary responsibility as set down in tribal-state compacts and, in doing so, interfered with the government-to-government relationship between the tribes and the state,” says CNIGA Chairwoman Brenda Soulliere.

The joint audit committee rejected arguments from Pete Melnicoe, general counsel for the commission, that the review of fund management was unnecessary because the agency had already contacted with an outside agency to conduct its own, “much less expensive” audit.

“I’m sorry sir,” committee Chair and Assemblywoman Rebecca Cohn, D-Saratoga, replied, “but in this committee we believe you get what you pay for.”

Cohn said she was concerned that CGCC was not performing its fiduciary duty as trustee for the fund.

State Auditor Elaine Howle said the agency’s contract with an outside auditor called for nothing more than a “fiscal statement” for the commission that did not constitute a thorough audit of the agency’s “management and handling” of the fund.

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