Graham Fire & Rescue overpaid for buyouts, audit finds

Graham Fire & Rescue paid $153,908 more in payouts for 3 employees than necessary, state audit concludes

kari.plog@thenewstribune.comJune 5, 2014 

Last year, Graham Fire & Rescue paid more than $150,000 above what was necessary to buy out three administrators, including the former chief, and negotiated the agreements behind closed doors, according to a state audit.

The audit also states the fire district’s secretary calculated the buyouts — including her own package — with no evidence of an independent review. She negotiated one year of medical and dental coverage for herself and husband, miscalculating a payout that resulted in overpayment of $26,391, according to a May 20 letter from the auditor’s office.

The buyouts were negotiated during ongoing budget cuts, months before the district’s 65 employees took a 5 percent reduction in total compensation.

Concerns about how buyouts were handled come two months before voters will decide on an $11 million levy meant to boost staffing and response times in the district.

The auditor’s office disagrees with how the process was handled, urging the fire district to strengthen its transparency and financial checks.

The letter from the state auditor’s office shows that the fire district paid $153,908 more on the three employees’ payouts than was necessary.

The buyouts totaled $313,456 for the former chief, $153,331 for the former district secretary and $125,577 for the former deputy chief.

In addition, the regularly scheduled accountability audit found that the buyouts were “completed outside the public process, during executive sessions.”

Fire Chief Ryan Baskett told The News Tribune the buyouts were “an effort to balance the budget” and entice longtime employees to retire. It will save more than $500,000 a year, he said.

Meeting minutes from the closed-door discussions didn’t identify amounts to be paid to each retiree, but only the amount the district would save in future costs.

The approved agreements guaranteed that half of the employees’ remaining salaries and benefits would be paid upon retirement.

Miscalculations resulted in excessive payouts to the three employees:

 • Buyout amounts incorrectly included $71,502 of employer costs, such as retirement contributions, disability insurance and medical insurance.

 • Unearned vacation and sick leave benefits were also paid, costing $39,964 for the former chief and $16,051 for the former secretary.

 • The secretary negotiated medical and dental coverage for her and her husband, resulting in an overpayment of $26,391.

Baskett, who was hired last July following the buyout negotiations, said the higher amounts resulted from calculating what each position would cost through the end of the contracts — including the unearned benefits — and dividing those amounts in half.

“I don’t know why the decision was made to do that the way they did,” he said.

He said the district has no plans to seek reimbursement for the overpayments.

Tammy Bigelow, the state audit manager who issued the management letter, told The News Tribune that the district could improve its practices.

“We disagreed with the methodology and believe the payouts incorrectly included employer costs and leave not yet earned,” she said in an email Wednesday.

The concerns come as the fire district continues to struggle with declining revenue, which led it to place an $11 million measure on the ballot in August.

Baskett said the four-year maintenance and operations levy would help Graham Fire hire 16 new firefighters and paramedics, improve response times and allow for 24-hour staffing at a newer, understaffed station.

It would also provide two additional response units, reducing dependency on aid from outside the district.

The district, which provides emergency services to 61,000 residents in East Pierce County, has seen a 20 percent decline in tax revenue since 2008, while calls for service have increased by more than 14 percent. Baskett estimates the fire district will respond to 6,000 calls this year.

He said layoffs have been avoided by leaving vacant positions unfilled and reorganizing department administration, among other changes.

All employees took a 5 percent compensation cut last summer to save nine people from layoffs. Baskett said those changes occurred after the buyout negotiations happened in early 2013.

Baskett said he is the “CEO of a company” owned by taxpayers and is working to maximize resources.

“We’re doing the best we can for those folks out there who need it,” he said.

Kari Plog: 253-597-8682 kari.plog@thenewstribune.com @KariPlog

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