Lottery Chief, Panel to Share Contract Authority

California’s 31-year-old lottery director lost out to a couple of veteran bureaucrats Wednesday in a turf battle over who should be allowed to award the lottery’s numerous big-dollar contracts.

Until Wednesday, the director, M. Mark Michalko, had authority to enter into any contract he wished. Only after the fact did he have to go to the five gubernatorial appointees on the Lottery Commission for approval.

That system has been rankling two commissioners, Compton City Manager Laverta S. Montgomery and William J. Johnston, former superintendent of the Los Angeles Unified School District, for several weeks. The conflict finally came to a head during a July 10 commission meeting when Michalko agreed to come up with a plan to share contract authority with the commission.

That procedure, approved by unanimous vote Wednesday, requires Michalko not to sign any contract for more than $100,000 until he brings it to the commission for review and approval. While there is a provision for signing pacts on an emergency basis, the director must then bring the agreement to the next commission meeting for formal ratification.

Other Restrictions

In addition, the director now must get prior commission approval for any contract with “substantial policy complications,” regardless of the amount, and he must routinely inform the commission of all contracts he signs, no matter how small.

“I don’t think it has anything to do with the substantive issue of authority,” the nation’s youngest lottery director said after the vote. “If anything, this will help to streamline the process.”

In other action Wednesday, the commission agreed to spend about $22 million on a massive advertising campaign for the new lottery, which is scheduled to begin with an instant “scratch off” game in late September or early October.

The $22 million will include $15 million for television commercials and newspaper advertisements; $5 million for signs and other paraphernalia in stores selling lottery chances, and a $2.2-million commission to the agency selected to handle the contract, the Los Angeles office of Needham Harper Worldwide Inc.

Michalko, who was appointed by Gov. George Deukmejian to the director’s post in mid-May, announced the final appointment to his executive staff, saying Richard Van Allen will serve as deputy director for electronic data processing operations.