Special Meeting on Feb 07, 2017 2:00pm
Minutes for the Port Of Seattle Commission meeting, held on Feb 07, 2017 2:00pm
Digital recordings of the meeting proceedings and meeting materials are available online – www.portseattle.org. APPROVED MINUTES COMMISSION SPECIAL MEETING FEBRUARY 7, 2017 The Port of Seattle Commission met in a special meeting Tuesday, February 7, 2017, in the International Auditorium at Seattle-Tacoma International Airport, Seattle, Washington. Commissioners Albro, Bowman, Creighton, Felleman, and Gregoire were present. CALL TO ORDER The meeting was called to order at 2:02 p.m. by Commission President Tom Albro. EXECUTIVE SESSION pursuant to RCW 42.30.110 The public meeting was immediately recessed to an executive session estimated to last 60 minutes to discuss one matter relating to litigation and legal risk and one matter relating to performance of a public employee. Following the executive session, which lasted approximately 50 minutes, the public meeting reconvened at 3:02 p.m. Commissioner Albro led the flag salute. 1. MOTION, AUDIT COMMITTEE CHARTER Motion of the Port of Seattle Commission temporarily suspending a portion of the Audit Committee Charter to consider an external audit by the Port of Seattle Commission. Presentation materials included the text of the motion, which reads as follows: The Port Commission hereby temporarily suspends Section II(C) of the Audit Committee Charter relating to Committee review of external audits and refers to the Port of Seattle Commission the State Auditor’s Office’s Port of Seattle 2015 Accountability Audit. The motion carried by the following vote: In favor: Albro, Bowman, Creighton, Felleman, Gregoire (5) A recording of this part of the meeting has been made available online. 2. REPORT OF THE STATE AUDITOR’S OFFICE Report of the State Auditor’s Office: Port of Seattle 2015 Accountability Audit. Presenter(s): Kelly Collins, CPA, State Auditor’s Office Director of Local Audit, and Mark Rapozo, CPA, State Auditor’s Office Assistant Director of Local Audit. P.O. Box 1209 Seattle, Washington 98111 www.portseattle.org 206.787.3000 PORT COMMISSION MEETING MINUTES Page 2 of 5 TUESDAY, FEBRUARY 7, 2017 Minutes of February 7, 2017, submitted for review on March 6, 2017, and proposed for approval on March 14, 2017. Presentation materials provided at the time of the meeting included an exit conference summary of the State Auditor’s Office, Accountability Audit Report, Accountability Audit Exit Items, Assessment Audit Report, and presentation slides. The presentation included the scope of the accountability and assessment audits and noted there were no findings or concerns in the assessment audit of the Industrial Development Corporation for the fiscal years 2013, 2014, and 2015. The State Auditor’s Office reported on an audit finding related to the Port’s payment of extra compensation in December 2015 to 642 employees. The auditors noted that the method for providing the one-time payment, which was not linked to performance standards or goals that exceeded normal employment requirements prior to the payment, constituted extra compensation not allowed by the state Constitution. The audit report recommends the Port establish policies to ensure compensation payments are based on performance standards or goals and that the Port conduct further legal review to determine if additional actions, such as repayment, are necessary. The report included several areas of audit review where no issues were found, including promotional hosting expenditures, public works contract procurement, and police department overtime. Recommendations regarding use of fleet fuel and maintenance cards and timely cash deposits at two Port marinas were described. It was reported that these recommendations have already been implemented. There was further discussion of the finding related to the one-time payment of extra compensation in 2015. Facts presented for consideration regarding the one-time payment included that there were 642 non-represented, salaried employees who received the payment, which represented a total expense of $4,782,796, that it was authorized under Resolution No. 3712 at an open public meeting, that the payment was not contingent on future services, nor tied to job performance, nor a salary increase, and that it was made for reasons surrounding the Port’s shift to a newly adopted 40-hour work week. Irregularities in the application of the one-time payment identified by auditors were described. These included 26 recipients of the payment who were already working a 40-hour work week, 13 of whom had worked for the Port for 12 months or less and had received merit increases during that time. It was also noted that the one-time payment was retroactively increased in error for six employees whose annual compensation was increased in January 2016 for reasons not related to the one-time payment. Also noted were two employees who should have been ineligible for the payment due to their having left the Port prior to the December 31, 2015, payment date. It was acknowledged that the Port is in the process of seeking repayment from the eight employees who were paid in error. Commissioners requested clarifications throughout the presentation. Commissioners asked whether alternative methods of making the payment would have avoided an audit finding. For example, quarterly payments, rather than a one-time payment, might not have resulted in an audit finding, provided measurements would have been in place prior to receipt of the benefit. It was reported that under the right conditions, an outright salary increase, although a far greater expense than the one-time payment, to the affected employees would likely have stood up to auditors’ scrutiny and not resulted in an audit finding. A recording of this part of the meeting has been made available online. PORT COMMISSION MEETING MINUTES Page 3 of 5 TUESDAY, FEBRUARY 7, 2017 Minutes of February 7, 2017, submitted for review on March 6, 2017, and proposed for approval on March 14, 2017. 3. MANAGEMENT RESPONSE TO AUDIT Management Response to the State Auditor’s Office Port of Seattle 2015 Accountability Audit. Presenter(s): Paula Edelstein, Senior Director, Human Resources, and Craig Watson, General Counsel. Presentation materials provided at the time of the meeting included presentation slides. The business rationale and effective benefit of the Port’s one-time payment to non-represented, salaried employees in 2015 was presented. Numerous organizational and programmatic changes affecting employees at that time were summarized. Emotionally charged feedback from employees related to job security, uncompensated mandatory work hours, administrative changes resulting in overall reduction in pay, and low morale was described. Commissioners noted that the Port’s 37.5- hour work week had been in place for several decades. Other changes affecting employee morale were described, including changes in the Port’s pay program, new leadership throughout the Port, the shift to a common performance review date and resultant delays for some in receipt of annual performance increases, and formation of the Northwest Seaport Alliance. The highly competitive job market at the end of 2015 was described. The benefits of the one-time payment were described as swiftly addressing employee concerns, not adding fixed operational costs, and ensuring retention of 611 out of 640 employees in 2016. Commissioners opined on the effectiveness of the one-time payment and the lower cost of the one- time payment compared to a permanent salary increase. Commissioners requested clarification on the selection of the seven-percent amount. Commissioners noted that nonexempt, or hourly, staff were to be compensated for the additional hours worked during the week, while exempt, or salaried, staff would not. Some of the benefits for employees associated with a 7.5-hour workday were noted. The legal review portion of the Port’s audit management response was summarized. It was noted that the terms of the one-time payment were designed with the intent to comply with legal requirements, including constitutional components. The lack of donative intent on the part of the Port in providing the payment was emphasized, and it was noted that independent, outside counsel had concurred in the legitimacy of the one-time payment. Commissioners commented on the significance of the changes affecting employees in 2015. They thanked the State Auditor’s Office for their review and emphasized the sincerity of efforts in 2015 to ensure compliance with constitutional and other legal requirements when approving the one-time payment. They expressed their esteem for Port staff and their conviction that the one-time payment was appropriate, although they respected the auditors’ opinion that there might have been a better way to implement it. A recording of this part of the meeting has been made available online. 4. AGENDA-RELATED PUBLIC TESTIMONY Public comment was received from the following individual(s): Eddie Rye Jr., Washington State Civil Rights Coalition, regarding changes to the Code of Ethics to allow senior staff to accept certain gifts. PORT COMMISSION MEETING MINUTES Page 4 of 5 TUESDAY, FEBRUARY 7, 2017 Minutes of February 7, 2017, submitted for review on March 6, 2017, and proposed for approval on March 14, 2017. Andrew McIntosh, reporter for the Puget Sound Business Journal, regarding the 26 workers who received the one-time payment in 2015 despite the fact that they already worked a 40-hour week. Ralph Ibarra, President, Diverse America Network, regarding the audit findings and the practicalities of retaining qualified employees. A recording of this part of the meeting has been made available online. 5. MOTION, CODE OF CONDUCT Motion related to the Port of Seattle Code of Conduct. Presenter(s): Aaron Pritchard, Commission Issues and Policy Manager. Presentation materials provided at the time of the meeting included the text of the motion, which reads as follows: (1) The Port of Seattle Commission hereby amends the Port of Seattle Code of Ethics and Workplace Conduct to add section CC-15 as follows: “Changes to the Code of Conduct: Any changes made to the Code of Conduct shall be done in consultation with the Port of Seattle Commission.” (2) The Port of Seattle Commission hereby amends the Port of Seattle Code of Ethics and Workplace Conduct, Section CC-04(II)(D) “Exceptions t50 Limit on Gifts,” as follows: “Occasional Gifts in the form of food and beverage in the ordinary course of meals where attendance by the employee is related to the performance of official duties. For senior managers only, Occasional Gifts may include the cost of admission to a performance or event where attendance by the senior manager is related to the performance of official duties. If you have a question about whether attendance is related to official duties, please consult with the Workplace Responsibility Officer. Gifts in the form of food and beverage and/or the cost of admission that exceed $50 per person on a single occasion shall be reported to the Workplace Responsibility Officer on the Gift Disclosure Form. ‘Occasional’ means not more than four to six times per year with the same business partner.” (3) When potential conflicts of interest, reported concerns, or alleged violations of the Port’s Workplace Responsibility policies pertain to the CEO, the Port shall report those matters to the President of the Commission. The President of the Commission shall have the discretion to refer such matters to an outside party. Commissioners praised the Port’s Code of Ethics and expressed their disdain for administrative changes to the Code made without Commission awareness that provided for preferential treatment of senior managers. They underscored the Code’s themes of transparency and accountability and emphasized that the changes proposed in the motion were intended to strengthen those characteristics of the Code of Conduct. They allowed that further refinement of these Code changes might be required. PORT COMMISSION MEETING MINUTES Page 5 of 5 TUESDAY, FEBRUARY 7, 2017 Minutes of February 7, 2017, submitted for review on March 6, 2017, and proposed for approval on March 14, 2017. The motion carried by the following vote: In favor: Albro, Bowman, Creighton, Felleman, Gregoire (5) A recording of this part of the meeting has been made available online. 6. NON-AGENDA-RELATED PUBLIC TESTIMONY Public comment was received from the following individual(s): Ralph Ibarra, President, Diverse America Network, regarding the Executive Order of the President of the United States banning travel to the U.S. from certain countries and the Port’s response to the travelers affected. Cindi Laws, Wheelchair Accessible Taxi Association, regarding the President’s travel ban and its effects on wheelchair accessible cab drivers, most of whom are from Somalia. A recording of this part of the meeting has been made available online. ADJOURNMENT There was no further business, and the meeting adjourned at 4:22 p.m. Fred Felleman Assistant Secretary Minutes approved: March 14, 2017.