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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

PFD faces reprimand again over bonus policies

For the second time in two years, the State Auditor’s Office will reprimand the Spokane Public Facilities District for issuing employee bonuses without having appropriate policies in place.

That’s frustrating for the district’s board, which researched and re-examined its bonus policy after last year’s report, trying to comply with state law, said PFD Executive Director Kevin Twohig.

“Just tell us what to do and we’ll do it,” he said, adding that the board has passed three resolutions trying to address the issue, only to be found out of compliance again.

In a report to be released Friday, the auditor’s office said the district issued $218,612 in bonuses for 2004 without having the proper policies in place. That included the fact that the policy governing bonuses wasn’t approved until January, after compensation for the year had already begun. In addition, the audit said, bonuses were awarded despite the fact that the district did not generate a profit, as its own board policy dictates.

Twohig disputes that, saying the district generated a $1.3 million profit in 2004. However, the Auditor’s Office included depreciation on the district’s buildings in its revenue calculations, which brought that number down to a loss. Twohig said the board found that unfair because it has no control over building depreciation. The district owns and manages the Spokane Veteran’s Memorial Arena, the Spokane Convention Center, Opera House and Ag Trade Center.

“Public agencies don’t include depreciation in financial statements,” Twohig said, emphasizing that the district was profitable in 2004 and also generated a similar profit in 2005.

Auditor Brian Sonntag said the issues identified in the report do not constitute a serious violation, but are big enough that they have to be identified.

“We’ve got a responsibility to report and report accurately, and that’s what the audit is,” he said. “I don’t want to leave the impression that because it’s a ‘finding,’ it’s just as bad as an embezzlement, because it certainly isn’t.”

But, he said, “A reportable issue is a reportable issue. You certainly can distinguish, but we don’t grade audit findings.”

The PFD receives a portion of sales and hotel taxes collected in Spokane County, which it uses for debt repayment on the buildings it operates. The state’s constitution bars the gifting of public funds, so state law calls for bonuses to be included as part of a compensation package and the criteria for awarding them must be clear.

In 2004, 26 district employees received bonuses ranging in size from $3,897 to $15,000. District policy allows employees to receive up to 20 percent of their base salary as a bonus.