Wednesday, September 21, 2011

EDITORIAL >> So long, Ernie P.

Ernie Passailaigue resigned Monday as the director of the Arkansas lottery, which will appease two large groups of people: those who hated the lottery as a moral blight on the state and those who love the lottery but assume that Passailaigue was responsible for the many blunders that beset the two-year-old operation.

The lottery brought in $13 million less for scholarships in the second year than it did in the first, the opposite of what was supposed to happen, so the awards had to be reduced this year.

But their euphoria in both instances may be misplaced. Passailaigue did not invent the Arkansas lottery but just got it up and running very quickly, which seemed to be what state lawmakers and the lottery’s champions wanted. The miscues that kept the lottery in headlines for two years were not so much Passailaigue’s fault as they were endemic to institutionalized gambling. The constitutional and statutory law that set up the lottery as an independent agency almost guaranteed that it would have problems.

Passailaigue’s chutzpah and his whopping $324,000 salary—nearly four times the governor’s—made him an inviting target when anything went wrong, as it did, time after time. He brought with him two assistants from South Carolina, both at salaries higher than the top medical professionals at the University of Arkansas for Medical Sciences. But Passailaigue didn’t fix those salaries. The legislature and the political appointees to the Lottery Commission did.

What kind of education and expertise does it take to run a lottery? Passailaigue was a state senator and an accountant when he got the job in South Carolina. The big gambling franchises helped him get it started, as they did in Arkansas and in all the states that run lotteries.

An audit of the lottery after its first year found problems in its accounting and management practices and criticized its sloppy financial report. Passailaigue awarded illegal compensatory time to himself and other top officials. A big gaming contract gave the vendor a fixed and handsome percentage of the proceeds rather than a flat sum—in exchange, Passailaigue said, for their getting the thing set up quickly. Only 20 percent of all the lottery sales went to scholarships, which made a few commissioners and legislators unhappy. Reducing winnings for bettors and profits for vendors would reduce the handle and produce even less scholarship money, Passailaigue said.

In the end, it was no doubt Gov. Beebe who forced his resignation. The governor had never been happy about the big salaries or the inherent powers of lottery officials and he made his unhappiness increasingly evident. Passailaigue went gracefully, which speaks as well of him as anything he did.

Someone suggested a salary of $125,000 for the new manager, which seems about right and is in line with directors of state lotteries of similar size. The State Police is a much larger and more vital agency and its director makes less. Lottery champions insist that it is about the most important agency in government because it sends tens of thousands of kids to college.

The lottery does account for a few more people attending college, but mainly it has made college going simply easier for some 25,000 youngsters whose parents no longer have to pay much for college because the lottery law lowered the academic requirements for state help and removed family need as a standard. The poor who buy lottery tickets in desperate numbers pick up the tab for parents.

If Ernie Passailaigue had not facilitated it, someone else would.