Monday, September 19, 2011

Ernie Passailaigue resigns as Arkansas lottery director

Posted By on Mon, Sep 19, 2011 at 10:57 AM

The Passailaigue era is over. The Arkansas Lottery Commission today received the resignation of the founding director of the Arkansas Lottery, Ernie Passailaigue.

Julie Baldridge, who has been chief spokesman for the lottery, will serve as interim director. She said she had no interest in being permanent director. She'll receive no pay increase for the new duties, said Commission Chairman Dianne Lamberth.

Passailague wasn't present when the resignation was announced (my earlier post about Ernie being present with reporters during an executive session was based on what I've since learned was a joking Twitter feed). He turned in his letter of resignation Friday and the commission formally accepted it this morning. Commissioner Steve Faris said it wasn't a surprise. At least one commissioner, Smokey Campbell, said he was surprised. All praised him for getting the lottery off the ground quickly. There were no recriminations and no mention of any buyout (he didn't have a contract) or what would become of other employees he had hired. When asked about the financial details of Passailaigue's departure, Lottery Staff Attorney Bishop Woosley wrote in an email, "He will continue to earn his current salary through his last day at the lottery. Any other leave or other benefits that he may be owed (leave, retirement that is not vested) will be paid out in accordance with standard state policies." His letter was pro forma, thanking commissioners and others for "courtesies" extended over his 2 and a half years in the job.

The resignation was announced after a lengthy executive session, more than 90 minutes. Afterward, it was announced Passailaigue's resignation will be effective Oct. 7. Gerard Matthews will be back with more soon.

One question I'd have for the commissioners is what they discussed in the private session that legally allowed it to be in secret. He wasn't fired or disciplined; promoted or demoted. Perhaps they'll say they talked about the hiring of a new director, though such meetings can't be about process, but only about specific people.

Ernie P. had been credited with a speedy startup of a lottery that met revenue targets for the college scholarship program, but he'd been bedeviled by a variety of operational issues, beginning with his high pay ($324,000) and that paid some others he brought with him from South Carolina, where he'd also been lottery director. David Barden and Ernestine Middleton, vice presidents of the lottery, had worked with him in South Carolina.

Ernie P.'s problems escalated with recent changes on the Lottery Commission. Former legislator Steve Faris and North Little Rock accountant Bruce Engstrom added their voices to some previous commission critics with sharp questions about issues ranging from protection of software to lack of marketing to income streams from various forms of gambling games. A growing issue was the highly favorable deal Passailaigue struck with a major lottery vendor — a percentage take of revenue rather than a fixed price, which produced payments to the vendor much higher than the same vendor gets for a bigger lottery in South Carolina. Over seven years, the advantage will be worth more than $100 million to the vendor, enough to pay for 20,000 $5,000-a-year lottery scholarsnhips. Passailaigue argued that the deal was necessary to insure a speedy startup, though the vendor wasn't being asked to do anything different than what it has done in any number of other states, just do it faster in the first few months.

The lottery began selling tickets in late September 2009. The first college college scholarships went to about 27,000 30,000 students at two- and four-year colleges in the fall of 2010 and a similar number got money this year..

I'd heard word of Passailaigue's impending departure last week and was told it would be done in a way not to create further bad press for the agency. That is, I was led to expect there'd be no buyout or other form payment for the departure. He'd made up for earlier excessive comp time, but Chairman Lamberth said he'd receive no severance or additional pay beyond Oct. 7.

The same people who told me of this coming development suggested I inquire about the possibility that Bill Stovall, former House speaker and top staffer in the House, might be a candidate for the job going forward. I asked him. He said no one had talked to him about it. He did say he'd heard the same rumor. Those who were in the legislature when the lottery was created — Faris and Robbie Wills (now a lottery lobbyist), for example — are not eligible until they've been out of office for two years.

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