Elements of the ads, with an analysis by Times staff writer Douglas P. Shuit

The Race: Republican primary for treasurer. Whose ads?: Incumbent Thomas W. Hayes and challenger Angela M. (Bay) Buchanan.

Hayes, former state auditor general appointed by Gov. George Deukmejian to fill the unexpired term of the late Jesse M. Unruh, is running for his first four-year term. His 30-second commercials portraying him as a good manager began airing this week, with emphasis on stations serving voter-rich Southern California.

Buchanan, former U.S. treasurer who is running in her first state office race, switched ads for the last week of the campaign. The latest ad is a sharp attack on Hayes for accepting campaign contributions from Wall Street investment firms that do business with the treasurer's office.

Elements of the ads, with an analysis by Times staff writer Douglas P. Shuit:

Hayes ad: "As our treasurer, Tom is recognized worldwide as a financial leader . . . not a politician."

Analysis: Hayes, as auditor general, was little-known until appointed treasurer in 1988. Polls still show that he is not widely known by voters, although he is better known than Buchanan. The claim of worldwide recognition stems from his role as sometimes financial adviser to governments of the Philippines and Thailand. This year, Hayes opened California's trade office in Hong Kong at the request of Deukmejian, his strongest political supporter. Although a relative newcomer to politics, Hayes managed to tie up endorsements of most major Republican officeholders, avoided face-to-face campaign appearances with lesser-known Buchanan, and used his status as treasurer to raise a political war chest of $300,000 from investment bankers and other Wall Street interests, about one-third of his campaign contributions.

Ad: "Last year alone, Tom Hayes earned a record $1.6 billion for California taxpayers."

Analysis: Hayes sets policy from the top but most actual investments of the state's $19-billion treasury cash pool are handled by the treasurer's professional staff. Last year investments generated an average yield of 8.87%. This earned California the top rating among the nation's most populous states, according to The Bond Buyer, but other states were close behind: Pennsylvania earned return of 8.61%; Texas, 8.3%; Illinois, 8.01%, and New York, 7.73%.

Buchanan ad: "When junk bond dealer Drexel Burnham was near bankruptcy . . . Tom Hayes was taking their money . . . dealing with them."

Analysis: Various officials of Drexel Burnham Lambert contributed $6,000 to Hayes. The treasurer's office bought $65 million in bank certificates of deposit through Drexel then sold them four days later on the day the firm entered bankruptcy proceedings. Hayes' office said the state made $60,000 on the deal.

Ad: "Drexel went under and California could lose millions."

Analysis: This refers to an unsecured note of $25 million purchased from Drexel by the California Public Employees' Retirement System. Hayes sits on the pension board, but was not a member when the note was purchased. State officials believe the state can recover its money through bankruptcy proceedings.

Ad: "She won't accept special-interest money, won't deal in junk bonds. She'll stop the back-room deals, and one more thing, she'll find out exactly where our lottery money is going."

Analysis: While Buchanan accepts contributions from real estate firms and other so-called special interests, she has drawn the line at firms that do business with the treasurer's office. Despite that vow, fund-raising solicitations were mailed on Buchanan's behalf to several officials in the financial industry, forcing campaign officials to promise to return the money. Like Buchanan, Hayes said he is against any state purchases of junk bonds. By law, lottery proceeds must be split this way: 50% to players as prizes, at least 34% to public education, and a maximum of 16% for administration. In 1989, lottery officials sent more than the minimum, 39% or $1.03 billion, to schools, and spent 11% on administration.

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