LITTLE ROCK — Ernie Passailaigue survived an unexpected attempt Wednesday to fire him from his job as director of Arkansas’ lottery.
It happened in a meeting of the state Lottery Commission where the chairman scolded him as being arrogant for granting hundreds of hours of compensatory time to high-paid employees who are exempt from being paid overtime. Granting compensatory time is unusual in state government.
The commission decided to revamp the Lottery Commission’s policies with the help of the state Office of Personnel Management to come up with a practice that’s more in line with what other departments use. That’s the same office that looked at the lottery policies recently and said there was reason to be concerned that the lottery could face some liability under federal law for granting overtime-pay-exempt employees compensatory time.
After the scolding, the commissioners went into a closed session, something they’re allowed to do under the Arkansas Freedom of Information Law to discuss personnel matters (although any personnel decisions must be voted on in public).
When the commission’s public session resumed, Commissioner Ben Pickard made a motion to ask for Passailaigue’s resignation.
The $324,000-a-year lottery director, who guided the lottery through its startup in world-record time, wasn’t in the meeting room.
Of the eight commissioners present, Pickard and Joe White voted for the motion. It would have passed if five had voted for it.
Pickard of Searcy and White of Conway are both former state employees.
Commissioner Derrick Smith of Little Rock was absent.
It was a sudden change in the wind for Passailaigue. A year ago, he was roundly praised for the swift development of the lottery, which began selling tickets Sept. 28. At the time, one commissioner said Passailaigue’s work had saved the commission $500,000.
After Wednesday’s meeting, Pickard declined to explain why he made the motion.
But before the executive session, White and Pickard told Passailaigue that they disagreed with his decision to grant compensatory time to certain lottery employees, including himself and the lottery’s two $225,000-a-year vice presidents. They were given time off for working long hours during the lottery start-up from July 2009-November 2009.
The vice presidents are David Barden and Ernestine Middleton, who worked with Passailaigue at South Carolina’s lottery before they came to Arkansas in June 2009.
Passailaigue granted himself 200 hours of compensatory time off. He also granted Barden and Middleton 200 hours each, according to a lottery spokesman. That 200 hours is equivalent to five 40-hour weeks.
Chairman Dianne Lamberth of Batesville said she didn’t vote to seek Passailaigue’s resignation because he has shown that he can run the lottery effectively and raise substantial amounts for college scholarships.
She said she talked with Passailaigue after the meeting and he gave no indication that he intends to leave his job.
“It was a very good conversation with Ernie,” she said. “I am disappointed that we have had so many bumps in the road. This one will be ironed out, and we will run smoothly and we will continue to make scholarship money.”
Passailaigue could not be reached for comment late Wednesday. Passailaigue’s cell phone had a message directing callers to commission spokesman Julie Baldridge. During the lottery’s first year of operation, Passailaigue answered his cell phone. Baldridge said she would let Passailaigue know about the newspaper’s request to talk to him about the commission’s vote.
“Am I irritated about some of the things he has done? Yes,” Lamberth said in an interview. “Am I irritated about the comp time? Yes. It was arrogant and irresponsible to do that.”
Lamberth said there has been “miscommunication” between Passailaigue and the commission because she had thought the compensatory time issue was “moot.” In fact, she told the commission inJanuary that lottery officials had withdrawn a proposal to grant exempt employees compensatory time off over a two-year period in return for the long hours worked during the lottery’s start-up.
Lamberth said the first she heard of Passailaigue granting compensatory time was when she read the state Office of Personnel Management’s review of the lottery’s personnel policies. That review was requested by the commission.
In it, the state’s personnel director, Kay Terry, said in a letter dated Aug. 12 to Passailaigue that the commission’s awarding of compensatory time deviated from the practice elsewhere in state government.
Terry said it’s generally assumed that if employees are exempt from overtime pay, then their salaries compensate them for extra hours of work that may be required, and that granting compensatory time to them “could negate their exempt status, creating a liability” for the commission.
Passailaigue said in an Aug. 25 letter to the commission that the lottery is a unique agency with a unique mission and that the General Assembly created it “to be modeled after other successful lotteries throughout the country and not after another state agency.”
Compensatory time is used by other state agencies and is commonly used in the lottery industry because of staffing limitations, he wrote.
Passailaigue said there was “a miscommunication” with the commission about his deciding to grant the compensatory time. He said he’s taking “complete and full responsibility” for that.
The lottery has 44 such overtime-pay-exempt employees, including 25 who have been granted compensatory time ranging from 15 hours to 501 hours apiece, according to Baldridge. Those employees are no longer being granted compensatory time, she has said.
Passailaigue said the Office of Personnel Management indicated that compensatory time was to be decided by him.
White said he disagreed with Passailaigue’s decision to grant compensatory time.
“I never voted on that,” he said. “The first that I knew of it was when I read it in the newspaper [last week].”
White said lottery officials have told the commissioners that the lottery is operating in line with other state policies and procedures, and clearly that’s not the case in some instances.
“We were successful in our launch, but we have got some adjustments to put in,” he said.
Passailaigue said he thought that granting the exempt employees compensatory time off “was justified” because the lottery was started in less than three months’ time because of the employees’ extraordinary efforts. He said he was trying to insulate the commissioners from personal liability by making the decision on compensatory time.
White said he was a state employee for a dozen years and never received compensatory time off.
Pickard said lottery commissioners took a lot of flak from the public about paying large salaries to certain executives, and he justified the salaries partly because he thought that would be the only compensation they would receive. He said he never thought they would receive compensatory time off.
Commissioner Susan Ward-Jones of Marion said she didn’t know about Passailaigue awarding compensatory time until she read it in the newspapers.
“We just didn’t know,” she said.
Front Section, Pages 1 on 09/09/2010