Bad budget management and poor use of public money cause financial mess at Island Transit

July 30, 2014

New information from Island Transit shows a series of poor financial decisions made by local managers are the source of the district’s trouble, not lack of state money. Island Transit provides bus service and vanpools throughout Whidbey and Camano Islands, with routes connecting Skagit and Snohomish Counties. The agency is fully subsidized by taxpayers and doesn’t collect fares from passengers. Earlier this year, Island Transit officials announced plans to cut the Camano Island to Everett bus route, citing a lack of state tax money as the primary reason. Island Transit’s Executive Director Martha Rose called current levels of state funding, “shameful.” Yet new information reveals budget mismanagement and poor decisions may be the real reason bus service will be slashed.

According to an op-ed by State Representative Dave Hayes (R-Camano Island),the Camano to Everett route started when Island Transit officials successfully lobbied Olympia for “start-up funds” from a $1.9 million state grant in 2006. The grant required “other funding sources must ultimately replace” the temporary grant money. Yet Island Transit officials continued to apply and receive temporary grants for years.  Nearly $7 million in start-up grants and “legislative bailouts” kept the Camano to Everett route running, despite promises from Island Transit officials of their intent to secure local funding to maintain service.

Even worse, at the same time Island Transit officials are cutting bus service, the transit agency moved into a brand new $22 million office and maintenance building (equipped with an employee gym) without the funds to pay for it.

The Whidbey News-Times reports years of bad financial practices have drained the agency’s reserves intended to pay the $4.4 million in local funds required for the new building. According to the article, Island Transit hasn’t been producing monthly cash flow statements. These critically important statements for sound financial management have not been produced for years, during which time Island Transit’s Financial Director was selling off reserve investments to stabilize their budget.

Island Transit leaders have failed to perform their duty to run this agency responsibly. Rose was “blindsided” when she heard the news of financial mismanagement.  The article says the Island Transit Board also failed to review the financial statements. Both Rose and the Board assumed the agency had sound financial footing. However, Island Transit’s annual reporting to the Washington State Department of Transportation clearly show reserve funds being spent.

Additionally, yearly cash flow statements sent to the State Auditor’s Office also show the sale of investments outpacing the purchase of new investments, netting the agency millions of dollars in cash.

Island Transit’s former Financial Director said the financial mess could have been averted with monthly tweaks to bus service that would have appeared “invisible” to riders.

Bad financial decisions now require Island Transit to cut routes, lay off employees and even borrow money. Island Transit must take on $2.3 million in debt just to pay off the remaining balance on the new office building and to pay for bus operations.

More tax money from the state is not the solution to fix the financial mess at Island Transit. Better budget management and financial practices could have reduced the pain felt by communities across Island County. Many residents are rightfully upset their neighborhood bus service will be reduced or eliminated because of poor management of public money and a new “Taj Mahal” office building, as one commenter put it. Instead of trying to secure more money from state taxpayers, Island Transit officials should better manage public tax dollars to rebuild the public trust and restore reliable and efficient bus service.

Comments

I find it incredible that

I find it incredible that Rose & the entire Board are still employed at IT, while people are being laid off and routes cancelled. It is obvious to everyone that over the years the issues should have been spotted. Rose knew that the monthly cash flow statements would have shown there was an ongoing problem. The Board knew that these monthly cash flow statements would have shown the issues as well.

Is there a recall for the Board & when will Rose be fired? This is mismanagement of taxpayer funds. So far I see Rose & the Board more interested in pointing their fingers else where. Meanwhile no more Saturday routes and employees being fired.

When will we see heads roll?

I can answer that one....

I can answer that one.... Head's ARE Rollin'

The First HEAD, one of many, to Roll out the front door of Island Transit happened during Extended Executive Session following Island Transit meeting, Friday, September 19, 2014.

Island Transit, Executive Director, MARTHA ROSE Submitted her Resignation "EFFECTIVE IMMEDIATELY".... I witnessed the Board's "Unanimous" vote to accept MARTHA ROSE's Resignation... It was BEAUTIFUL.

It is not over for MARTHA ROSE, I am reporting MARTHA ROSE's Corrupt non-compliance involving Federal Grant Funds, Programs and Policies, in accordance with CRIMES and CIVIL PENALTIES. MARTHA ROSE "SHALL" take out her personal checkbook, to pay this one. As well as, Any and All associated with said Corruption. Federal Laws are truly amazingl in "covering" all parties. This is merely the beginning. So, Grab some popcorn....

However, I also witnessed MARTHA ROSE, following immediately effective resignation, exit Island Transit parking lot, driving state owned Island Transit Vehicle... Leads me to believe MARTHA ROSE is still in possession of "electronic key card" and other items. MARTHA ROSE was FIRED and should have been escorted off the property by law enforcement. End of conversation.

Martha Rose resigned this morning 9.19.14

TRANSIT UPDATE from Island County Commissioner Helen Price Johnson (and member of the Island Transit Board of Directors) ...

At this morning's Island Transit meeting the Board took unanimous action to accept the immediate resignation of Executive Director Martha Rose. Though I was in Ellensburg for another meeting, I was able to participate in the vote by telephone. As per the bylaws, the Chair of the Board Bob Clay will serve as director while an interim executive is selected. A special meeting for this transition is scheduled for Wednesday September 24th at 4pm in the Transit Board room.

The Island Transit financial reports are showing positive gains. The auditor's review is continuing. Martha Rose served Island County for 26 years and deserves credit for her role in building up the Island Transit system. But she acknowledged today that her presence had become a distraction to the important work of recovery. With the action today the Board will now focus on moving forward in rebuilding this vital system for the good of our community.

Operations staff is working on a draft plan for right-sizing of the transit runs which will be sustainable. Public input is encouraged. I will keep sending updates as this unfolds

Martha Rose resigned this morning

From Island County Commissioner Helen Price Johnson, Friday September 19th:

TRANSIT UPDATE - part 2

At this morning's Island Transit meeting the Board took unanimous action to accept the immediate resignation of Executive Director Martha Rose. Though I was in Ellensburg for another meeting, I was able to participate in the vote by telephone. As per the bylaws, the Chair of the Board Bob Clay will serve as director while an interim executive is selected. A special meeting for this transition is scheduled for Wednesday September 24th at 4pm in the Transit Board room.

The Island Transit financial reports are showing positive gains. The auditor's review is continuing. Martha Rose served Island County for 26 years and deserves credit for her role in building up the Island Transit system. But she acknowledged today that her presence had become a distraction to the important work of recovery. With the action today the Board will now focus on moving forward in rebuilding this vital system for the good of our community.

Operations staff is working on a draft plan for right-sizing of the transit runs which will be sustainable. Public input is encouraged. I will keep sending updates as this unfolds