By Mike Rosenberg

The Seattle Times

The Port of Seattle illegally gave out nearly $5 million in raises to hundreds of employees about a year ago, a state audit has concluded.

Kathleen Cooper, a spokeswoman for the state auditor’s office, said the auditor’s office was conducting a routine accountability review of the Port when it discovered questionable payments to 642 nonunion employees, about one-third of the Port’s staff, that totaled $4.7 million.

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 charges stem from a December 2015 vote by the commissioners, recommended by top Port staff, to give 7 percent lump-sum raises to all nonunion employees. The Port made the change after increasing those employees’ work schedules from 37.5 to 40 hours per week.

“We did not want to raise salaries across the Port 7 percent. We felt it was much more economical to make a one-time payment and be done with it,” said Port commission Chair Tom Albro.

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 might 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.

The Port expects to issue a formal response on Monday, and Albro said officials will wait until then to provide more details on how they will fix the problems. The state will then release the final audit, as soon as next week.

Albro said officials believed at the time the raises were legal, and he declined to say if they still think that.

Then-CEO Ted Fick and his human resources team proposed the pay increase plan, and it was enthusiastically and unanimously supported by the five-member elected Port commission in December 2015. Although Fick didn’t disclose it to the commissioners at the time, he, too, received the pay increase equal to $24,500.

Fick resigned on Wednesday, the same day the state auditor presented its initial findings to Port staff, although his departure was not revealed until Thursday. Fick was on leave when the auditors briefed Port officials.

Fick’s attorney declined to comment. Albro said the audit findings were not directly related to the commission’s decision to place Fick on leave a week prior.

One source at the Port said everyone in charge, including commissioners and the Port’s legal team, shared the blame on the illegal payments. The audit does not single out Fick or anyone specifically for wrongdoing.

The Port has a history of problems uncovered by audits. In 2007, the state auditor blasted the Port for lax management of construction projects, which wasted $97 million in taxpayer money and left the agency vulnerable to waste, fraud and abuse. And a year ago, an internal Port audit found poor management of dispatch and taxi services led cabs to underpay the Port, prompting an $880,000 settlement.

Mike Rosenberg: mrosenberg@seattletimes.com or 206-464-2266. On Twitter @ByRosenberg