AC Transit Annual Report 1986-1987

8/14/2019 AC Transit Annual Report 1986-1987

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Fiscal Year 1986-87 proved to bedemanding and productive asAC Transit's Directors,

management and staff worked toadapt state-of-the-art facilities an dtechniques to th e task of meetinglong-standing challenges -maintaining on-street service whilecoping with th e harsh economicrealities of th e mid-1980's.Accomplishments of note included:

Completing majormodernization at two of th eDistrict's four bu s operatingfacilities.

Achieving significant advancesin strategic planning effortsaimed at modernizing th e totalEast Bay bu s service network toinsure greater marketpenetration in years to come.

Expanding previous public- an d

governmental-relationsprograms to establish ne walliances with elected officialsan d opinion leaders at th elocal, regional, state an dnational levels.

Helping in the successfulpromotion of a local Alamedacounty sales tax ballot measuretailored, in part, to fund busservice improvements over th enext 15 years.

Introducing ne w in-houseclasses with up-to-date trainingaids, to achieve greaterproductivity from bu s drivers,maintenance an d supportworkers.

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Planning for the future

I n FY 1987, as the District'sdecade-long facilitiesreconstruction progra m

approached its end, AC Transitfocused additional attention andenergy on identifying actions tomaximize productivity of greatermetropolitan East Bay bu sservice.

An expansive study identifiedvarious major commute corridorswithin (or immediately adjacentto) th e service area as toppriority prospects for majorimprovements in the 1990's. Suchupgrading is necessary becauseof the explosive expansion ofne w suburban growth centersthroughout Alameda an d ContraCosta counties.

In the Bay Bridge corridor,current transportation modes

(including bu s an d rail) alreadyserve very heavy demand -more than 200,000 daily passengertrips - yet congestion remainssevere. Similar conditions prevailin corridors paralleling th e EastBay's interstate highways. ACTransit plans to help meetgrowing demand in suchcongested areas by introducingtransportation mitigationmeasures, such as ne w servicesan d improvements to existingnetworks.

This year, the District madeconsiderable strides in definingth e long-range strategic policiesthat will guide development ofthese additions an d adjustments.Additionally, considerableattention was directed to refiningth e shorter-range Compre hensiveService Plan (CSP) - an ambitiousproject that will streamline an d

modernize existing bu s servicenetwork to meet 1990's needs.The CSp, tantamount to a totaloverhaul of th e system's routesan d schedules, is tailored toimprove mobility options forcurrent riders while attractingne w patrons.

Ridership totals remainedrelatively stable during this year;th e System moved nearly 70million passengers. But animportant shift became apparentwhich impacts th e District'sfarebox recovery ratio. Transbayridership declined slightly whilelocal usage went up. An d th eincrease was in youth, seniorcitizens, an d disabled riders - allof whom pay substantiallydiscounted fares. For th e firsttime in its history, more than halfof th e District's local riders werepaying d iscounted fares.


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Regional cooperation

Again this year, th e East

Bay's public bu s systemplayed a leading role in

improving inter-system coordination within th e Bay Area. The AC tBART Plus, the region's newestinter-system fare instrument, wasintroduced in February. A flashpass on local buses , the ne w cardalso is valid , within limits , on th eregional rail system.

AC Transit also lentencouragement and support toregional activities marking th e50th anniversary of the Oakland-

Sa n Francisco Bay Bridge -

which opened officiallyNovember 12, 1937, an d since ha sbeen a vital link in the busservice network . Bus riders alsojoined in the salute. During thecommemorative "Bridge BuildersDinner;' held midway across th espan at Treasure Island, a regulartransbay commuter participated,representing th e 750 millionpassengers wh o have utilized ACTransit (and predecessor, KeySystem) to cross th e Bay Bridgesince bu s service was introducedto the span half a century ago.


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Facilities up-date

While bulldozers movedin to begin totalreconstruction of

aging Richmond Division (builtshortly after World War II), th etransit workers assigned to th eEmeryville an d Haywardoperating yards were adapting tototally ne w facilities.

Hayward Division, ACTransit's newest, beganoperations in September,absorbing bu s service schedulesdispatched since 1974 from asmaller Newark site an d alsosome activities of long over-taxedEast Oakland Division. Thenewly completed operationalcomplex shares a 23-acre sitewith state-of-the-art Training an dEducation Center, opened lastyear.

Hayward Division housesabout 550 employees wh o

operate more than 200 busesserving riders in central andsouthern Alameda County, partsof Santa Clara an d Contra CostaCounty, as well as commuterstraveling transbay to an d fromSa n Francisco and Palo Alto.

The $21 million Division isfully equipped with the latestexample of coach operation/maintenance technology:computerized destination signprinting; an d fast, powerful bu svacuuming an d washingequipment.

In Emeryville, near the hu bof AC Transit's metropolitanservice area, th e District'sOperations personnel made ahistoric move - less than 1,000feet in distance, bu t representinga dramatic leap from a 1930's-

style facility to a 1980's-modernbuilding. The ne w Operationssite opened in September - a14,000 square foot structurewhich also houses the District'sradio room and Central Dispatchfunction. Construction of a newmaintenance building, automatedfuel islands, bu s washer an dpowered vacuuming systems alsoare included in this extensive $24million revamp.

AC Transit's administrativean d support personnel movedalso - vacating crowded,inefficient quarters in Oakland'sLatham Square Building afternearly a quarter of a century. InJune, 1987, AC Transit's ne waddress became 1600 FranklinStreet - just on e block from theformer offices. The new 10-storystructure houses most Districtsupport functions, including:executive offices, finance, legal,

payroll, personnel an d a spaciousne w Customer Services Office,welcomed by patrons.

Located on District-ownedland near many of AC Transit'smainline bu s routes, the newbuilding was designed an d builtto District specifications throughth e use of private-sector capitalrather than public funds.


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Through an innovative long-ter mlease/purchase agreement, title toth e structure eventually will beacquired by th e District.

The District's ambitiousFacilities Master Plan, begun inth e late 1970's, also includesreconstruction of an agingoperating yard in East Oaklandan d th e creation (completed lastfiscal year) of a ne w CentralMaintenance Center, also in EastOakland, where heavy bu smaintenance an d componentremanufacture is performed.Central Maintenance also ishome now to AC Transit's newlycomputerized purchasing an dwarehousing functions.


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competition in Detroit - registering 640 ou tof a possible 650 points in this tough test ofat-the-wheel skills, job knowledge an dprofessional appearance.

Since AC Transit no w has an off-roadbu s driving course (at Training an dEducation Center in Hayward), th e Districtwas able for th e first time this year to inviteamateurs to try their hand at Bus Roadeostyle competition. As "Bus Drivers forA Day:' some local elected officialsand retired athletic starsjoined members of th enews media in a dayof mock competition.In addition topositive press, this

event yielded closerties and cooperationwith local cityofficials.


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8

Training for the future

Increasing numbers of

employees are going ''backto school" at AC Transit as a

sweeping array of educationalan d job-training programs arebeing introduced . To get th emost ou t of state-of -the-artsystems an d equipment beinginstalled throughout th e District,AC Transit must also build acadre of well trained personnel.Thus, human resourcesdevelopment remains a highpriority effort.

Operations an d maintenance

personnel, for example, areparticipating in a course titledProductivity an d SupervisorySkills, tailored to improve peoplemanagement. And in conjunctionwith a local university, th eDistrict sent 40 managementemployees to a five-month coursetitled Developing FrontlineLeaders - which focused on th ephilosophy of good managementan d th e day-to-day aspects ofmotivating and managing people .

With assistance from privatesector maintenance trainingexperts, AC Transit developedcomprehensive in- house studycourses to insure that bus repairworkers ca n maintain an dimprove their on-the-job skills.Thus, th e Training an d EducationCenter offers in-depth instruction,

at beginner an d advanced levels,

in the fine points of repairingengines, transmissions, an d otheron-board operating an d safetysystems .

AC Transit also undertookproduction of a training programto increase employees' sensitivityto the needs of elderly an ddisabled passengers. Incooperation with th e WorldInstitute on Disability (ofBerkeley), th e District is creatinga comprehensive training packagefor application within the systemas well as distribution to othertransit agencies which share inAC Transit's concern aboutimproving service to this specialsegment of th e riding public.


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BALANCE SHEETSJUNE 30, 1987 an d 1986 (In Thousands)

ASSETS NOTES

C a s! ,~an i investments ~~ ' ~ _ ~ = ~ " : :Accounts r e ceivable a I \ a~a c c r U ea revenues :

Federal grantsOther, princip'all X state and local ass ::;s:a;::;;::;e:;:;:;;;::::-:::::;::-:::::;:======

Materials and s,!pp l i es", at c o~s: : : :t = = = = = = = ~ = = = = = = ;Pre aid ~ e n~s e~s' w ; ; ; ; - ; ; ; ; : ;-;;;;;,;,= = = = = = = = = = = = = = = : ' : =

TotalCilrrent assets~ ~

1987

Deferred Compensation Plan Investme :::::nt s: : : ; ; ; ; ; ; ; ; = = = = = = = = : : : : : : : : ,9

Cash an d Investments Restricted for

2,497

~ y m e n tof Accrued Pension Costs . , 87,624

Properly,Plant andEquipment:

Land 11,398= = = = -=5,839

R e v e n u e~ 1 ! i pm e n t ~ ; ; ; ; ~ _ ~= = : := - = = = = - = = = = = =104,818Shop, Q[!igt a n d other ~ 1 ! i : E m . e n t a n dservice v ehicleS 30,783Acquisitions i i 1p ' r o~ ~ 16,356

Totalproeerty, plant an d eguiement 239,194Accumulated depreciation ( 6 7 , 7 ~ ! l )

Prgg;m', plant and ~ l E! !e n t- ~ 7~_, 4_3 4_ ' _ '~

TOTAL $303,013

LIABILITIES AN D CAPITALi i m _ * ] w ~ ~

C u r r~ r u ..R0 r t i o nof cap'ita[ le aseobli gationsA c c o u ~ ts ~p a y a b l e~ = ~ ~ ; ; ; ; ; - = = = = = = = = = = = = = = ;;;!Salariesd:yages and vacationsOther accrued l i~b i l i t i e s==:: : := = = = = = = = = = = = = = : : ; ; ; ; ; ;AdVances under .8 !; :a n; ; ;t~s ; ; . , ~ == == = = ; ; : ; = , - ; ; ;= = = =: : , , = =: : : ; ; ; : : -

337

c==

1986

2,052

$279,96

$ 3,406~0

2~5

,< _ _4 , 7;2S e~ u ra n c el i ab i I i t i e ~ :;:c"';;;;=='-

Workers' comyensation 5,0204;71'7

===;::;;Public liability and p'roperty damage

Totc_ _ urrent liabilitIes '= = = = 2,3,966

2,497 2,9?

A!?crued Pension C9sts

Capital &ease O b l l g a t l o n ~= = -

8

10

~~ ? , 5 J 2 4= =~ ~7~8 ': f716,148

Capital: District equ i i~tJ Y~ ~ 7 == == = = = = = = =; ; ; = = ~,=7= = = = =..,.::2::,::1=3=3=3~ = = = : .; ; E2=8L~9=4Contributed capital ;: ~ = = = = = = = = = = = = = = = =~ M

Federal g r a~n t s~ : : : : : : : : : ; ; = ' 7 = ~ = = = = = = = = = = = = = = :109,331State toll bridge funds 26,98'7~Q C a ! J I !J ; l ~ R Q r ta t i Q ! ! l ! ! r u ! 15;12'7 = = : :,,= ~

T O~ C l ! , i t a i " J 72,778- -~ = = = = = = =TOTAL $303,013 $279,96

See notes to general purpose financial statements.

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STATEMENTS OF REVENUES AND EXPENSESFOR THE YEARS ENDED JUNE 30, 1987 an d 1986 (In Thousands)

NOTES 1987 1986

Revenues: Fares 32,216 $ 30,53P r~ E e r t y t'2 i :a x=e~s : : = : ; : : = = = = : ; ; ; ; ; ; ; ; ; ; = = = = = : : : , = = = = . : = = =

~ ~ ~Co n t r a c{ service18,167 16,36

13,109 12,17=;;; ; . ,== Other o p e r a t i nc g =r e:: ;.;v~e=n u=e= =s= = = = = ~ = = : : = : ; : : = ~

Operating a s s i s t a~ _ . ,6690 79

. Local sales tax (AS 1107 1 B 2551) ~ 1 0 , 828,048!252,26

Local ~ p o r t a t: : ;i o; ani . .f=u: ; :n:d s~ = = = = ; ; ; , . ~ = = = = = = : : = : ; : : ~FederalState tr a nsit Assi stance Fu n d

" " " " " " " ~ -= = = = ni"e,,;e;s:::.: e ~ ! l le d ,less amounts a U o c a~ d to 'penSion funds . 2,J1

TQLAL 1 1 4 , 3 0 9~ 1 1 1( 3

Expenses: 36,658 34,3222,448 20,583 3 ~ i 2 29,61

3,744 5,128[ 717 8,845,399 .4,574,193 4,774(271_ 3~

c : : : : : : : = ~O t h e rmaterials a nd s u p~p::;:;l i:;::;e s= . . . = = = = = = = = = = = = = =~ ~ ~ = = = =Services

= = = = =~ = = = ~ ~ ~ ~ : = = = = - = = = = = = = = = . : = = = = =Insurance11;;;;;;::::=;;;;;;

Other

1 0 f A L 119102 111 (11

= =~ e J . s~ e v e n u e s ( E ~ n s e s }Before

D e l ? r ~ c ! a t l q n

t 4,793) 2214,460 12,40

Excess of Exeenses an d DeRreclatlon Over Revenues I (19,253) $ {12,18


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STATEMENTS OF CHANGES IN CAPITALFOR THE YEARS ENDED JUNE 30, 1987 an d 1986 (In Thousands)

CONTRIBUTED CAPITAL

STATE LOCALDISTRICT FEDERAL TOLL BRIDGE TRANSPORTATION

NOTES EQUITY GRANTS FUNDS FUNDS TOTAL

Balance, June 30 , i985 ~ P~ ~ 3r : 3 2 2 $11,755 $150;900~ _ . ------

Excess of expenses an ddepreciation over revenues

(12,182) (12, ).82as restated) 7

Depreciation Expense ofcontributed "'assets transferredfrom District equity tocontributed capital (as restated) 7 9(808 (7,129) (2,053) ~ 2 6 )

Capital grant funds earned 4 26,975 6,875 769

Balance, June 30, 1986pp(as restated) 7 106,232 173,33

Excess of expenses an ddepreciation over revenues (19,253) (19,253)

Depreciation Expense ofcontributed assets transferredfrom District equity tocontributed c ~ p i t a l 11[638 _ i 8 ~ g 3 8 ) (2,251) (1,349)

Capital grant funds earned 4 2,979 4,578 181 694

Balance, June ~ 1987 21(333 109(331M l J n l l l . l ' ~ ,

26(987 15(127 172(778_ . _ ""'"


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STATEMENTS OF CHANGES IN FINANCIAL POSITIONFOR THE YEARS ENDED JUNE 30, 1987 an d 1986 (In Thousands)

1987 1986

Cash Provided (Used) by Operations:Excess of expenses an d depreciation over revenues $ (19,253) $ (12,182)Depreciation 14,460 12,402Changes in working capital:

Receivables 7,614 (1,668)Other current assets 218 (2,758)Accounts payable 61 (1,154)Salaries, wages an d vacations 676 286Other accrued liabilities 233 352Self-insurance liabilities 584 3,922

Cash provided (used) by operations 4,593 (800)

Cash Provided by Capital GrantsCapital gt:ants 18,694 34,619Changes in working capital:

Receivables 3,679 490Advances under grants (3,771) 1,895

Cash provided by capital grants 18,602 37,004

Cash Used For Investment Activities:Property expenditures (20,038) (35,078)

Cash and Investments:

Increase for the year3,157 1,126

Balance, beginning of year 18,767 17,641

Balance, End of Year $ 21,924 $ 18,767


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ALAMEDA-CONTRA COSTA TRANSIT DISTRICTNOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS

1. Organization an d Basis of PresentationDescription of Reporting Entity - AlamedaContra Costa Transit District (the District) is apolitical subdivision of the State of Californiaestablished in 1956 an d subject to transit district lawas codified in the California Public Utilities Code.

For financial reporting purposes, the District'sgeneral purpose financial statements include allfinancial activities that are controlled by ordependent upon actions taken by the District's Boardof Directors. As such, the general purpose financialstatements include th e financial activities of th eDistrict's Special Transit Service Districts No.1 and

No. 2 and other areas in which the District ha scontracted to provide transit service.

The general purpose financial statements exclude thefinancial activities of th e District's pension anddeferred compensation fiduciary funds. These plansare governed by boards independent of the District'sBoard of Directors. As such, only the plans' assetsand offsetting fiduciary liabilities are reported in theDistrict's balance sheets.

2. Significant Accounting Policies

Investments - are stated at cost or amortized cost,except for investments of the deferred compensa tionplan which are stated at current (market) value.

Property, plant an d equipment - is stated at costand depreciated using th e straight-line method overthe following estimated useful lives:

Buildings, structuresan d improvements

Revenue equipmentShop, office and other

equipment an d service

vehicles

20 to 30 years12 years

3 to 10 yearsSeH-lnsurance Liabilities - The District is selfinsured for public liability an d property damage upto $2,000,000 and workers' compensation claims upto $150,000 for each occurrence. Claims in excess ofthese amounts are insured with commercial carriers.The District accrues, in each period, liabilities for th eestimated costs of the self-insured port ion of claims.

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Contributed Capital - 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 th eacquisition of buses and other equipment an dimprovements. Capital grant funds earned, lessamortization equal to annual and accumulateddepreciation of the related assets, are included incontributed capital. Advances received on capitalgrants are recorded as liabilities until the funds areexpended for capital acquisitions.

Pensions - The District has two noncontributory

pension plans, one for all union employees an danother providing similar benefits for nonunionemployees. Annual expenses for pension costs arebased on percentages of gross payroll which includethe normal cost of the plans plus amortization ofprior service costs over a period of no t more thanforty years. The District funds pension costs asaccrued. Cash and investments equal to the annualexpense for pension costs are restricted by th e Boardof Directors to provide for th e future payment ofpension benefits. The District receives an actuarialvaluation for each plan every three years. TheDistrict's policy is to amortize any over- or underaccrued expenses for pension costs over the periodto the date of th e next actuarial valuation.

Property Taxes, Collection and Maximum Rates- The State of California (State) Constitution ArticleXIII A provides that th e general purpose maximumproperty tax rate on any given property may notexceed one percent of its assessed value unless anadditional amount for general obligation debt hasbeen approved by voters. Assessed value iscalculated at 100 percent of market value as definedby Article XIII A an d may be adjusted by no morethan two percent per year unless th e property issold or transferred. The State Legislature hasdetermined th e method of distribution of receiptsfrom a on e percent tax levy among th e counties,cities, school districts and other districts, suchas th e District.


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Notes to Financial statements cont.

Alameda an d Contra Costa Counties assessproperties, bill for, collect, and distribute propertytaxes. Property taxes are recorded as revenue orcontributed capital (for improvement allowancecapital grants as determined by management), asappropriate, an d receivables, net of estimateduncollectibles, in the fiscal year of levy.

Operating assistance grants - are accrued asrevenue in the period to which the grant applies.

Contracted Services - The District has contractedto provide transit service for the Bay Area RapidTransit District (BART) an d several cities an d other

areas in Contra Costa County. The allocated cost ofproviding such service, less related operatingrevenue, is funded from local transportation funds,federal operating assistance and, for BART expressservice, by direct reimbursement which is recordedas contract service revenue.

3. Cash an d InvestmentsThe District maintains a cash an d investment poolthat is available for general use and is used for thefunding of the pension plan.

Deposits - At June 30, 1987, the carrying amountof the District's time an d demand deposits was$23,810,000an d the bank balance was $26,638,000.Ofthe bank balance $1,638,000was insured by federaldepository insurance or collateralized by securitiesheld by the District's agent in the District's namean d $25,000,000was "uninsured an duncollateralized" as defined by GovernmentalAccounting Standards Board Statement No. 3"Deposits with Financial Institutions, Investments(including Repurchase Agreements), an d ReverseRepurchase Agreements". As required by Section53652 of the California Government Code, the

pledging financiaI institutions have collateralized110% of such "uninsured an d uncollateralized"deposits with securities; such collateral, however, isnot in the District's name.

Included in "Deposits" is an $8,000,000certificate ofdeposit which the District maintains in an escrowaccount related to a lease agreement (see Note 10).

Investments - Statutes authorize the District toinvest in obligations of the U.S. Treasury, its agenciesan d instrumentalities, commercial paper rated A- I

. by Standard & Poor's Corporation or P-l by Moody'sCommercial Paper Record, bankers' acceptances,repurchase agreements, an d the State Treasurer'sinvestment pool. The District is also authorized toenter into reverse repurchase agreements. TheDistrict did not enter into any reverse repurchaseagreements during 1987 or 1986.

The District's investments are categorized below togive an indication of the risk assumed by the Districtat June 30, 1987. Category 1 includes investmentsthat are insured or registered or for which thesecurities are held by the District or its agent in theDistrict's name. Category 2 includes uninsured andunregistered investments for which the securitiesare held by the broker's or dealer's trust departmentor agent in the District's name. Category 3 includesuninsured an d unregistered investments for whichthe securities are held by the broker or dealer, or byits trust department or agent but not in the District'sname .

. . . . . . . . . . . . . (In Thousands) . . . . . . . . . . . . .. . . . . . . Category . . . . . . . Carrying Market

1 2 3 Amount ValueCommercial paper $18,500 $ 18,500 $ 18,500U.S. Government

securities 49,289 49,289 47,913Bankers' acceptances _ _ ~ _ __ $7,043 7,043 7,043Total ___ $67,789 $7,043 74,832 73,456TlIIle and demand

depositsMutual funds

U.S. governmentsecurities moneymarket fund

Deferred compensationplan investments(Note 9)

Total

23,810 23,810

10,906 10,906

2,497 2,497$112,045 $110,669

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Reported asCash and investments(included in current

assets)Cash and investments

restricted for paymentof accrued pensioncosts

Deferred compensationplan investments

Total

4. Capital Grants

$ 21,924

87,624

The District has eight grant contracts in process withUMTA which provide federal funds for theacquisition of buses an d other equipment an dimprovements. These grants are summarized at June30, 1987 as follows (in thousands):Total approved

pro ject costsTotal approved federal fundsLess :Amounts rece ivedAmounts receivable - net

$ 99,982

$ 79,458

(49,689)

Remaining amoun tavailable underfederal grants

(745)

The District is committed to purchase additionalequipment at a cost of approximately $20,746,000inconnection with these projects.

Under the terms of the grants, proceeds fromequipment sold are refundable to the federalgovernment in proportion to th e original federalcapital grant funds.

The District has also received allocations of fundsgenerated from net toll bridge revenues of the SanFrancisco Bay Bridge. These funds are receivedunder provisions of th e California Streets an dHighways Code and are allocated based on claimsapproved by the Metropolitan TransportationCommission (MTC) .

Local transportation funds received for capital grantprojects include allocations received pursuant to th eTransportation Development Act of 1971, certainproper ty tax revenues, an d certain local sales taxfunds.

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5. State and Local Operating AssistanceThe District receives state and local operating

assistance from two principal sources. TransportationDevelopment Act funds of $24,505,000 an d$28,043,000were allocated to th e District for th e yearended June 30, 1987 and 1986, respectively. Thesefunds are received from Alameda and Contra CostaCounties to meet, in part, th e District's operatingrequirements based on annual claims filed by th eDistrict and approved by MTC. State TransitAssistance funds of $434,000 an d $2,456,000 wereallocated to th e District for the years ended June 30,1987 and 1986. These funds are received directlyfrom MTC based on the ratio of th e District's transitoperation revenue and local support to the revenueand local support of all state transit agencies.

6. Federal Operating AssistanceThe District was allocated $7,500,000an d $7,956,000 ofederal operating assistance, an d $215,000 and$294,000 of federal planning assistance for th e yearsended June 30, 1987 and 1986 respectively. Thesefunds are distributed to th e District by UMTA afterapproval by MTC.

7. CapitalDistrict Equity - The Board of Directors hasauthorized the designation of portions of Districtequity to indicate tentative plans for utilization ofDistrict funds in future periods for th e replacementof facilities an d equipment and other expenditures,as follows (in thousands) :

Amounts deSignated :Restricted FundSelf-InsuranceRetention

Building FundWorking Capital Fund

Total

June 31987

$ 52

4,008,008,80

$21,33

Designated funds are to be used for the followingpurposes:

Restricted Fund - To provide for unusual or otherwise necessary expenditures for repair,improvements to or replacement of essentialelements of the District's facilities or for operatingrequirements.


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Sen-Insurance Retention - To provide funds foruninsured losses, including the deductible portion ofinsured losses.

Building Fund - To assist in meeting th e District'spotential financial requirements associated with thepurchase, construction or rehabilitation of a buildingto provide adequate permanent accommodations forthe District's general offices consistent with theMaster Facilities Improvement Program. These fundshave previously been designated by the Board to beused for the construction of a general office facility.

Working Capital Fund - To provide sufficient

funds to meet the District's operating requirementsfor apprOximately one month. District managementdeems this designation to be prudent due to th euncertainty relating to the timing of receipt of publicoperating assistance funds.

Such designations are subject to change, have no tbeen legally authorized an d may not result inexpenditures.

Restatement of 1986 Amounts - During the yearended June 30, 1987, th e District determined that1986 depreciation expense was overstated by

$4,574,000. As a result, certain 1986 amounts havebeen restated from those previously reported, asfollows (in thousands):

Depreciation expenseExcess of expenses anddepreciation over revenues

Depreciation expense ofcontributed assets transferredfrom District equity tocontributed capital:District equityFederal grantsState toll bridge fundsLocal transportation funds

As

PreviouslReErte

$16,976

(16,756)

13,425

(9,769)

(2,813)

(843)

Adjustments

$(4,574)

4,574

(3,617)

2,640

760217

As

Restated

$12,402

(12,182)

9,808

(7,129)

(2,053)

(626)

8. Pension PlanAll permanent District employees participate in theAlameda-Contra Costa Transit Employees' PensionPlans (the Plans). The Plans are single employerdefined benefit retirement plans administered by apension system board composed of individualsappointed by the District or designated by theAmalgamated Transit Union. The Plans provideretirement, disability and death benefits based onemployees' age, years of service and average of fivefinal years compensation. Employees vest after tenyears of service an d are eligible to receive retirementbenefits commencing at age 55.

Totalpension expenses for

th eyears

endedJune

30,1987 and 1986 were $8,074,000 and $5,280,000,respectively, plus allocations of $5,616,000 an d$6,784,000 of interest earned on Plan investments,respectively. Benefit payments for th e year were$4,794,000 (1986, $4,197,000). The pensioncontribution includes amortization of the unfundedliability through th e year 2015.

The actuarial present value of accrued benefits forth e Plan is determined by the Plan's actuary and isthat amount that results from applying actuarialassumptions to adjust accrued benefits to reflect th e

time value of money.

The most recent actuarial valuation date was JanuaryI, 1986 (previous valuation date was January 1,1983). Significant actuarial assumptions (used tocompute the actuarial present value of accrued planbenefits) include the entry age normal cost method,assumed ne t investment yield on plan assets of 7.5%(changed from 8% in previous valuation) an d salaryprogression of 4% (changed from 5% in previousvaluation). The impact of such changes inassumption, since the prior valuation, has not beendetermined by the District's actuary.

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A summary of accumulated Plan benefits an d cashand investments restricted for payment of accrued

pension costs follows (in thousands):

Actuarial present value of accrued benefits:VestedNonvested

Total actuarial present value of accrued Plan benefits

Cash and investments restricted for payment of accruedpension costs

January 1,1986

$81,90714,813

$%,720

$75,148

On February 19, 1988, the District's Board ofDirectors approved an early retirement programwhereby employees with 20 years of Districtemployment and 50 years of age are eligible forretirement with full benefits. H all 197 eligibleemployees elect this program, the present value ofvested benefits is expected to increase $11,500,000.

9. Deferred Compensallon PlanThe District has a deferred compensation plan (thePlan) adopted pursuant to Internal Revenue Code(IRe) Section 457(b). The Plan, available to alIDistrict salaried employees, permits them to defer aportion of their salary until future years. Thedeferred compensation is not available to participantsulltil retirement, termination, or certain othercovered events. As required by IRC Section 457, Planassets remain the property of the District until paidor made available to the participants, subject only tothe District's general creditors. Participants' rightsunder the Plan are equal to those of generalcreditors of the District in an amount equal to thefair market value of the deferred account for eachparticipant. The District is not liable to theparticipants for any loss from investing of the fundsas long as the District exercises its obligation in goodfaith. The Plan Administrator, the Hartford InsuranceGroup, has invested the deferred amounts innumerous participant directed, uninsuredinvestments.

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10. Capital lease ObllgallonsOn July 1, 1987, the District commenced leasing their

adminstrative office facilities (which ha d beenoccupied by District personnel prior to July 1, 1987).This lease expires on June 30, 2007. Lease paymentsinclude a fixed portion that is sufficient to amortizethe facilities cost over th e lease term plus a variableportion that is the product of the unamortizedfacilities cost and a variable interest rate. Thefacilities (cost, $15,756,000) are included in buildings,structures and improvements. The interest rate forthe year ending June 30, 1988 is 9.86%. The Districthas the option to purchase the facilities on anyanniversary of the lease at fair market value on thatdate. At the expiration of the lease in 2007,ownership of the facilities reverts to the District. TheDistrict has placed an $8,000,000 certificate of depositin an escrow account to protect the lessor against anevent of default. This certificate of deposit isincluded in the District's cash and investments.

In addition, the District leases certain dataprocessing equipment under capital leases (cost,$925,000). These leases expire in fiscal year 1991.

Future minimum lease payments under capital leasesare as follows (in thousands):Year ending June 30:

1988. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. .... .. . . . . . $ 1,9321989. . . . . . . . . . . . . . .. .. . . . . . . .. . . . . . . . . . . . . . . . .. 2,0231990. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,020

' 1 m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1,9831992. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . . . . . . . .. 1,793Thereafter. . .. . . . . . . . . . . . . . . . . . .. .. . . . . 27,869

Total minimum lease payments 37,620Less variable interest, at estimated 9.86% rate (21,135)

~ $ ~ ~

11. Litigation

There are claims and litigation pending which areconsidered normal to the District's operation of thetransit system. The District maintains insurancecoverage for such incidents, and provision has beenmade in the financial statements for estimated lossesunder the deductible limits of insurance policies.


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AC Transit Annual Report 1986-1987

Documents

Transcript of AC Transit Annual Report 1986-1987