Tenn. legislator requests meeting over ‘enormous’ lottery salaries

Amber McDowell

Monday, Dec. 15, 2003 | 9:05 a.m.

NASHVILLE, Tenn. -- State Rep. Bill Dunn wants to discuss the "enormous pay package" Tennessee Education Lottery Corp. board members approved for CEO Rebecca Paul before the Legislature votes to confirm their appointments.

"In order to make an informed vote, I would like to meet with the board to hear your reasoning on the enormous pay package given to Ms. Paul and your plans for salaries in the future once the lottery is established," Dunn, R-Knoxville, wrote in a letter sent Friday to each of the board's seven members and Gov. Phil Bredesen.

One of the first acts of the General Assembly when it returns to session next month will be to vote on confirmation of the board, which was appointed this summer by Bredesen.

Dunn's request comes after months of criticism of Paul's pay, which could total $750,000 with bonuses for an early startup. In addition, salaries for the games' top executives have ranged from $80,000 to $180,000, plus bonuses of up to 10 percent of their pay.

"I would like to hear their explanation of why (Paul's) salary and bonuses total $750,000 for a quasi-governmental organization that has a monopoly over a product," Dunn said last week.

Dunn is asking to sit down with the full board during its Jan. 26 meeting in Nashville "to learn more about you and your philosophy as it pertains to the running of the Tennessee lottery." Other legislators also would be invited to attend, he said.

Paul said that she had not seen the letter, but "now that we know we have questions, we'd be more than happy to meet with him." Board chairman Denny Bottorff said he plans to draft a response on behalf of the entire board.

In other lottery news, the board last week selected First Tennessee to provide banking services for the games, a contract worth $51,000 over three years.

The bid by Memphis-based First Tennessee was the lowest of the eight banks that submitted proposals to the lottery, said Andy Davis, chief financial and technology officer for the games. It also received the top score in an assessment by an evaluation committee composed of executive-level management, he said.

"We're looking for someone to be able to provide service without any doubt or problems, and I think we've done that" with First Tennessee, Davis told the board.

The committee's recommendation was approved by just one of the board's members, Marvell Mitchell, after the remaining six recused themselves citing possible conflict of interest because of their personal business dealings.

Mitchell is managing partner of Mitchell Technology Group LLC, which installs computer networks for businesses and distributes computer hardware and software. He was the only board member who said he didn't have an ownership interest in a bank or any other conflicting relationship.

The banking ties of other board members include: Bottorff, former chairman of AmSouth Bancorporation and CEO of First American Bank; Morris Fair, whose son works in the investment banking division of First Tennessee; and Jim Hill, a board member of SunTrust Bank.

Paul told the board that 1,000 businesses have now been approved to sell tickets, with computer systems already installed in 116 of those. Officials are hoping for between 3,000 and 4,000 approved retailers by the anticipated Feb. 10 launch.

Also, Paul announced the hiring of Joe Hills, a former executive for Williams Travel Centers, as vice president of sales for the lottery at an annual salary of $112,500, plus bonuses.