Transit Authority debts worse than feared

May 27, 2003|by DON AINES

CHAMBERSBURG, Pa. - Despite an independent auditor's report that showed its debts were more than three times what were previously stated, the Chambersburg Transit Authority will continue to operate on a day-to-day basis as long as its cash holds out.

"Right now we need money to get to the end of May," Authority President James Jenkins said when asked what it would take to keep the buses rolling until July 1 when a new fiscal year begins and new state subsidies might be available.

Former executive director Eva McKula said that would take $20,000 or more, but Jenkins said the authority only has enough money to make the next payroll and will have to shut down if it can't make workers' compensation payments next month.


As of June 30, 2002, the authority had approximately $321,000 in assets against $1,050,000 in liabilities, according to John A. Persun, a certified public accountant with the Chambersburg firm Boyer and Ritter. The authority had been reporting it had accumulated a deficit of about $310,000 as of last year, but has reduced that to about $200,000 recently.

That figure, however, was an operational deficit primarily for bank loans, payroll tax liability, money owed suppliers and other costs. Persun said the audit showed CTA had "misapplied" approximately $230,000 in Pennsylvania Transportation Assistance Fund money and more than $300,000 in U.S. Department of Transportation subsidies between the 2000 and 2002 budget years.

Those were subsidies earmarked for the purchase of buses and other equipment and engineering, design and acquisition of a facility for the CTA. Instead, the money was used to keep the bus service operating, Jenkins said.

"Never at any time was there any question of malice aforethought or intentional malfeasance" in transferring the money from capital to operational uses, Persun said. The audit did recommend that the authority return the monies to the state and federal agencies or negotiate a complete or partial waiver of repayment.

"What we were looking at then was what we owed our vendors," Jenkins said, explaining the variation between the $200,000 and the $731,000 in debt Persun said the authority faces.

The auditor's report stated there is "substantial doubt" about the authority's ability to remain a going concern.

The situation may be somewhat worse than the audit states, since its findings are for a budget year that ended 11 months ago. On the asset side, Persun said factors such as depreciation of buses has to be taken into account and what the authority would actually get in a "fire sale" of its assets.

Besides seeking a source of funding to bridge the five-week gap, Jenkins said CTA has several other hurdles to clear. Before funding is available from the state, he said CTA must prepare a budget and a recovery plan, neither of which exists at this point.

Part of that recovery plan will have to outline how CTA plans to reimburse the Pennsylvania Department of Transportation and U.S. Department of Transportation, Jenkins said.

The authority, however, lacks an executive director to assist in the preparation of either of those documents, Jenkins said. He said the authority had been working on a recovery plan with Borough Manager Eric Oyer, but no work on it has been done recently.

Still some of the board members want to continue serving the community's public transportation needs as long as possible.

"If push comes to shove, we have to shut down for a few days until a new fiscal year begins," said Sam Kuhn.

The worsening financial situation in March forced the authority to close down all but one route, including a route that served the Waynesboro area. Jenkins also told the board that the owner of the Wolf Avenue property the authority rents wants the buses stored somewhere else by June 1.

The monthly report for April showed just 575 riders, compared to 6,800 in April 2002.

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