State audit takes issue with $4.7M in payouts to 642 Seattle port employees

A State Auditor’s Office draft audit has flagged the Port of Seattle over a combined $4.7 million in payments to 642 nonunion employees.

State Auditor spokeswoman Kathleen Cooper said auditors flagged these payments as a violation of two sections of the state constitution regarding gifts of public funds and extra compensation.

Cooper said the issue arose during a routine accountability audit for 2015. The Auditor’s office performs such audits at the Port of Seattle every year and thousands of times for other government agencies around the state, she said.

“The audit is still in draft stages, and (the payments are) being described as extra compensation” by auditors, she said.

Since the audit is a draft it is not available for public review, Cooper said.

The auditors concluded the payments violated two parts of the state constitution because they were not tied to specific performance standards or goals.

The port’s $385 million operating budget, used to pay employees, is partially funded with taxpayer money, The Seattle Times reported Friday.

The audit recommends the port fix the problems by setting up programs to make sure this doesn’t happen again and to launch a legal review to figure out how to remedy the illegal payments. It’s unclear if the money would be taken back from the employees.

If the port doesn’t correct the problems, the issues could be forwarded to the Attorney General’s Office for potential prosecution.

Port of Seattle CEO Ted Fick was placed on paid leave, then resigned from his position at the port this week.

Port of Seattle Commission President Tom Albro said in a statement Friday that Fick’s placement on administrative leave was not related to the audit.

“The Port Commission had raised multiple personnel issues with Mr. Fick during his performance review,” Albro’s statement read.

The Port of Seattle commission convened a special meeting Thursday afternoon and voted unanimously to accept Fick’s resignation, which was offered the previous day. The commission appointed David Soike, chief operating officer, as interim Port of Seattle CEO.

Albro issued this response to the audit on Friday: “In the draft report, the auditors presented a finding challenging the one-time payment the Port made to exempt employees in December 2015. The Port Commission authorized this payment to address widespread negative reactions following a series of large-scale organizational changes, moving to a common performance review date and increasing the standard work week from 37.5 hours to 40 hours. We believe that the one-time payment achieved the intended effect of supporting employee retention and addressing employee concerns. We have conveyed to the State Auditor’s Office our belief that the Port has a strong legal basis for taking this action.”

Port of Tacoma Commission President Dick Marzano said the Port of Tacoma stands ready to assist its sister port to the north as it transitions to a new CEO.

“If the Port of Seattle were to look this way, help would be available, but I’m sure they have something in mind as far as what their next move should be,” Marzano said.

The two ports joined marine cargo properties in 2015 as the Northwest Seaport Alliance, a first-of-its-kind partnership of major ports in the United States.

The Port of Tacoma also is audited every year. In its most recent accountability audit, for the year 2015, auditors did not note any problems.

Seaport alliance spokeswoman Tara Mattina said via email that the Port of Seattle CEO did not interact much with the alliance or the Port of Tacoma day-to-day.

“We expect his resignation to have minimal impact here. We also don’t expect any executives from here to step in during the Port of Seattle’s transition,” Mattina wrote.

Port of Seattle commissioners next meet in public at a Northwest Seaport Alliance meeting 11:30 a.m., Tuesday, Feb. 7 at the Conference Center at Seattle-Tacoma International Airport (inside the airport), 17801 International Blvd., Room 6012M, Seattle. The Port of Seattle commission’s next standalone meeting is not scheduled.

This story was originally published February 3, 2017 at 3:34 PM with the headline "State audit takes issue with $4.7M in payouts to 642 Seattle port employees."