LITTLE ROCK — Several days before a state auditor and a lawmaker lauded Arkansas lottery officials for fixing problems cited in an audit, the director of the lottery and one of its vice presidents each wrote a check for $350.90 to reimburse the lottery for airfare for a March 2010 trip.
The checks of Director Ernie Passailaigue and Vice President of Gaming Operations David Barden, dated Feb. 8, increased Passailaigue’s reimbursements to the lottery to $1,180.54 and Barden’s to $991.39, according to a list of reimbursements provided by lottery attorney Bishop Woosley.
Reimbursements were triggered by a Nov. 12 audit critical of some of the lottery’s financial practices.
Passailaigue and Barden reimbursements total about $2,170, accounting for most of the $2,453.09 repaid to the lottery by eight lottery employees.
The salary of Passailaigue, one of the highest-paid lottery directors in the nation, is $330,480 a year. Barden, who last month lost out on the job of executive director of the North Carolina lottery to its interim director, is paid $225,655 a year.
Passailaigue survived bids by two of his bosses on the nine-member Arkansas Lottery Commission to oust him last year.
He underwent a review by the commission last month amid speculation that his job could be in jeopardy, but he was praised by commission chairman Dianne Lamberth of Batesville for starting lottery-ticket sales in record time and for his lottery acumen.
Since it began Sept. 28, 2009, and estimated through the end of this month, the lottery has sold about $670 million worth of tickets and raised about $146 million for college scholarships through instant tickets and games such as Powerball, Mega Millions, Cash 3, Cash 4 and a raffle, according to lottery spokesman Julie Baldridge.
Though a state auditor told the Legislature’s lottery oversight committee that the lottery appears to have made significant improvement in most areas cited in the audit in November, a committee member, Rep. Darrin Williams, D-Little Rock, says it’s too soon to say all is well.
“We are going to continue to keep a close eye on them and hope that they stay diligent about addressing those issues,” he said in an interview last week. “I don’t want to give them a pass just yet. I am going to keep watching.”
The November audit by the Legislative Audit Division revealed that the lottery failed to follow state travel rules for reimbursements and failed to seek a legislative committee’s review of certain contract matters.
At that time, state Rep. Clark Hall, D-Marvell, questioned whether the lottery paid for plane tickets for Passailaigue to fly home to South Carolina and back to Little Rock on the weekends. An auditor said he didn’t have the documents to determine that, and Passailaigue said the lottery didn’t do that.
Last week, supervising senior auditor Andy Babbitt of the Legislative Audit Division said that based on the documents provided to auditors, it appears the lottery paid for Passailaigue and Barden’s trips to Atlanta for business with lottery vendor Scientific Games International, but they paid out of their own pockets for subsequent stops in South Carolina.
Gov. Mike Beebe, a Democrat who stopped short of calling for Passailaigue’s resignation after the audit, said last week that he hasn’t heard anything to suggest that lottery officials haven’t fixed problems cited by auditors or aren’t in the process of fixing them.
“The comp time ... irritated the heck out of me,” he said. “But I think they’ve fixed that and it’s never going to happen again.
“So there is no reason right now unless something new comes up for me to do anything other than rely on that commission to make sure they keep things watched,” Beebe said.
In October, Passailaigue told the commission that the compensatory time off that he, Barden and Vice President of Administration Ernestine Middleton took “will be restored in total” to the lottery “in some mutually agreed manner, as if it had never been used.”
It’s unusual in Arkansas’ state government for overtime-exempt employees such as the three lottery officials to be granted compensatory time, according to state officials.
Passailaigue granted himself, Barden and Middleton 200 hours apiece of compensatory time for working extra hours to get the lottery up and running, according to commission officials.
Passailaigue used 16 hours of compensatory time, Middleton used 178.5 hours and Barden 134.5 hours, according to commission records.
Lottery records show that Passailaigue told the commission in a Dec. 20 e-mail that he applied 16 hours of his annual leave to pay back the lottery for 16 hours of compensatory time that he used.
Woosley said last week that Barden’s used compensatory time “has been paid in full.” Barden told the commission in December that he repaid the commission for 40 hours of the 134.5 hours of time that he has used and will give up at least four hours a month of leave time until the total is paid.
Barden said in a Feb. 7 email to lottery chief financial officer Philip Miley that he would reimburse the agency for 82 hours that he worked by reducing his payable hours from 80 to 39 for each of a pair of two-week pay periods and giving up a half-hour of leave time to complete his “total reimbursement” on Feb. 25.
Middleton, whose salary is $225,655 a year, told the commission Dec. 9 that she would begin repaying the 178.5 hours of compensatory time that she used with four hours of leave time a month, starting in January. Both Barden and Middleton accrue eight hours of leave time a month, according to Woosley.
Middleton said in a Feb. 11 e-mail to Passailaigue and Miley that, in order to reimburse her outstanding compensatory time as requested by the commission, she asked payroll to reduce her payable hours to 72 for each of the next 11 pay periods starting Feb. 6 and ending with the July 9 period. That will reduce her comp-time balance by 88 hours from 174.5 hours,she said.
She said she’ll also forfeit her cost-of-living and merit pay increase and apply that amount, $8,922.24, to further reduce the balance by 82.6 hours, and “pay the 3.1 hours of compensatory time to bring the balance to zero”by the end of July.
Miley replied in a Feb. 11 e-mail that the lottery’s payroll records show she has “a current balance of 178.5 hours instead of 174.5 hours.”
Passailaigue, Barden and Middleton previously worked together at the South Carolina lottery.
On the whole, state officials said the lottery has done well at raising money for college scholarships despite critics who oppose it, saying that gambling is wrong and attracts participation by people who cannot afford to gamble.
Passailaigue has told lawmakers that the lottery could fall short of his projection for $104.9 million for college scholarships in this fiscal year.
Committee Co-Chairman Sen. Johnny Key, R-Mountain Home, said he’s not worried about that. Raising $101 million for scholarships rather than $105 million won’t by itself change the amount of the scholarships, he said.
Scholarships have been $5,000 a year for students at four-year schools and $2,500 a year for those at two-year schools. Legislators have been considering lowering the amounts to $4,500 and $2,250 for the second class of recipients of lottery scholarships.
So far, $5,000 scholarships have been awarded to about 21,000 students and $2,500 scholarships have been awarded to about 11,000 students, according to the state Department of Higher Education.
Front Section, Pages 1 on 02/27/2011