AC Transit Annual Report 1987-1988

8/14/2019 AC Transit Annual Report 1987-1988

1/28


2/28


3/28


4/28

2

1988AnnualReport

Fiscal Year 1987-88 was one of thebusiest on record at AC Transit asthe District's Directors, managementand staff strove to maintain serviceto the public while adding newimprovements that makeintersystem transit usage eveneasier. Accomplishments of noteincluded: Establishing a "Timed Transfer"demonstration project that links

bus schedules to timetables forBART intercity rail service at theHayward Station.

Expanding intersystem userinformation aids - illustrating forthe traveling public the steadilyincreasing ease of makingconnections between the EastBay bus service and transitsystems serving other parts ofthe region.

Expanding and adapting therevenue fleet and adding newcapabilities in the non-revenuefleet to improve reliability ofon-street service to the public. Establishing new partnerships

with public agencies and privatesector institutions to help supportbus service expansion andimprovements.

Adopting a sweeping FinancialRecovery Program tailored tomove the District toward a moresolid financial footing despite theharsh economic pressures of thelate 1980's.

Continuing to provide high levelsof training and education tailoredto hone the skills and enhance theproductivity of the District's busdrivers, maintenance workers andsupport personnel.

Timed TransferTest . . .In FY 1988, AC Transit joined BARTin an on-street road test of a "timedtransfer" concept that's aimed at

speeding riders' trips - whetheracross town or across SanFrancisco Bay.Timed Transfers, kicked off May 2ndat BART/Hayward Station, providea new level of customerconvenience by insuring fastconnections between 14 AC Transitand BART Express bus routes plusSamTrans transbay service to SanMateo County. In addition, the localroutes make convenient meets withselected BART trains on theFremont/San Francisco andFremont/Richmond lines.Basically, timed transfers eliminatelong waits between legs of a transittrip, benefitting riders e ither byshortening total trip time orpermitting longer trips in the sametime period. Meshed bus/trainschedules are one of the far-reachingimprovements proposed in ACTransit's long-range ComprehensiveService Plan . . . an ambitiousundertaking that will totallyrevamp bus routes and schedulesserving the entire metropolitanEast Bay.

Planning ForThe Future . . .Mass transit, in the form of a horsedrawn car, was introduced to thestreets of Oakland in 1869. In theyears since, improvements andadjustments were made largely inresponse to localized demands andpressures. This year, the Districtcontinued considerable progresstoward a sweeping ComprehensiveService Plan (CSP) that - for thefirst time - will analyze the entireEast Bay bus network, and itsrelationship to BART rail, as a singleintegrated unit.This year, the District's plannersbegan involving others - includingthe public, as well as AC Transitdrivers, maintenance workers andsupport personne l - in the processof examining a "model" bus route


5/28

network which serves as tangibleillustration of the CSP serviceimprovements fm;=better servingcurrent riders' needs while alsoattracting new patrons to theSystem.Drafted with assistance from UCBerkeley's Institute forTransportation Studies, this modelCSP network makes it easier fortransit professionals and others toundertake in-depth examination ofmass transportation - in thecontext of the East Bay's currentand projected shifts in employment,educational, commercial, residentialand recreational patterns.

Though it's relatively easy to getaround the East Bay today usingAC Transit buses, the CSP conceptsare tailored to provide improvedaccess to a greater number ofdestinations. This year, staffreached out to public officials,businesses, civic and neighborhoodgroups, and other interestedindividuals, to gain reactions andsuggestions from the entire EastBay. In the coming fiscal year, theDistrict and its Directors will assessthat public input and adjust theCSP accordingly.

3


6/28

Serving RidersToday . . .Ridership statistics remainedrelatively stable in this fiscal year,with the District again registeringpatronage totals about 60 millionriders. Internally, variousadjustments helped enable theDistrict to serve riders with greaterefficiency and cost-effectiveness.In a move that helps to insuretransportation of elderly anddisabled riders to where they needto go, AC Transit acquired five vansmodified to accept rear-doorpassenger lifts. The vehicles servetwo functions: normally, they'reused by Road Supervisors whomonitor service and assist busdrivers; bu t if necessary, they canbe deployed to transport wheelchair

users encountering difficulty withregular fixed route bus service.Riders, given the opportunity tojudge a New Flyer coach on orderfor the District, found much to likein the prototype which was roadtested on East Bay streets this year.Responding to an on-street survey,riders were particularly appreciativeof new large electronic destinationsigns, a high level of interiorcomfort, and the soothing effects ofsound-deadening materials. Thesecoaches were scheduled to beginarriving in the next fiscal year.

CoordinationandCooperation. The East Bay's public bus systemcontinued to spearheadimprovements in intersystemcoordination during the fiscal year.In addition, new strides were madein bringing private-sector agenciesand institutions into the process ofhelping to establish - and tounderwrite -East Bay bus service.AC Transit played a key role thisyear in establishing a firm fundingbase to continue Line DB at thesouth end of San Francisco Bay.Operated by AC Transit since 1984,Line DB links BART and local EastBay bus service with SamTrans andSanta Clara County Transit in the


7/28

West Bay. The three bus systemsare joined by BART and Union CityTransit in Line DB - serving some400 daily riders between SouthernAlameda County and high-techemployment centers in StanfordIndustrial Park.Working in close conjunction withtechnical services staff at theMetropolitan TransportationCommission, the District was ablethis year to introduce bus riders to

automated schedule departureinformation at two key East Baytransfer centers. Computer-drivenschedule displays went on line atBART/Hayward and BART/OaklandCity Center stations, listingdeparture times for buses andBART trains. The displays areincorporated into comprehensiveRegional Transit InformationCenters being established - underthe auspices of the Regional TransitAssociation - at more than twodozen intersystem transfer pointsthroughout the Bay Area.Faced with continued shrinkage infinancial support from federal andstate sources, AC Transit turned topartnerships with the private sectorto continue and improve some localtransit service. Bus service to realestate developments in Richmondand Alameda resulted from

5


8/28


9/28

While in the process of coming togrips with the financial headachesof the 1980's, the District'sadministrative structure and topmanagement roster underwentsubstantial change. During thisfiscal period, one general manager,Gene Gardiner, retired and wassucceeded by an interim managerwhile the District's Directorsconducted a nationwide search,resulting in selection of a new chiefexecutive officer, James L.O'Sullivan.In the same period, the District goton the road to financial recoveryafter adopting an aggressiveprogram aimed at containingoperating costs and increasingproductivity while also generatingnew revenues. While the projectedFY 1987-88 budget was less thanthe previous year's spending plan,it still contained significant financialchallenges - particularlyanticipated increases in costs oflabor as well as of materials,supplies and services required toconduct business.The comprehensive financial plancombines internal economics withmodest fare increases, plus serviceadjustments tailored to haveminimal impact on bus riders.Targets for internal cost-cutting -without impacting bus service -included: tightening inventorycontrol; curtailing usage oftemporary help and utilities; andcutting expenditures for travel,meetings and consulting services.In addition, this year's spendingplan called for modest increases incash local fares for adults andyouth while leaving prices ofMonthly Passes and conveniencetickets unchanged - therebyproviding cost-saving alternativesto regular commuters andoccassional riders.The spending plan also identifieddollars to be directed to specificimprovements: hiring moremaintenance workers and roadsupervisors (while cuttingadministrative and supportpositions) with the aim ofimproving the reliability of ACTransit's on-street bus service.


10/28

8


11/28

ARTHUR ANDERSEN & CO.SAN FRANCISCO , CAL I FORN IA

Report of Independent Public Accountants

To the Board of Directors ofAlameda-Contra Costa Transi t Dist r ic t :

We have examined the balance sheet of the ALAMEDA-CONTRA COSTA TRANSIT DISTRICTas of June 30, 1988 and the related statements of revenues and expenses, changesin capita l and changes in financial posi t ion for the year then ended. Ourexamination was made in accordance with generally accepted audit ing standardsand, accordingly, included such t es t s of the accounting records and such otheraUditing procedures as we considered necessary in th e circumstances. Thef inancial statements for the year ended June 30, 1987 were examined by otheraudi tors whose report thereon dated January 8, 1988 (February 19, 1988 as to thel a s t paragraph of Note 8 to those statements) expressed an unqualif ied opinionon those statements.In our opinion, the general purpose financial statements referred to abovepresent fa i r ly the f inancial position of the Alameda-Contra Costa Transi tDist r ic t as of June 30, 1988 and the results of i t s operations and the changesin i t s financial position for the year then ended, in conformity with generallyaccepted accounting principles applied on a basis consistent with that of thepreceding year.Our examination was made for the purpose of forming an opinion on the generalpurpose f inancial statements taken as a whole. The supplementary informationincluded in Schedules A and B is presented for purposes of additional analysisand is not a required part of the general purpose financial statements. Thisinformation has been subjected to the audit ing procedures applied in ourexamination of the general purpose financial statements and, in our opinion, isfair ly sta ted in a l l material respects in re la t ion to the general purposef inancial statements taken as a whole.

San Francisco, CaliforniaOctober 14, 1988

9


12/28

10

BALANCE SHEETSJUNE 30, 1988 and 1987 (In Thousands)

ASSETS

Current Assets: Cash and investmentsAccounts receivable and accrued revenues

Federal grantsOther, principally state and local assistance

Materials and supplies, at costPrepaid expenses

Total current assetsDeferred CompensaHon Plan InvestmentsCash and Investment Restricted forPayment of Accrued Pension CostsProperty,Plant andEquipment:

LandBuildings, structures and improvementsRevenue equipmentShop, office and other equipment and service vehiclesAcquisitions in progress

Total property, plant and equipmentAccumulated depreciation

Property, plant and equipment - netTOTAL ASSETS

NOTES

34,5,6

3,11

3,9


13/28

LIABILITIES AND CAPITAL NOTES 1988 1987"Current Uabilltles: Current portion of capital lease obligations 12 $ 182 $ 337

Current portion of accrued early retirement costs 10 910Accounts payable 6,079 3,46Salaries, wages and vacations 7,422 6,736Other accured liabilities 3,687 2,73Advances under grants 430 950

Total current liabilities 18,710 14,22Self-Insurance Uabilltles: 13Workers' compensation claims 5,092 5,02Public liability and property damage claims 5,205 !,71

Total seH-insurance liabilities 10,297 9,73Long-Term Portion of Accrued Early Retirement Costs 10 6,453Deferred Compensation 11 2,714 2,49Accrued Pension Costs 9 97,465 87,624Capital Lease Obligations 12 15,966 16,14

Total liabilities 151,605 130,23Commitments and Contingencies 12, 13capital: District equity 8 11,763 21,33

Contributed capital -Federal grants 111,530 109,331State toll bridge funds 28,020 26,98Local transportation funds 15,221 15,12

Total capital 166,534 172,77Total1iabilities and capital $318,139 $303,01

*Changed to conform to 1988 presentation.The accompanying notes are an integral part of these financial statements.

11


14/28

STATEMENTS OF REVENUES AND EXPENSESFOR THE YEARS ENDED JUNE 30, 1988 and 1987 (In Thousands)

NOTES 1988 1987"Operating Fares $ 30,676 $ 32,216Revenues: Contract service 13,472 13,109

Other operating revenues 1427 690Total operating revenues 45c575 46015

Operating Operator wages 37,439 36,658Expenses: Other wages 22,842 22,448Fringe benefits 34,166 33,672Depreciation and amortization 15,026 14,460Fuel and oil 4,413 3,744Other materials and supplies 7,430 8,717Services 6,242 5,399Insurance 4,282 4,193Other 3734 ~ 1 9 8 Total operating expenses 1 3 5 ~ 7 4 133,489

Net operating loss (89,999) (87,474)

Nonoperating Revenues (Expenses):Operating assistance 5,6, 7Property taxes 21,644 18,167

Local sales tax 21,188 16,400Local transporation funds 25,424 24,505Federal 6,961 7,715State Transit Assistance Fund 1,048 434

Interest income, net of amounts allocated topension funds 1,154 1,073Interest expense (1761) (73}

Total nonoperating revenues (expenses) 75658 68,221Loss before addback of depreciation of assets acquiredwith contributed capital and nonrecurring item (14,341) (19,253)

Depreciation of Assets Acquired wHh Contributed CapHaI 1 2 ~ 3 7 11,638Loss before nonrecurring item (1,804) (7,615

Nonrecurring Item Costs of early retirement plan 10 7766 -Net loss ( 9 ~ 7 0 ) (7,615}

Changed to confonn to 1988 presentation.The accompany ing notes are an integral part of these fi nancial statements.

12


15/28

STATEMENTS OF CHANGES IN CAPITALFOR THE YEARS ENDED JUNE 30, 1988 and 1987 (I n Thousands)

CONTRIBUTED CAPITAL

STATE LOCALDISTRICT FEDERAL TOLL BRIDGE TRANSPORTATION

NOTES EQUITY GRANTS RINDS RINDS TOTAL1986 $28,948 $106,232 $26,259 $11,898 $173,33

(7,615) - - - (7,61epreciation of assets acauired (8,038) (2,251) (1,349) (11,63ith contributed capital -

grant funds earned 4 - 11,137 2,979 4,578 18,69June 30,1987 21,333 109,331 26,987 15,127 172,77

t loss (9,570) - - - (9,57epreciation of assets acquiredwith contributed capital - (9,057) (2,240) (1,240) (12,53

grant funds earned 4 - 11,256 3,273 1,334 15,86June 30, 1988 ~ 1 1 , 7 6 3 ~ 1 1 1 , 5 3 0 $28,020 $15,221 ~ 1 6 6 , 5 3

'Changed to confonn to 1988 presentation .The accompanying notes are an integral part of these financial statements.

13


16/28

STATEMENTS OF CHANGES IN FINANCIAL POSITIONFOR THE YEARS ENDED JUNE 30, 1988 and 1987 (In Thousands)

Source of Cash and InvestmentsOperations -Net lossNoncash expenses included in income -Depreciation and amortizationDepreciation of assets acquired with contributed capitalEarly retirement plan costs(Increase) decrease in accounts receivableDecrease in materials and supplies(Increase) decrease in prepaid expensesIncrease in accounts payableIncrease in salaries, wages and vacationsIncrease in other accrued liabilitiesTotal cash and investments provided (used) by operations

Other sources -Increase in self-insurance liabilitiesIncrease in deferred compensation liabilityIncrease in accrued pension costsIncrease in capital lease obligationsCapital grants -Capital grant funds earned(Increase) decrease in capital grant funds receivableDecrease in advances under grantsTotal sources of cash and investments

Applications of Cash and Investments:Additions to property, plant and equipmentPayments of early retirement plan benefitsIncrease in cash and investments restricted forpayment of accrued pension costsIncrease in deferred compensation plan assetsDecrease in capital lease obligations

Total applications of cash and investmentsNet increase (decrease) in cash and investments

Cash and Investments, beginning of year

Cash and Investments, end of yearChanged to conform to 1988 presentation.See notes to general purpose financial statements.

14

1988 1987"

$ (9,570) $ (7,61515,026 14,460

(12,537) (11,6387.766

685 (4,793(10,182) 7,614

805 704618 (4862,612 61686 676948 233(3,828) 4,009560 584217 445

9,841 8,8%16,485

15,863 18,694(3,518) 3,679

{520} (3,77118.615 49,021

18,446 36,523403

9,841 8,8%217 445337

29.244 45,864(10,629) 3,157

21.924 18,767

$ 11.295 $ 21,924


17/28

ALAMEDA-CONTRA COSTA TRANSIT DISTRICTNOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS

1. Organization and Basis of Presentation:Description of Reporting Entity - Alameda-ContraCosta Transit District (the District) is a politicalsubdivision of the State of California established in 1956and subject to transit district law as codified in theCalifornia Public Utilities Code.For financial reporting purposes, the District's generalpurpose financial statements include all financialactivities that are controlled by or dependent uponactions taken by the District's Board of Directors. Assuch, the general purpose financial statements includethe financial activities of the District's Special TransitService Districts No.1 and No.2 and other areas inwhich the District has contracted to provide transitservice.In May 1988, the District created AC Transit FinancingCorporation (AC Transit Financing), a nonprofit publicbenefit corporation incorporated in the state ofCalifornia under the guidelines of the Nonprofit PublicBenefit Corporation Law. AC Transit Financing wasformed to provide financial assistance to the District byfinancing, refinancing, acquiring, constructing,improving, leasing and selling buildings, equipment,land, building improvements and other publicimprovements for the benefit of the residents of theDistrict and surrounding areas and to borrow thenecessary funds to perform any or all of the aboveactivities. As of June 3D, 1988, AC Transit Financing hadno financial activity, and, as such, has not beenreported as a separate component of the District'sgeneral purpose financial statements for the yearsended June 3D, 1988 and 1987 (see Note 12 fortransaction involving AC Transit Financing thatoccurred subsequent to June 3D, 1988).The general purpose financial statements exclude thefinancial activities of the District's pension and deferredcompensation fiduciary funds. These plans are governedby boards independent of the District's Board ofDirectors. As such, only the plans' assets and offsettingfiduciary liabilities are reported in the District's balancesheets.Supplemental Schedule B is presented for the purposeof showing all revenue sources and all recurringexpenses, excluding depreciation.

2. Summary of Significant Accounting Policies:Basis of Accounting - The District maintains itsrecords on the accrual basis of accounting as anenterprise fund.Investments - Investments are stated at cost oramortized cost, except for investments of the deferredcompensation plan, which are stated at current(market) value.Property. Plant and Equipment - Property, plantand equipment is stated at cost and depreciated usingthe straight-line method over the following estimateduseful lives:Buildings, structures

and improvementsRevenue equipmentShop, office and other equipment

and service vehicles

30 years12 years3 to 10 years

Contributed CapHaI - The District periodicallyreceives federal grants from the Urban MassTransportation Administration (UMTA) of the U.S.Department of Transportation, local transportationfunds and state toll bridge revenues for the acquisitionof buses and other equipment and improvements.Capital grant funds earned, less an amount equal to theaccumulated depreciation of the related assets, areincluded in contributed capital. Advances received oncapital grants are recorded as liabilities until the fundsare expended for capital acquisitions.Pensions - The District has three noncontributorypension plans, one for all union employees and twothat provide similar benefits for nonunion employees.Annual expenses for pension costs are based onpercentages of gross payroll, which include the normalcost of the plans plus amortization of prior service costsover a period of not more than 40 years. The Districtfunds pension costs as accrued. Cash and investmentsequal to the annual expense for pension costs arerestricted by the Board of Directors to provide for thefuture payment of pension benefits. The Districtreceives an actuarial valuation for each plan every twoyears. The District's policy is to amortize anyoveraccrued or underaccured expenses for pensioncosts over the period to the date of the next actuarialvaluation.

15


18/28

Notes to Financial statements cont.

Property Taxes. Collection and Maximum Rates -The State of California (State) Const itut ion Article XllIAprovides that the general purpose maximum propertytax rate on any given property may not exceed 1% ofits assessed value unless an additional amount forgeneral obligation debt has been approved by voters.Assessed value is calculated at 100% of market value asdefined by Article XlIIA and may be adjusted by nomore than 2% per year unless the property is sold ortransferred. The State Legislature has determined themethod of distribution of receipts of the tax levy amongthe counties, cities, school districts and other districts,such as the District. Alameda and Contra Costacounties assess properties, bill for, collect, anddistribute property taxes. Property taxes are recordedas nonoperating revenue or are treated as capitalcontributions for capital expenditures, as determinedby management, and as receivables, net of estimateduncollectibles, in the fiscal year of levy.Operating Assistance Grants - Operating assistancegrants are accrued as nonoperating revenue in theperiod of which the grant applies.Contracted Services - The District has contracted toprovide transit service for the Bay Area Rapid TransitDistrict (BART) and several cities and other areas inContra Costa County. The allocated cost of providingsuch service, less related operating revenue, is fundedfrom local transportation funds, federal operatingassistance and, for BART express service, by directreimbursement, which is recorded as contract servicerevenue.In May 1988, BART appointed a private transit firm toreplace the District as the provider of express busservice to certain BART stations in Alameda and ContraCosta counties beginning January 15, 1989. Districtrevenues from the BART express service totaled$7,661,000 and $7,303,000 for the years ended June 30,1988 and 1987, respectively.3. Cash and InvestmentsThe District maintains a cash and investment pool thatis available for general use and is used for the fundingof the pension plan.

16

Deposits - At June 30, 1988, the carrying amount ofthe District's time and demand deposits was $9,270,000and the bank balance was $11,257,000. Of the bankbalance, $2,732,000 was insured by federal depositoryinsurance or collateralized by securities held by theDistrict's agent in the District's name and $8,526,000was "uninsured and uncollateralized" as defined byGovernmental Accounting Standards Board StatementNo.3, "Deposits with Financial Institutions, Investments(including Repurchase Agreements), and ReverseRepurchase Agreements." As required by Section 53652of the California Government Code, the pledgingfinancial insti tutions have collateralized 110% of such"uninsured and uncollateralized" deposits withsecurities; such collateraL however, is not in theDistrict's name.Included in cash, time and demand deposits below isan $8,000,000 certificate of deposit, which the Districtmaintains in an escrow account related to theadministra tive office lease agreement. With the purchaseof the District's administrative office facilities by ACTransit Financing in July 1988 (see Note 12), allrestrictions to this certificate of deposit have beenremoved.Investments - Statues authorize the District to investin obligations of the U.S. Treasury, its agencies andinstrumentalities, commercial paper rated A-I byStandard & Poor's Corporation or P-1 by Moody'sCommercial Paper Record, bankers' acceptances,repurchase agreements, and the State Treasurer'sinvestment pool. The District is also authorized toenter into reverse repurchase agreements. There wereno reverse repurchase ,!greements held at June 30, 1988.The District's investments are categorized below togive an indication of the risk assumed by the District atJune 30, 1988. Category 1 includes investments that areinsured or registered or for which the securities areheld by the District or its agent in the District's name.Category 2 includes uninsured and unregisteredinvestments for which the securities are held by thebroker's or dealer's trust department or agent in theDistrict's name. Category 3 includes uninsured andunregistered investments for which the securities areheld by the broker or dealer, or by its trust departmentor agent bu t not in the District's name.


19/28


Category1 2 3------

(I n thousands)Repurchaseagreements $19,500 $ $

Corporate bondsand notes 9,351

U.S. governmentsecurities 56,885Bankers' acceptances ___ 11,850 _ _TotalCash, time anddemand deposits

Mutual funds -U.S. governmentsecurities moneymarket fundDeferred compensationplan investments(Note 9)Total

Reported as -Cash and investments(included in currentassets)Cash and investmentsrestricted forpayment of accruedpension costs

Deferred compensationplan investments

=$8=5=,7=36= =$=11=850== = $ = = =

4. Capital Grams

CarryingAmount MarketValue

$ 19,500 $ 19,5009,351 9,286

56,885 55,07011,850 11,85097,586 95,706

9,270 9,270

1,904 1,904

2,714 2,714$111 ,474 $109,594

$ 11,295

97,4652,714

$111,474

The District has eight grant contracts in process wi thUMTA that provide federal funds for the acquisition ofbuses and other equipment and improvements. Thesegrants are summarized at June 30, 1988 as follows (inthousands):Total approved project costsTotal approved federal fundsLess -Amounts receivedAmounts receivableRemaining amount availabe

under federal grants

$79,002$62,825

33,8814,263

Under the terms of the grants, proceeds from equipmentsold are refundable to the federal government inproportion to the original federal capital grant funds,net of the related depreciation.The District has also received allocations of fundsgenerated from net toll bridge revenues of the SanFrancisco-Oakland Bay Bridge. These funds are receivedunder provisions of the California Streets and HighwaysCode and are allocated based on claims approved bythe Metropolitan Transportation Commission (MTC).Local transportation funds received for capital grantprojects include allocations received pursuant to theTransportation Development Act of 1971, certainproperty tax revenues and certain local sales tax funds.

5. State and Local Operating Assistance:The District receives state and local operatingassistance from two principal sources. TransportationDevelopment Act funds of $25,424,000 and $24,505,000were allocated to the District for the years endedJune 30, 1988 and 1987, respectively. These funds arereceived from Alameda and Contra Costa Countiesto meet, in part, the District's operating requirementsbased on annual claims filed by the District andapproved by Metropolitan Transportation Commission(MTC). State Transit Assistance funds of $1,048,000 and$434,000 were allocated to the District for the yearsended June 30, 1988 and 1987. These funds are receiveddirectly from MTC based on the ratio of the District'stransit operating revenue and local support as apercentage of total transit operating costs.

6. Local Sales TaxThe District receives local sales tax operating assistancefrom two principal sources. Local sales tax assistance(AB 1107) totaling $15,238,000 and $16,400,000 wasallocated to the District after approval by MTC for theyears ended June 30, 1988 and 1987, respectively.In 1987, the District began receiving local sales taxassistance under Measure B. Approved by the voters ofAlameda County, Measure B provides for the collectionand distribution by the Alameda County Transportation

17


20/28


Authority of a one-half cent transactions and use tax.The District is authorized to receive 11.617% of theannual tax collected under the condition (among others)that the money be used for operations and maintenanceexclusively in Alameda County. Funds totaling$5,950,000 were received and recorded as nonoperatingrevenues for the year ended June 30, 1988.

7. Federal Operating AssistanceThe District was allocated $6,869,000 and $7,500,000 offederal operating assistance and $92,000 and $215,000 offederal planning assistance for the years ended June 30,1988 and 1987, respectively. These funds are distributedto the District by UMTA after approval by MTC.

8. capHaIDIstrict Equity - The Board of Directors hasauthorized the designation of portions of Districtequity to indicate tentative plans for utilization ofDistrict funds in future periods for the replacement offacilities and equipment and other expenditures, asfollows (in thousands):

Amounts designated -Self-Insurance RetentionWorking Capital FundTotal

June 30,1988$ 4,0007,763$11,763

Designated funds are to be used for the followingpurposes: Self-Insurance Retention - To provide funds foruninsured losses, including the deductible portion ofinsured losses. Working Capital Fund - To provide sufficient fundsto meet the District's operating requirements forapproximately one month. District managementdeems this designation to be prudent due to theuncertainty relating to the timing of receipt of publicoperating assistance funds.Such designations are subject to change at the discretionof the Board and may not result in expenditures.

18

9. Pension PlanPlan Description - All permanent District employeeparticipate in the Alameda-Contra Costa TransitEmployees' Pension Plans (the Plans). The Plans consisof three noncontributory single-employer-definedbenefit retirement plans, one for all union employeesand two that provide similar benefits for nonunionemployees. The Plans are administered by a pensionsystem board composed of individuals appointed bythe District or designated by the Amalgamated TransitUnion. The District's payroll for employees covered bythe Plans for the year ended June 30, 1988 was$69,592,000.All full-time employees are eligible to participate in thePlans. Benefits vest after 10 years of service. Districtemployees who retire at or after age 55 with 10 years ocredited service are entitled to an annual retirementbenefit, payable monthly for life, at a rate based uponthe employees' ages, their average salaries during theirlast five years of employment and their completedyears of service witli the District. The rate increasesincrementally from a low of 11.5% for certain employeewho retire at age 55 to a high of 56% for certainemployees who retire at age 65 or older. The Plans alsoprovide death and disability benefits. These benefitprovisions and all other requirements are establishedby the District.Summary of Significant Accounting Policies andPlan Asset MaHers - Annual expenses for pensioncosts are based on percentages of gross payroll, whichinclude the normal cost of the Plans plus amortizationof prior service costs over a period of 40 years. TheDistrict funds pension costs as the expense is accrued.Investments equal to the annual expense for pensioncosts are restricted by the Board of Directors to providfor the future payment of pension benefits. Theseinvestments are included in the cash and investmentpool managed by the District (see Note 3 - Cash andInvestments). The District intends to transfermanagement and control of the pension plan and therelated assets to an independent trustee and investmenmanager.


21/28


Funding Status and Progress - The amount shownbelow as the pension benefit obligation is astandardized disclosure measure of the present value ofpension benefits, adjusted for the effects of projectedsalary increases and step-rate benefits, estimated to bepayable in the future as a result of employee service todate. The measure is intended to help users assess thefunding status of the Plans on a going-concern basis,assess progress made in accumulating sufficient assetsto pay benefits when due, and make comparisonsamong employers. The measure is the actuarial presentvalue of c.redited projected benefits and is independentof the funding method used to determine contributionsto the Plans.The pension benefit obligation was computed as part ofan actuarial valuation perfomed as of January 1, 1988.Significant actuarial assumptions used in the valuationinclude (a) the projected unit credit method ofdetermining the District's pension benefit obligation,(b) a rate of return on the investment of present andfuture assets of 8.5% a year compounded annually, (c)projected salary increases of 4.5% a year, and (d) theamortization of unfunded prior service costs over a 40-year period. The District's previous actuarial valuationwas as of January 1, 1986 and used the en try agenormal actuarial method for determining pensionbenefit obligation and the District's contributionrequirements, as described below.Total unfunded pension benefit obligation applicable tothe District's employees was $10,011,000 at January 1,1988, as follows (in thousands):

Pension benefit obligation - vestedPension benefit obligation - nonvestedTotal pension benefit obligation

Net assets available for benefits, at cost(which approximates market)Unfunded pension benefit obligation

$92,00010,055102.05592,044

$ 10,011

Actuarlally Determined Contribution Requirementsand Contribution Made - The Plans' funding policyprovides for actuarially determined periodiccontributions at rates that, for individual employees,increase gradually over time so that sufficient assetswill be available to pay benefits when they are due.

The District's contribution rates for the two yearsended June 30, 1988 for union and nonunion employeegroups were 11.26% and 15.87%, respectively, of theapplicable covered payroll.Pension expense and District contributions to the Planstotalled $8,222,000 and $8,074,000 for the years endedJune 30, 1988 and 1987, respectively. The 1988 and 1987expense and contribution were determined inaccordance with the entry age normal method ofdetermining contribution requirements based on theactuarial valuation performed as of January 1, 1986.Effective July 1, 1988, the District changed from theentry age normal method to the projected unit creditmethod for determining future pension expense andcontribution requirements. The effect of this change inactuarial method will be to decrease pension expenseand District contributions to the Plans by an estimated$3,900,000 for the year ended June 30, 1989.Ten-Year Historical Trend InformaHon - Ten-yearhistorical trend information for employer contributionsto the Plans, interest income and benefit paymentsdesigned to provide information about the District'sprogress made in accumulating sufficient assets to paybenefits when due is presented in supplementarySchedule A to these general purpose financialstatements.

10. Early RetIrement PlanDuring fiscal 1988, the District offered an earlyretirement plan to certain employees who reached age50 years and had at least 20 years of service with theDistrict. In accordance with Statement of FinancialAccounting Standards No. 74, the District recorded$7,766,000 as expense during the year, representinglump sum payments for benefits not previously earnedor accrued and the present value of the increasedpension benefits given to those employees acceptingearly retirement. It is management's opinion that futurpayroll savings resulting from the early retirement planwill be in excess of the additional early retirement plancosts recognized during the year ended June 30, 1988.

19


22/28


District until paid or made available to the participants,subject only to the District's general creditors.Participants' rights under the deferred compensationplan are equal to those of general creditors of theDistrict in an amount equal to the fair market value ofthe deferred account for each participant. The Districtis not liable to the participants for any loss frominvesting of the funds as long as the District exercisesits obligation in good faith. The deferred compensat ionplan administrator, the Hartford Insurance Group, hasinvested the deferred amounts in numerous participantdirected, uninsured investments.12. capital Lease and Long-Tenn Debt ObllgaHonsIn July 1987, the District sold its administrative officefacilities to a financial institution and commencedleasing these facilities over a 20-year period. This leaseis recorded as a capital lease in the District's balancesheets for the years ended June 30,1988 and 1987. Leasepayments totaled $170,000 in fiscal 1988.In July 1988, AC Transit Financing issued $18,570,000 ofcertificates of participation .(certificates) at interest ratesvarying from 5.10% to 8.00%. The certificates mature ininstallments over a 3O-year period beginning July 1,1989 and ending July 1, 2018. The net proceeds from thesale of the certificates were used to acquire the District'sadministrative office facilities. The remaining bondproceeds were deposited in a reserve fund or were usedto pay issuance costs. The District began leasing theadministrative office facilities from AC Transit Financingat a cost equal to AC Transit Financing's annual debtservice requirements.Interest on the certificates is payable semiannually onJanuary 1 and July 1 of each year. Principal repaymentsare made when each installment matures on July 1. ACTransit Financing's debt serVice requirements totalapproximately $1,630,000 yearly until final maturity in2018. Certificates maturing on or after July 1, 1992 aresubject to redemption at the District's option at anytime on or after July 1, 1991.The District leases certain data processing equipmentcosting $925,000 under capital leases. These leases expirein fiscal year 1991.

20

Future minimum lease payments under capital leasesfor data processing equipment are as follows (inthousands):Year EndingJune 30

1 ~ 9 $U61990 U61991 189Toial minimum lease payment 641Less - Interest, at variable rates 77

Net

In April 1988, the District entered into a leaseagreement with Santa Clara County Transit District(Santa Clara) to lease, with an option to purchase atbook value, 30 articulated motor coaches. The termof the lease was for six months commencing in April.Lease payments totaling $72,000 were made to SantaClara dur ing fiscal 1988.On October 1, 1988, the lease agreement was extendedfor another six months under the same terms. It is theintent of management to purchase the motor coachesupon approval of the Urban Mass TransportationAuthority (UMTA) in order to transfer UMTA fundingof these motor coaches from Santa Clara to theDistrict. The net book value of the motor coaches isestimated at $5,762,000. Approximately 80% of the costsof the motor coaches would be funded through thetransfer of UMTA funding from Santa Clara to theDistrict. The District has applied for state toll bridgefunds to finance the remaining 20% cost of the motorcoaches. The motor coaches have an estimatedremaining useful life of seven years.

13. UtlgallonThere are claims and litigation pending, which areconsidered normal to the District's operation of thetransit systems. The District maintains insurancecoverage for such incidents, and provision has made inthe financial statements for estimated losses under thedeductible limits of insurance policies.The District is self-insured for public liability damageclaims up to $1,000,000 and workers' compensationclaims up to $250,000 per occurrence. Insurance policesprovide coverage in excess of the self-insured retention,with a $25,000,000 limit for public liability and propertydamage and a $2,000,000 for workers' compensation.


23/28

SCHEDULE A

ALAMEDA-CONTRA COSTA TRANSIT DISTRICTEMPLOYEES' PENSION PLANSSUPPLEMENTARY SCHEDULE OF REVENUES BY SOURCEAND EXPENSES BY TYPE(In Thousands)

Cash andInvestmentsRestricted forExpenses PaymentotRevenues by Source by Type Net AccruedIncrease Pension CostsFiscal Employer Investment .. em to Plan Balance,Year Contribution Income Total Payments Assets End of Year1979 $5,583 $1,446 $ 7,029 $1,609 $ 5,420 $18,3661980 6,280 2,738 9,018 1,959 7,059 25,4251981 6,942 4,267 11,209 2,189 9,020 34,4451982 7,741 6,190 13,931 2,538 11,393 45,8381983 6,482 5,418 11,900 2,844 9,056 54,8941984 5,009 5,943 10,952 3,235 7,717 62,6111985 5,134 6,888 12,022 3,772 8,250 70,8611986 5,280 6,784 12,064 4,197 7,867 78,7281987 8,074 5,616 13,690 4,794 8,8% 87,6241988 8,222 7,260 15,482 5,641 9,841 97,465


24/28

SCHEDULE B

ALAMEDA-CONTRA COSTA TRANSIT DISTRICTSCHEDULE OF REVENUES AND EXPENSESEXCLUDING DEPRECIATION AND AMORTIZATION AND NONRECURRING ITEMFOR THE YEARS ENDED JUNE 30, 1988 and 1987 (I n Thousands)

Revenues: FaresContract serviceOperating assistance -Property taxes

Local sales taxLocal transportation fundsFederalState Transit Assistance Fund

Interest income, net of amounts allocated topension funds

Other operating revenuesTotal revenues

Expenses: Operator wagesOther wagesFringe benefitsFuel and oilOther materials and suppliesServicesInsuranceInterest expenseOther

Total operating expenses, excluding depreciationand amortization

Net income (loss), excluding depreciationand amortization and nonrecurring item

22

1988 1987$ 30,676 $ 32,216

13,472 13,10921,644 18,16721,188 16,40025,424 24,5056,961 7,7151,048 4341,154 1,0731427 690

122994 114309

37,439 36,65822,842 22,44834,166 33,672

4,413 3,7447,430 8,7176,242 5,3994,282 4,1931,761 733734 4198

122,309 119102$ 685 (4793)


25/28

Drivers'Honors. Louella Delaney, top overallscorer in the annual in-houseRoadeo, poses with her trophyand her fellow winners, past an dpresent: William Gamlen (secondfrom right), 1987 AC Transitwinner; Jesse Cruz (left), 1987

Regional winner; and HarryKurz, this year's third-placefinisher. Taking second-placein this latest Roadeo wasDan Hoile, Sr.Louella Delaney, is firstwoman to top the listin AC Transit Roadeohistory

23


26/28


27/28


28/28

ALAMEDA-CONTRA-COSTA TRANSIT DISTRICT1600 Franklin Street, Oakland, California 94612-2806

AC Transit Annual Report 1987-1988

Documents

Transcript of AC Transit Annual Report 1987-1988