2015 Comprehensive Annual Financial Report - · PDF fileComprehensive Annual Financial Report ... accepted accounting principles ... agency financial activities through authorization

Comprehensive Annual Financial ReportYears Ended December 31, 2015 and December 31, 2014

Community TransitSnohomish County, Washingtonwww.communitytransit.org

2015

Josefina B.Boeing – Canyon Park Commons Bothell

Vanpool/Ferry/TelecommuteChoice Connections 2015Smart Commuter of the 1st Quarter

Innovative transportation programs to reduce traffic congestion and pollution while encouraging healthy travel options

BOARD OF DIRECTORS Board Chair - Mike Todd

Board Vice Chair - Jon NehringBoard Secretary - Stephanie Wright

Board Member - Kim DaughtryBoard Member - Dave Earling

Board Member - Tom HamiltonBoard Member - Leonard KelleyBoard Member - Lance Norton

Board Member - Terry RyanBoard Member - Jerry Smith

BOARD ALTERNATESBoard Alternate - Joe NeigelBoard Alternate - Sid RobertsBoard Alternate - Jan SchuetteBoard Alternate - Dave Somers

Board Alternate - Emily Vanderwielen

CEOChief Executive Officer - Emmett Heath

DIRECTORSChief Communications Officer - Todd Morrow

Chief Technology Officer - Tim ChrobuckDirector of Customer Relations - Bob ThrockmortonDirector of Planning & Development - Joy Munkers

Director of Transportation - Fred Worthen Director of Maintenance - Dave RichardsDirector of Administration - Geri Beardsley

Table of Contents

Section One – Introduction Letter of Transmittal ................................................................................................................... 1 Certificate of Achievement ....................................................................................................... 16 Principal Officials ..................................................................................................................... 17 Organizational Chart ................................................................................................................ 18

Section Two - Financial Independent Auditor’s Report .................................................................................................. 21 Management’s Discussion and Analysis ................................................................................. 25 Basic Financial Statements

Comparative Statements of Net Position .......................................................................... 36 Comparative Statements of Revenues, Expenses, and Changes in Net Position ........... 38 Comparative Statements of Cash Flows........................................................................... 39 Notes to the Financial Statements .................................................................................... 41

Required Supplementary Information Pension Data

Schedule of Proportionate Share of Net Pension Liability ......................................... 78 Schedule of Employer Contributions .......................................................................... 79

Other Postemployment Benefits (OPEB) Plan Data Schedule of Funding Progress ................................................................................... 80 Schedule of Employer Contributions .......................................................................... 80

Section Three - Statistical Financial Trends

Net Position, Ten-Year Comparison ................................................................................. 85 Change in Net Position, Ten-Year Comparison ................................................................ 86 Expenses, Ten-Year Comparison ..................................................................................... 88

Revenue Capacity Revenues, Ten-Year Comparison .................................................................................... 90 Retail Taxable Sales, Ten-Year Comparison ................................................................... 92 Snohomish County Overlapping Sales Tax Rates, Ten-Year Comparison ...................... 94

Debt Capacity Bond Coverage, 2004 and 2010 Bond Issues, Last Ten Fiscal Years ............................. 95 Snohomish County Assessed Valuation, Ten-Year Comparison ..................................... 96 Outstanding Debt by Type, Ten-Year Comparison ........................................................... 97 Legal Debt Margin Information, Ten-Year Comparison .................................................... 98

Demographic and Economic Information Snohomish County Demographic and Economic Statistics, Ten-Year Comparison ...... 100 Snohomish County Principal Employers, Fiscal Years Ending December 31, 2015

and 2006 ............................................................................................................ 101 Snohomish County Population Demographics Statistics, Ten-Year Comparison .......... 102

Operating Information Snohomish County Public Transportation Benefit Area Map 2015 ................................ 103 Service Statistical Data, Ten-Year Comparison ............................................................. 104 Ridership, Ten-Year Comparison ................................................................................... 106 Service Hours, Ten-Year Comparison ............................................................................ 107 Service Miles, Ten-Year Comparison ............................................................................. 108 Fare Structure, Ten-Year Comparison ............................................................................ 109 Miscellaneous Operational Data, December 31, 2015 ................................................... 110 Capital Assets, Active Revenue Vehicles, Ten-Year Comparison ................................. 111

This page left blank intentionally.

Intro

duct

ory

Sect

ion

Choice Connections is a Community Transit program that rewards you for choosing a better commute, and offers you the tools and resources to get started.

Samantha B.Cascadia College

Bus/Walk/Carpool/BikeChoice Connections 2015Smart Commuter of the 2nd Quarter


1

Board of Directors June 21, 2016

Snohomish County Public Transportation Benefit Area Corporation Snohomish County, Washington

Subject: Comprehensive Annual Financial Report

Honorable Chair and Members of the Board:

This letter of transmittal presents Snohomish County Public Transportation Benefit Area

Corporation’s (dba Community Transit) Comprehensive Annual Financial Report for the years

ended December 31, 2015, and December 31, 2014. The Comprehensive Annual Financial

Report was prepared by Administration Department staff. Responsibility for the accuracy,

completeness, and fairness of the data presented and the clarity of the presentation,

including all disclosures, rests with the management of Community Transit. We believe the

data, as presented, is accurate in all material aspects, that it fairly presents Community

Transit’s financial position and results of operations, and that we have included disclosures

necessary for the reader to gain an understanding of Community Transit’s affairs.

This report was prepared in accordance with guidelines recommended by the Government

Finance Officers Association of the United States and Canada and conforms to generally

accepted accounting principles promulgated by the Governmental Accounting Standards

Board (GASB). This report contains three sections:

1. Introductory Section: Includes this letter of transmittal, a copy of the most recent Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting, a list of principal officials, and the agency’s organization chart.

2. Financial Section: Includes the independent auditor’s opinion, management’s discussion and analysis, the basic financial statements with accompanying notes, and required supplementary information.

3. Statistical Section: Includes additional data about Community Transit’s past ten years of operation.

State law requires that Community Transit be audited annually for compliance with existing

statutes, adequacy of internal controls, and accuracy in financial accounting and reporting.

The Washington State Auditor’s Office has issued an unqualified (clean) opinion on

Community Transit’s financial statements for the years ended December 31, 2015, and

December 31, 2014. The independent auditor’s report is located at the front of the Financial

Section of this report.

Letter of Transmittal (cont.)

2

The Management’s Discussion and Analysis (MD&A) provides a narrative introduction,

overview, and analysis to the basic financial statements. This letter of transmittal is designed

to complement the MD&A and should be read in conjunction with it. Community Transit’s

MD&A can be found immediately following the independent auditor’s report.

Community Transit’s Profile

The Agency

Community Transit, a special purpose municipal corporation providing public transportation

services, began operations on October 4, 1976. The agency’s original service area consisted of

Edmonds, Lynnwood, Marysville, Mountlake Terrace, Brier, Snohomish, and Woodway. The

following table shows when residents of other Snohomish County communities approved

annexation into Community Transit’s service area.

Year Communities Added To Community Transit’s Service Area

1977 Lake Stevens and Monroe

1979 Granite Falls, Mukilteo, Stanwood, and Sultan

1980 Arlington

1981 Goldbar, Index, and Startup

1982 Oso and Darrington

1983 Mill Creek

1992 Snohomish County portion of Bothell

1997 Silver Firs and the Tulalip Indian Reservation

Today, Community Transit’s public transportation benefit area (PTBA) encompasses a land

area slightly in excess of 1,300 square miles including most of urbanized Snohomish County,

except for the City of Everett. On the south, Community Transit’s PTBA borders King County,

which includes the cities of Seattle and Bellevue.

Community Transit serves 555,637 residents, about 73 percent of Snohomish County’s

population. The remainder of the county’s population resides in the City of Everett and in less

populated areas in north and east Snohomish County.

Although the City of Everett is not part of Community Transit’s service area and taxing

authority, Community Transit provides Swift bus rapid transit service to Everett Station and

receives payment from the City of Everett for this service. Community Transit also operates

Everett Transit’s ORCA Call Center service under a separate contract, and Community Transit

and Everett Transit coordinate dial‐a‐ride transportation program (DART) paratransit services

to better serve our customers.


3

Governing Body

Community Transit is governed by a Board of Directors consisting of nine voting members and

one nonvoting member. Voting board members are elected officials appointed by their

respective jurisdictions and elected to two‐year terms by representatives from similarly sized

cities. Voting board members include:

Two members of the Snohomish County Council.

Two elected officials from cities Community Transit serves with populations of more than 30,000.

Three elected officials from cities Community Transit serves with populations between 10,000 and 30,000.

Two elected officials from cities Community Transit serves with populations of less than 10,000.

The nonvoting board member is a labor representative selected as prescribed in RCW

36.57A.050 by the bargaining units who represent approximately 75 percent of Community

Transit’s workforce.

The Chair, Vice‐Chair, and Secretary are elected from among the voting Board members.

During 2015, Councilmember Mike Todd from the City of Mill Creek served as Chair, Mayor

Jon Nehring from the City of Marysville served as Vice‐Chair, and Councilmember Stephanie

Wright from the Snohomish County Council served as Secretary.

Community Transit’s Chief Executive Officer (CEO), Emmett Heath, is responsible for overall

administration of the agency as directed through policy guidance issued from the Board of

Directors. In addition to the CEO, the agency’s principal officers are the Director of

Administration (position vacant on December 31, 2015; filled by Geri Beardsley effective

January 4, 2016), Director of Customer Relations (Bob Throckmorton), Director of Planning

and Development (Joy Munkers), Director of Maintenance (Dave Richards), Director of

Transportation (Fred Worthen), Chief Technology Officer (Tim Chrobuck), and the Chief of

Strategic Communications (Todd Morrow).

Community Transit’s Services

Community Transit’s local, commuter, paratransit, and vanpool services provide riders with a

variety of options to meet their transportation needs. Local fixed‐route service provides all‐

day coverage which links most communities in Snohomish County. Commuter service

operates within Snohomish County and to major destinations in King County. The Everett

Boeing facility is the primary destination for Snohomish County commuter routes, while

commuter routes to King County serve the Seattle central business district and the University

of Washington. Both local and commuter services allow riders to connect with services

provided by King County Metro, Sound Transit, Everett Transit, Skagit Transit, Amtrak, and the

Washington State Ferry System.


4

Community Transit’s DART serves those customers unable to use fixed‐route service because

of disabilities. Vanpool and ride‐matching services enable commuter groups to use vanpools

and carpools to travel to and from Snohomish and King County destinations that are less

accessible by local or commuter bus routes. Community Transit also provides information and

technical support to employers affected by the state’s commute trip reduction legislation.

Ridership

Community Transit provided more than 10 million passenger trips in 2015 on bus, DART

paratransit, and vanpool services. Sunday and holiday service was restored in June 2015, after

being eliminated in 2010 due to the economic recession. Overall, ridership was 2 percent

higher than in 2014. There were 8.9 million bus boardings, 0.9 million vanpool boardings, and

0.2 million DART boardings.

As reported in agency system performance reports, 2015 weekday ridership averaged 36,769

boardings. Saturday ridership averaged 11,385 boardings. Sunday ridership averaged 6,538

boardings, and holiday service ridership averaged 4,889 boardings. The number of passenger

trips per hour of service (productivity) was 15.7 boardings per hour for all modes combined

and 21.7 boardings per hour for bus service.

The statistical section of this report contains additional detailed operating information

including ridership, service hours, and fares.

Stewardship of Public Funds

Budget Process and Financial Oversight

The Board of Directors adopts both short‐term and long‐range plans that define the financial

and service goals for the agency. The Six‐Year Transit Development Plan (TDP) is updated

each year and provides parameters for the annual budget. Based on TDP goals, staff develop

an agency business plan which is used to prepare the agency’s annual budget. The Board of

Directors adopts the agency budget after review and public comment.

The annual budget fully funds that year’s operating expense, capital development, and

reserves needed for preservation of capital assets, workers’ compensation, bond covenant

requirements, and replacement of vehicles. The Board monitors the annual budget and

agency financial activities through authorization of all expenditures exceeding $100,000 and

review of monthly expenditure listings, quarterly financial reports, and the Comprehensive

Annual Financial Report.

Financial Practices

Community Transit places emphasis on internal financial controls designed to provide

reasonable (not absolute) assurance regarding protection of assets against loss from


5

unauthorized use or disposition and reliability of financial records used to prepare financial

statements and account for assets. We believe Community Transit’s internal controls

adequately safeguard assets and provide reasonable assurance of proper recording of

financial transactions. For more information about the agency’s accounting system and

budget practices, please see Note 1 to the Financial Statements.

Community Transit’s Procurement staff earned the Outstanding Agency Accreditation

Achievement Award from the National Institute for Government Procurement (NGIP) for a

three‐year period ending in February 2017. Only 5 percent of NGIP members have earned this

recognition. The agency completed their 21st consecutive annual audit with no audit findings,

and earned its 26th consecutive Certificate of Achievement for Excellence in Financial

Reporting from the Government Finance Officers Association (GFOA). These achievements

speak to the quality and integrity of Community Transit’s financial programs and staff.

Accomplishments

Community Transit wants customers to “Think Transit First.” To support that goal, we want

our customer service, technology, transit centers, and buses to be inviting and consumer

friendly. Much of the work that supports “Think Transit First” occurs behind the scenes when

staff determine how much service and what customer amenities our resources can support

and then actively seek funding for future initiatives that will serve current and future riders.

Community Transit accomplished the following initiatives in 2015:

Increased service by 27,000 hours, including restoration of Sunday and holiday bus and DART paratransit service, starting in June 2015.

Completed safety and environmental upgrades at Ash Way and Swamp Creek Park & Rides.

Replaced 17 aging articulated buses with new Double Tall buses and added an additional five Double Talls, resulting in a Double Tall fleet of 45 vehicles.

Continued project development (environment, design, and engineering) for a second Swift line that will run east/west from the Canyon Park regional growth center in Bothell to the Paine Field/Boeing manufacturing and industrial center in Everett. In September 2015, Community Transit submitted for a FTA Small Starts rating for federal grant funds to build the project. Swift II bus rapid transit received a medium rating and has been recommended for FTA Small Starts funding in 2017. By the end of 2016, the Swift II bus rapid transit project, which includes Seaway Transit Center, 128th and I‐5 approach widening, and station corridors, will have reached the 60 percent design threshold. The construction phase of Swift II bus rapid transit is slated to begin in 2017.


6

Key Performance Indicators

In 2003 Community Transit developed a series of key performance indicators to measure the

agency’s performance. Key performance indicators provide a means of evaluating how

effectively and efficiently the agency performs over time. The Board of Directors originally

adopted nine performance indicators in two categories: Customer Satisfaction/Ridership

Growth and Good Stewards of Public Funds. A tenth indicator, cost per rider, was added in

2011. The charts that follow show trends for each performance indicator based on data for

ten years (or the number of years we have collected the data if less than ten). These charts

exclude Sound Transit service, since Community Transit operates this service on a contract

basis.

Customer Satisfaction and Ridership Growth

0

5

10

15

20

25

30

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Boardings per Capita

Boardings per Capita

Ridership growth kept pace with

population growth. Boardings per

capita remained stable with 18.1

boardings per capita in both 2015

and 2014. Between 2014 and 2015

the population in Community

Transit’s taxing authority increased

by 2.4 percent and ridership

increased by a comparable

2.3 percent.

Measures how effectively Community Transit attracts increased ridership in proportion to the population.

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Boardings per Revenue Hour Boardings per Revenue Hour

Service productivity declined slightly,

as service increased more than

ridership. There were 15.7 boardings

per revenue hour in 2015, compared

to 16.1 in 2014. This was an expected

outcome of adding about 31,400

hours of new service. New service

generally takes a period of time to

reach productivity. Sunday and

holiday services restored in June

have lower productivity than the

system average.

Measures use of the service Community Transit operates based on the number of passenger boardings per hour.


7

Customer Commendations

In 2015 there were 3.0 customer

commendations per 100,000

boardings, a slight increase

compared to 2.9 customer

commendations per 100,000

boardings in 2014. Complaints and

commendations are affected most

by service changes and outside

events like inclement weather.

There was a significant service

increase in 2015 but no significant

weather events.

0.0

1.0

2.0

3.0

4.0

5.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Customer Commendationsper 100,000 Boardings

Considered one indicator of customer satisfaction with Community Transit services.

0.0

10.0

20.0

30.0

40.0

50.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Customer Complaintsper 100,000 Boardings

Customer Complaints and service

requests per 100,000 boardings

decreased by 2.9 percent from 31.2

in 2014 to 30.3 in 2015. The 2015

service increase relieved some of

the passenger overcrowding that

had contributed to more complaints

in 2014. This statistic also reflects

customer requests for additional

service or changes in existing

service. Considered one indicator of customer dissatisfaction with

Community Transit services.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Voluntary Employee Turnover Voluntary Employee Turnover

tracks voluntary employee

separations and is influenced by

factors such as retirements,

relocations, competition in the job

market, fitness for duty, and job

satisfaction. The voluntary turnover

ratio increased from 4.8 percent in

2014 to 5.4 percent in 2015. Slightly

more than one‐third of the

voluntary separations in 2015

resulted from employee

retirements.

The total number of voluntary resignations (including retirements) compared to the total number of employees.


8

Good Stewards of Public Funds

Cost performance indicators are influenced by factors such as changes in the number of hours

of service (revenue hours) the agency operates, changes in the cost of operating the services

offered, and changes in fare revenue.

Service Changes: In June and September 2015, Community Transit implemented its first

major service increase since the great recession ended, restoring Sunday and holiday service

and adding about 31,400 hours of new service spread across fixed‐route, commuter, and

paratransit service. These new hours amounted to a 5.2 percent increase in total revenue

hours. One revenue hour is the basic unit of operation as defined by the Federal Transit

Administration National Transit Database Report. Revenue hours include all the time that

buses operate on a route; revenue hours do not include the time it takes a bus to get to the

starting point of a route or to return to base at the end of a route.

Operating Expenses: As compared to 2014, operating costs increased by 8.9 percent in

2015. The most significant contributor to the increase in operating costs was implementation

of 31,400 hours of new service in June and September 2015. The new service also incurred

start‐up costs that affected operating costs prior to the service implementations. Start‐up

costs began at the end of 2014 and continued through the first six months of 2015 to ensure

that there were enough coach operators and other resources necessary to implement the

service.

Fare Revenue: The amount of fare revenue can increase or decrease depending on two

factors: a change in the fare rates charged or a change in the number of riders. Effective

July 1, 2015, regular and paratransit fares increased by 25 cents. Youth and senior/disabled

fares for local and commuter service did not change. The number of riders (boardings)

increased by 2.3 percent.

The charts that follow show how the factors stated above affected Community Transit’s 2015

performance.

$-

$2.00

$4.00

$6.00

$8.00

$10.00

2012 2013 2014 2015

Cost per Rider Cost per Rider measures the net cost

after fare payment for delivery of one

passenger trip. It is an indicator of

cost effectiveness. Community

Transit’s 2015 cost per rider was

$7.06, an increase of 7.6 percent as

compared to the 2014 cost per rider of

$6.57. This was an expected outcome

of the service increase for the reasons

as follow: Operating expense less fare revenue divided by total

ridership (boardings).


9

1. New service generally takes a period of time to reach productivity.

2. Sunday and holiday services have lower productivity than the system average.

3. Some start‐up costs are incurred before new service carries passengers.

$-

$0.20

$0.40

$0.60

$0.80

$1.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cost per Passenger Mile Cost per Passenger Mile measures

the cost of operations to carry one

passenger for one mile. The 2015

cost per passenger mile was

86 cents, an increase of 9 cents as

compared to the 2014 cost per

passenger mile of 77 cents. The

increased cost per passenger mile

was an expected outcome for the

reasons stated earlier.

Operating cost divided by passenger miles.

0%

5%

10%

15%

20%

25%

30%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Farebox Recovery Farebox Recovery measures the

proportion of operating costs paid

for by passenger fare revenue. In

2015, farebox recovery decreased

by 3.4 percent as compared to

2014. Although both fare revenue

and ridership increased (fare

revenue by 5.2 percent and

ridership by 2.3 percent), 2015

operating expenses increased by

8.9 percent due to the start‐up

costs associated with the 2015

service change, resulting in a slight

reduction in farebox recovery.

Fares divided by operating cost.


10

Cost per Revenue Hour measures

the cost of operations for one

revenue hour of service. This

performance measure indicates

efficiency of the unit cost of

operations.

Community Transit’s Six‐Year Transit

Development Plan measures cost

growth by unit cost, or how much it

costs to deliver one hour of revenue

service. To maintain a sustainable

financial structure that allows the

$-

$20

$40

$60

$80

$100

$120

$140

$160

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cost per Revenue Hour

Operating cost divided by revenue hours.

agency to meet all operational and reserve requirements and allows for future service

adjustments and increases, the unit cost growth rate must average 4 percent or less per year.

For 2015, the unit cost of service, or cost per revenue hour, increased by 3.6 percent as

compared to the 2014 unit cost growth rate of 1.7 percent. The increase in unit cost reflects

the start‐up costs needed to implement the service increases as well as general cost growth.

900

950

1,000

1,050

1,100

1,150

1,200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Revenue Hours per Employee

Revenue Hours per Employee

Measures how much service

Community Transit operates per

employee and is an indicator of

workforce labor efficiency.

When there is an increase in the

number of employees but the

revenue hours remain the same,

decline, or increase at a lesser rate

than the number of employees,

revenue hours per employee

declines. Revenue hours divided by year-end employee count.

In 2015 the number of employees increased by 10.5 percent to prepare for the 2015 service

increases in June and September. The total revenue hours increased by 5.2 percent, a lesser

rate than the rate of increase in employees. As a result, revenue hours per employee declined

by 4.8 percent in 2015 as compared to 2014.


11

Economic Condition and Future Outlook

Local Economy—Snohomish County

Snohomish County is the third most populous county in the state, with an estimated

population of 757,600 in 2015. Over the past ten years, the county’s population has grown an

average of 1.5 percent per year.

Snohomish County is home to over 20,000 businesses, ranging from small family farms

specializing in organic foods, to the world’s largest advanced manufacturing facility producing

state‐of art aerospace equipment. The fifty largest employers account for over 100,000 jobs,

or about 35 percent of the county’s total employment. 1

The Boeing Company remains the county’s largest employer with about 38,000 jobs. The

United States Navy Everett homeport, the state of Washington, Providence Regional Medical

Center, and the Tulalip Tribes Enterprises round out the top five county employers and total

more than 18,000 jobs. A cluster of technology‐related businesses extending from the City of

Bothell to the City of Everett has given the county a technology corridor.

Community Transit’s primary operating revenue source is retail sales tax which is driven by

personal income, consumer confidence, and local business purchases. Local retail sales tax

growth has allowed Community Transit to increase revenue hours by 20,764, to 549,098

revenue hours for fiscal year 2015 as compared to 528,334 revenue hours for fiscal year 2014.

The Washington State Economic and Revenue Forecast Council maintains that motor vehicle

sales and parts are up 11 percent year over year in the latter part of 2015, and other retailers

such as drug and health stores, home furnishings, and building materials are also on the rise,

as are revenues from food services and the construction sector. However, revenues from the

manufacturing sector are down, as are transportation equipment (e.g., airplanes). Overall,

retail trade sector revenues are up 3.7 percent year over year.

The Management’s Discussion and Analysis section of this report contains information

concerning known economic factors that will affect the agency.

Economic Outlook—Regional and Statewide Factors

The Washington State Economic and Revenue Forecast Council measures changes in the

state’s economy. The council issued their final November 2015 Economic Forecast (dated

November 18, 2015) which reflects the primary economic indicators they measure. The

1 Data from Economic Alliance of Snohomish County.


12

following table provides a summary of key statewide economic indicators from the council’s

November 2015 forecast.

Washington State Economic Indicators 2015 2016 2017 2018 2019 2020

Unemployment 5.5% 5.4% 5.2% 5.1% 5.1% 5.1%

Percent Change in Real Personal Income 3.9% 2.0% 1.6% 1.9% 1.9% 1.8%

Percent Change in Personal Income 5.5% 4.2% 4.6% 5.1% 5.0% 4.8%

Current projections by the Washington State Economic and Revenue Forecast Council point

toward relatively low unemployment rates in Washington State through the year 2020. The

Council also predicts a slight gradual decline in aerospace employment, due to increased

productivity by Boeing in its pursuit of lower costs, but the decline will be moderated by a

backlog of orders for Boeing’s planes.

According to the Washington State Economic and Revenue Forecast Council, statewide

underemployment decreased to 9.9 percent from 11.3 percent in 2015, approximately what

the underemployment rate was in the decade prior to the great recession. In December, the

council reported that Washington employment growth had begun to slow down in the last

few months of 2015. The service and construction sectors continued to add jobs, whereas

manufacturing—mainly aerospace—had declined by about 1,300 jobs.

As of December 31, 2015, the seasonally adjusted unemployment rate for the Seattle‐

Bellevue‐Everett area, as reported by the Washington State Unemployment Security

Department, rose to 5.0 percent from 4.5 percent at the beginning of the year. This rate

remained very low during the first three quarters of the year—4.4 to 4.5 percent—and began

to rise in September, continuing to creep up to 5.0 percent by December.

Changes in Transit Grant Funding

On December 4, 2015, President Obama signed the Fixing America’s Surface Transportation

(FAST) Act into law. This act—the first federal law in over a decade to provide long‐term

funding certainty for surface transportation infrastructure planning and investment—

supports transit funding through fiscal year 2020. It reauthorizes Federal Transit

Administration (FTA) programs and includes changes to improve mobility, streamline capital

project construction and acquisition, and increase the safety of public transportation systems

across the country.

The FAST Act re‐established a competitive Bus Discretionary Program that funds

replacements for aging fleets or facilities and adds a new eligibility to deploy low‐ or no‐

emission vehicles. In fiscal year 2016, $268 million in funding will be available for competitive

grants under this program. Through the FAST Act, funding programs such as FTA Urbanized

Area 5307 and FTA State of Good Repair 5337 will continue to provide crucial formula funds

for Community Transit.


13

The FTA’s Bus and Bus Facilities Grants Program 5339 received an increase in funding of

$268 million over fiscal year 2015 levels, for a total of $696 million for fiscal year 2016. This

competitive program helps transit agencies fund new buses, replace aging fleets and facilities,

and fund bus system improvements not otherwise achievable through formula allocations.

Community Transit will compete for federal grants available through this program.

The FAST Act’s five years of predictable formula funding enables transit agencies to better

manage long‐term assets and address the backlog of state of good repair needs. To learn

more about the FAST act, visit this website: https://www.transit.dot.gov/grants/13070.html

2016 to 2021 Transit Development Plan

Community Transit is required by the Washington State Department of Transportation to

submit an updated six‐year Transit Development Plan (TDP) each year. This plan provides a

refreshed six‐year forecast of agency financials, service levels, and capital projects. It

represents an important forum for communicating strategic goals and helps set the stage for

many agency work programs. The Board of Directors adopted the TDP upon which the 2015

budget was based on May 1, 2014. The 2016 TDP was adopted May 5, 2016, and is available

at http://www.commtrans.org/Programs/Documents/ADOPTED%202016‐

2021%20TDP%2005‐05‐2016.pdf.

As discussed in the 2016 TDP’s Financial Plan, growth in Community Transit’s retail sales tax

revenue in 2015 remained strong (5.6 percent), though not quite at 2014’s growth rate of

7.1 percent. The forecast for 2016 to 2021 anticipates continued positive, but moderated

growth. The forecast shows the rate tapering from 5 percent in 2016 to 4 percent in 2017 and

beyond. This moderated forecast recognizes the potential for an economic recession during

the next six years and reflects the long‐term, 20‐plus year growth trend from retail sales tax in

the agency’s taxing district.

Voters in the PTBA approved Proposition 1 in November 2015, increasing the retail sales tax

rate for Community Transit by three‐tenths of 1 percent (3 cents for every $10 spent) to a

total of 1.2 percent (12 cents for every $10 spent). This increase is forecast to add $17 million

to baseline revenues in 2016 and $29 million by 2017. The increase is effective April 1, 2016,

with distribution of the new funds beginning in June 2016.

The increased funding provided by Proposition 1 will enable a 40 percent service expansion,

as described in the updated TDP. Service expansion will include improvements to existing

routes, more Swift service, including Swift II between Boeing/Paine Field in Everett and

Canyon Park in Bothell, and new routes providing new connections.


14

Major Initiatives Planned

The Puget Sound region is growing with more residents and businesses relocating here.

Growth in our greater urban area means more cars on the road and longer commutes. Our

commuter buses are full and riders are asking for more service. Five years after inception, our

Swift I line on Highway 99 has become our most productive service, with 17 percent of our

riders using it daily. We are implementing technology to make it easier for our riders to use

our services and to ensure that our buses are on schedule. These initiatives are planned to

meet rider demand and expectations. Major initiatives include:

Increasing service by about 37,000 hours in 2016 and 27,000 hours in 2017.

Expanding the number of vehicles available and replace older vehicles for fixed‐route and commuter services as well as for our vanpool fleet. Putting planned vehicle replacements into service for our paratransit service.

Designing the Seaway Transit Center which is planned for the northern terminal of the second Swift line in Everett. Seaway Transit Center will provide an easy transfer point for riders going to Boeing, Fluke, Honeywell, and other Paine Field‐area businesses. In 2015, Community Transit received a regional mobility grant of $6.8 million for construction of the transit center.

Continuing project development for a second Swift line that will run east/west from near the Boeing manufacturing center in Everett to Canyon Park in Bothell and will intersect with the north/south Swift I service on Highway 99.

Replacing the current radio system with a state‐of‐the art wireless communications platform which will provide reliable voice communications while also providing reliable high‐capacity data communications.

Working with our regional partners, begin the process to replace the regional fare coordination system (ORCA fare card) which is nearing the end of its useful life and must be replaced by 2020.

Awards and Acknowledgements

The Government Finance Officers Association (GFOA) of the United States and Canada

awarded a Certificate of Achievement for Excellence in Financial Reporting to Community

Transit for its Comprehensive Annual Financial Report for the fiscal year ended

December 31, 2014. This was the 26th consecutive year that Community Transit has achieved

this prestigious award. To be awarded a Certificate of Achievement, a government must

publish an easily readable and efficiently organized comprehensive annual financial report.

This report must satisfy both generally accepted accounting principles and applicable legal

requirements.

16

17

Community Transit—Principal Officials

Board of Directors—as of December 31, 2015

Name Title Expiration

of Term

Mike Todd, Chair Councilmember, City of Mill Creek 2/16

Jon Nehring, Vice‐Chair Mayor, City of Marysville 2/16

Stephanie Wright, Secretary Councilmember, Snohomish County 2/16

Kim Daughtry Councilmember, City of Lake Stevens 12/15

Dave Earling Mayor, City of Edmonds 2/16

Tom Hamilton Councilmember, City of Snohomish 2/16

Leonard Kelley Mayor, City of Stanwood 2/16

Terry Ryan Councilmember, Snohomish County 2/16

Jerry Smith Mayor, City of Mountlake Terrace 2/16

Lance Norton Labor Representative 2/16

Chief Executive Officer

Emmett Heath

Director of Administration Geri Beardsley

Director of Customer Relations

Bob Throckmorton

Director of Maintenance Dave Richards

Director of Planning & Development Joy Munkers

Director of Transportation

Fred Worthen

Chief Technology Officer

Tim Chrobuck

Chief of Strategic Communications

Todd Morrow

Community Transit2015 Organizational Chart

Emmett HeathChief Executive Officer

Joy MunkersDirector of Planning and Development

Fred WorthenDirector of

Transportation

Tim ChrobuckChief Technology Officer

Dave RichardsDirector of Maintenance

Jan McBrideExecutive O ffice Manager /

Clerk to the Board

Community TransitBoard of Directors

Ken BaileyVehicle

Maintenance Manager

Mike WarrenFacilities Maintenance

Manager

Martin MunguiaPublic Information

Officer

Bonnie GinsbergCustomer Outreach

and Marketing Manager

Dave TovreaIT Architect

De MeyersTransit Technology

Manager

Allen HendricksLegal Counsel

Bob ThrockmortonDirector of Customer

Relations

Deb OsborneExecutive Projects Manager

Larry OlsonApplication and Data

Services Manager

Paul DeCampSupervisor of Network

Engineering

Ann MartinNOC and Service

Operat ions Manager

Todd MorrowChief of Strategic Communications

June DeVollStrategic Planning and

Grants Manager

David TrueCapital Development

Program Manager

Carol ThompsonService Development

Manager

Wade MahalaManager of Contracted

Transportation

Colleen BaumannManager of

Transportation Operat ions

Steve WinecoffManager of

Transportation Administrat ion

Art BraeulCustomer Services

Manager

Dawn KirschVanpool Fleet

Supervisor

Lori FoxController

Lynn StarcherHuman Resources and

Labor Relations Manager

Mike BurressRisk Manager

Treva KosloskiStaff Development

Manager

Geri BeardsleyDirector of

Administrat ion

Gail McNuttAdministrat ive

Coordinator

Kunjan DayalProcurement and

Contracts Manager

Jeanine GallacciOrganizational

Development Manager

18

Fina

ncia

l Sec

tion

Choice Connections also offers innovative commute programs through Community Transit for large and small businesses in Snohomish County and Bothell.

Erin K.AT&T

Walk/Vanpool/Bike/TelecommuteChoice Connections 2015 Smart Commuter of the 3rd Quarter


INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS

June 21, 2016

Board of Directors

Snohomish County Public Transportation Benefit Area

Everett, Washington

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of the Snohomish County Public

Transportation Benefit Area (DBA Community Transit), Snohomish County, Washington, as of

for the years ended December 31, 2015 and 2014, and the related notes to the financial

statements, which collectively comprise the Authority’s basic financial statements as listed in the

table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements

in accordance with accounting principles generally accepted in the United States of America; this

includes the design, implementation, and maintenance of internal control relevant to the

preparation and fair presentation of financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We

conducted our audits in accordance with auditing standards generally accepted in the United

States of America and the standards applicable to financial audits contained in Government

Auditing Standards, issued by the Comptroller General of the United States. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the financial

Washington State Auditor’s Office

21

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the Authority’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal

control. Accordingly, we express no such opinion. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of significant accounting

estimates made by management, as well as evaluating the overall presentation of the financial

statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,

the financial position of Community Transit, Snohomish County, Washington, as of

December 31, 2015 and 2014, and the changes in financial position and cash flows thereof for

the years then ended in accordance with accounting principles generally accepted in the United

States of America.

Matters of Emphasis

As described in Note 1, during the year ended December 31, 2015, the Authority has

implemented the Governmental Accounting Standards Board Statement No. 68, Accounting and

Financial Reporting for Pensions – an amendment of GASB Statement No. 27, Statement No. 71,

Pension Transition for Contributions Made Subsequent to the Measurement Date - an

amendment of GASB Statement No. 68, and GASB Statement No. 82 Pension Issues – an

amendment of GASB Statements No. 67, No. 68, and No. 73. Our opinion is not modified with

respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the

management’s discussion and analysis on pages 25 through 35, pension plan information on

pages 78 through 79, and information on postemployment benefits other than pensions on page

80 be presented to supplement the basic financial statements. Such information, although not a

part of the basic financial statements, is required by the Governmental Accounting Standards

Board who considers it to be an essential part of financial reporting for placing the basic

financial statements in an appropriate operational, economic or historical context. We have

22

applied certain limited procedures to the required supplementary information in accordance with

auditing standards generally accepted in the United States of America, which consisted of

inquiries of management about the methods of preparing the information and comparing the

information for consistency with management’s responses to our inquiries, the basic financial

statements, and other knowledge we obtained during our audit of the basic financial statements.

We do not express an opinion or provide any assurance on the information because the limited

procedures do not provide us with sufficient evidence to express an opinion or provide any

assurance.

Supplementary and Other Information

Our audits were conducted for the purpose of forming an opinion on the financial statements that

collectively comprise the Authority’s basic financial statements. The information identified in

the table of contents as the Introductory and Statistical Sections is presented for purposes of

additional analysis and is not a required part of the basic financial statements of the Authority.

Such information has not been subjected to the auditing procedures applied in the audit of the

basic financial statements and, accordingly, we do not express an opinion or provide any

assurance on it.

OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING

STANDARDS

In accordance with Government Auditing Standards, we will also issue our report dated

June 21, 2016, on our consideration of the Authority’s internal control over financial reporting

and on our tests of its compliance with certain provisions of laws, regulations, contracts and

grant agreements and other matters. That report will be issued under separate cover in the

Authority’s Single Audit Report. The purpose of that report is to describe the scope of our

testing of internal control over financial reporting and compliance and the results of that testing,

and not to provide an opinion on internal control over financial reporting or on compliance. That

report is an integral part of an audit performed in accordance with Government Auditing

Standards in considering the Authority’s internal control over financial reporting and

compliance.

Sincerely,

TROY KELLEY

STATE AUDITOR

OLYMPIA, WA

23

24


25

Management’s Discussion and Analysis

This section of Community Transit’s Comprehensive Annual Financial Report (CAFR) represents

management’s overview and analysis of Community Transit’s financial performance for the

fiscal year ended December 31, 2015. This section should be read in conjunction with the

financial statements that follow.

Introduction

Community Transit is a public transportation benefit area corporation providing public

transportation services to the Snohomish County community. Services include:

Local and intercounty bus services.

Paratransit services for the elderly and disabled.

A vanpool program and Ridematch services.

Regional express bus services funded through Sound Transit.

Financial Summary

As of December 31, 2015, Community Transit’s assets exceeded its liabilities by

$289.9 million. Of this amount, $108.7 million is available to meet our primary goal

of providing service to the public and to be invested in future capital improvements

as discussed in Community Transit’s six‐year plan.

Community Transit’s total net position increased by $31.4 million.

Capital grants and contributions amounted to $26.6 million.

Community Transit’s primary source of funding is from local sales taxes. In 2015,

sales tax revenue increased by $4.9 million.

Overview of the Financial Statements

This discussion and analysis section serves as an introduction to Community Transit’s basic

financial statements. Community Transit is a stand‐alone enterprise fund, and our financial

statements report information using the accrual basis of accounting, a method similar to those

used by private‐sector businesses. Under this method, revenues are recorded when earned,

and expenses are recorded as soon as they result in liabilities for benefits received.

The Comparative Statements of Net Position present information about all of Community

Transit’s assets and liabilities. The difference between assets and liabilities is reported as net

position. When net position is compared for several years, increases and decreases may serve

as useful indicators of whether Community Transit’s financial position is improving or

deteriorating.

Management’s Discussion and Analysis (Cont’d)

26

The Comparative Statements of Revenues, Expenses, and Changes in Net Position present

information showing how Community Transit’s net position changed during the fiscal year. All

changes in net position are reported as soon as the event occurs, regardless of the timing of

related cash flows.

The Comparative Statements of Cash Flows present information on Community Transit’s cash

receipts, cash payments, and changes in cash and cash equivalents during the fiscal year.

The basic financial statements can be found following this Management Discussion and

Analysis. The Notes to the Financial Statements provide additional information that is essential

to a full understanding of the data provided in the financial statements. Notes to the Financial

Statements can be found following the basic financial statements.

Community Transit’s Financial Position

Community Transit’s overall financial position improved in 2015. Net investment in capital

assets increased by $21.3 million, restricted net position increased by less than $0.1 million,

and unrestricted net position increased by $10.2 million. This resulted in an increase in total net

position of $31.4 million.

Current assets net of current liabilities amounted to $152.0 million for the year ended

December 31, 2015, as compared to $141.9 million for 2014 and $127.5 for 2013.

Sales tax revenues increased by 6.2 percent for 2015, as compared to a 6.4 percent increase for

2014 and a 10.8 percent increase for 2013.

Cash reserves available to meet current and future obligations increased to $123.7 million in

2015 from $131.4 million in 2014 and $114.2 million in 2013. Of these reserves, $2.4 million

was restricted for debt service and workers’ compensation claims. As of December 31, 2015,

Community Transit had no long‐term public financing debt.

Financial Analysis

For the year ended December 31, 2015, Community Transit’s assets exceeded liabilities by

$289.9 million. A summary of Community Transit’s net position follows.


27

2015 2014 2013Assets:

Current and Other Noncurrent Assets 169,078,532$ 157,056,702$ 141,847,776$

Capital Assets 179,250,685 159,711,281 164,963,426

Total Assets 348,329,217 316,767,983 306,811,202

Deferred Outflows of Resources: 4,688,614 1,673,937 40,286

Liabilities:

Current and Other Liabilities 17,119,756 15,112,596 14,340,095

Noncurrent Liabilities 40,923,503 33,964,727 10,505,660

Total Liabilities 58,043,259 49,077,323 24,845,755

Net Position:

Net investment in capital assets 178,831,358 157,546,954 161,104,099

Restricted 2,355,611 2,292,861 2,314,361

Unrestricted 108,731,233 98,671,998 118,587,273

Total Net Position 289,918,202$ 258,511,813$ 282,005,733$

Summary Statement of Net Position

Public transportation is a capital‐intensive enterprise. Consequently, 61.7 percent of

Community Transit’s net position was invested in capital assets in 2015, as compared to

60.9 percent in 2014 and 57.1 in 2013. Because these capital assets are used to provide services

to citizens, they are not available for future spending.

External restrictions on assets affected 0.8 percent of net position in 2015, 2014, and 2013.

Community Transit’s Board of Directors designated 27.2 percent of total net position for vehicle

replacements and other capital improvements in 2015 compared to 29.8 percent in 2014 and

23.6 percent for 2013. An additional $2.3 million was designated for workers’ compensation in

2015; correspondingly, $1.8 million was designated in 2014 and $1.2 million in 2013. The

remaining $27.7 million in 2015 is available to support our public obligation for future transit

operations as compared to $20.0 million in 2014 and $51.0 million in 2013. Additional

information regarding net position can be obtained from Note 10 in the Notes to the Financial

Statements section.

Due to the implementation of GASB Statement 68, Accounting and Financial Reporting for

Pensions – an amendment of GASB Statement No 27, Deferred Outflows of Resourses increased

$3.0 million in 2015, and $1.6 million in 2014.


28

Community Transit’s net position increased by $31.4 million during the current fiscal year. Key

elements of this increase follow.

2015 2014 2013Operating Revenues:

Passenger Fares 20,798,527$ 19,769,863$ 19,331,239$

Regional Transit Service 16,600,685 16,870,539 16,402,918

Advertising 901,627 836,580 784,946

Nonoperating Revenues:

Subsidies 92,768,390 87,315,853 83,455,798

Other Revenues 500,445 750,209 748,945

Total Revenues 131,569,674 125,543,044 120,723,846

Expenses:

Operations and Maintenance 63,590,182 58,801,929 55,685,100

General and Administrative 22,396,557 21,012,151 19,748,865

Contracted Transportation 23,797,411 23,370,984 22,547,152

Depreciation and Amortization 16,886,860 15,150,735 15,573,477

Nonoperating Expenses 55,401 99,684 120,544

Total Expenses 126,726,411 118,435,483 113,675,138

Net Income (Loss) Before Contributions 4,843,263 7,107,561 7,048,708

Capital Grants and Contributions 26,563,126 3,201,352 9,801,132

Total Change in Net Position 31,406,389 10,308,913 16,849,840

Net Position―Beginning of Year 258,511,813 282,005,733 265,155,893

Prior Period Adjustment for Change in Accounting Principle - (33,802,833) -

Net Position―Beginning of Year Restated 258,511,813 248,202,900 265,155,893

Net Position—End of Year 289,918,202$ 258,511,813$ 282,005,733$

Summary Statements of Revenues, Expenses, and Changes in Net Position


29

Revenues

During 2015, revenues increased by $6.0 million, or 4.8 percent. Revenues from major sources

are illustrated in the following chart:

Passenger Fares16%

Regional Transit Service

13%

Advertising and Other Revenues

1%

Subsidies70%

2015 Revenues by Source

The major components of the overall increase in revenues were sales tax and fares.

Subsidies include sales tax revenue and operating grants. State and federal subsidies increased

$0.5 million in 2015 and decreased $0.9 million in 2014, while sales tax revenue increased in

2015 and 2014. This resulted in total subsidies increasing by $5.5 million, or 6.2 percent, over

the preceding year and $3.9 million, or 4.6 percent, when comparing 2014 to 2013.

Sales tax revenues increased by 6.2 percent in 2015, resulting in an additional $4.9 million in

sales tax revenue. In 2014, the increase was 6.4 percent, or $4.8 million, when compared to

2013. The increases in sales tax are attributed to improvements in the local economy.

Regional transit service revenues decreased $0.3 million, or 1.6 percent, in 2015. The 2014

increase was $0.5 million, or 2.9 percent, when compared to 2013. The 2015 decrease reflected

current service levels and contract rates.

Passenger fares for 2015 increased by $1.0 million, or 5.2 percent, over the preceding year.

Fares increased for 2014 when compared to 2013 by $0.4 million, or 2.3 percent.

Advertising and other revenues decreased in 2015 by $0.2 million, or 11.6 percent. The increase

in 2014 when compared to 2013 was $0.1 million, or 3.4 percent.


30

The following chart compares revenues by major source for 2015, 2014, and 2013.

Subsidies PassengerFares

RegionalTransit Service

Advertising andOther

Revenues

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

$100,000,000

2015, 2014, 2013 Comparative Revenues

2015

2014

2013

Expenses

During 2015, expenses increased by $8.3 million, or 7.0 percent. The increase is due primarily to

an increase in service hours, salaries and benefits, and staffing levels. Although fuel prices

continued to decline in 2015, the number of gallons consumed increased with the increase in

service.

Operations and maintenance expenses in 2015 increased by $4.8 million, or 8.1 percent. The

2014 operations and maintenance expenses when compared to 2013 increased by $3.1 million,

or 5.6 percent. General and administrative expenses increased by $1.4 million, or 6.5 percent in

2015. The 2014 general and administrative expenses when compared to 2013 increased by

$1.3 million, or 6.4 percent.

Contracted transportation expenses increased by $0.4 million, or 1.8 percent. This increase

reflects an increase in service hours. The 2014 contracted transportation expenses when

compared to 2013 increased by $0.8 million, or 3.7 percent.


31

The next chart summarizes expenses by major function.

Operations & Maintenance

50%

Contracted Transportation

19%

Depreciation & Other

Expenses13%

General Administrative

18%

2015 Expenses by Function

Depreciation and other nonoperating expenses increased $1.7 million, or 11.1 percent. The

increase is primarily attributed to an increase in capital assets via the purchase of coaches and

capitalization of the transit technologies suite of information systems. The 2014 depreciation

and other nonoperating expenses when compared to 2013 decreased by $0.4 million, or

2.8 percent.

The following chart compares expenses by function for 2015, 2014, and 2013.

Operations &Maintenance

ContractedTransportation

Depreciation &Other Expenses

GeneralAdministrative

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

2015, 2014, 2013 Comparative Expenses

2015

2014

2013


32

Capital Assets

Capital assets include revenue vehicles, support vehicles, land and buildings, equipment, and

passenger facilities.

As of December 31, 2015, Community Transit’s investment in capital assets amounted to

$179.3 million, net of accumulated depreciation. Capital assets increased by 12.2 percent

during 2015.

Major acquisitions during 2015 included:

16 Double Tall coaches in the amount of $14.4 million.

19 forty‐foot coaches in the amount of $9.2 million.

KPOB pavement replacement in the amount of $3.7 million.

For additional information on Community Transit’s capital assets, please see Note 5 in the

Notes to the Financial Statements section.

Debt Administration

In June 2010, Community Transit sold $5,240,000 in limited sales tax general obligation

refunding bonds. The bonds were sold on a competitive bid basis and carried a rate of

3 percent. Payment of the bonds will be made from a portion of Community Transit sales tax

revenue. The 2010 bond issue was rated Aa2 by Moody’s Investors Service and AA+ by S&P

Global Ratings (formerly Standard and Poor’s Ratings Services). The resulting funds were used

to refund the 2004 bond issue outstanding and to pay the cost of issuing the 2010 bonds. The

monies used to fund the bond reserve account continue to earn interest, while the funds

allocated to pay for the bond issuance costs are reflected in the Comparative Statements of Net

Position. For additional information on Community Transit’s bonds payable, please see Note

9(A) in the Notes to the Financial Statements section.

Under Washington State law, bonds secured by and payable from sales tax revenues are

general obligations of the issuer and are subject to this debt limitation: The bonds may not

exceed 0.375 percent of the value of taxable property within the agency’s boundaries. Larger

amounts may be approved with a public vote.

Assessed valuation in 2015 for collection of taxes in 2016 67,905,520,501$

Maximum nonvoted debt capacity at 0.375 percent of valuation 254,645,702

Less outstanding bond issues - net 1,810,857

Nonvoted debt capacity remaining 252,834,845$


33

Economic Factors and Next Year’s Budgets

On June 7, 2015, Community Transit initiated a 27,000 annualized hour service increase. This

increase restored service on Sundays and holidays and represents slightly less than 20 percent

of the service cut during the economic downturn. The June service expansion also added

several trips to downtown Seattle and the University of Washington. A few route changes and

off‐peak trip additions were implemented as well. The following press release provides

additional detail: http://www.commtrans.org/newsrelease/1605.

On July 1, 2015, fares increased by 25 cents for all adult local and commuter trips, as well as for

dial‐a‐ride transportation paratransit trips. This helps keep fare revenues in line with expenses

and prevents “sticker shock” that can occur with larger, more infrequent fare changes.

Snohomish County voters approved Proposition 1 on November 3, 2015. Proposition 1

authorized Community Transit to begin collecting an additional three‐tenths of 1 percent sales

and use tax effective April 1, 2016. Due to the passage of Proposition 1 and the related

increased retail sales tax revenue, Community Transit has planned substantial service increases

in 2016, 2017, and 2018 and more modest increases from 2019 through 2021. A small increase

of about 4,700 annualized revenue hours occurred in March 2016, and a larger increase of

32,000 annualized hours, including two new bus routes and numerous service enhancements,

will occur in September 2016. The agency plans to add approximately 27,000 annualized hours

in 2017, and 45,000 annualized hours—related to a new Swift II bus rapid transit line—will be

added in 2018.

More information regarding the 2016 budget can be obtained at www.commtrans.org/budget/.

The 2016 original budget is summarized below:

2016 Budget in millions

Operating Fund Revenues 133.8$

Capital Grants and Contributions 30.1

Other Revenues 0.1

Total Budgeted Revenues 164.0$

Operating Fund Expenditures 121.3$

Capital Projects 66.3

Workers' Compensation Fund 2.6

Debt Service 1.9

Total Budgeted Expenditures 192.1$


34

Requests for Information

This financial report is designed to provide a general overview of Community Transit’s finances

for anyone who has an interest. Questions concerning any of the information presented in this

report or requests for additional financial information should be addressed to:

Lori Fox, Controller Community Transit 7100 Hardeson Road Everett, WA 98203

35

Basic Financial Statements

Community TransitComparative Statements of Net Position

December 31, 2015 and 2014

Assets 2015 2014

Current Assets:Cash and Cash Equivalents 121,382,800$ 129,076,978$

Restricted Assets:

Cash and Cash Equivalents 2,355,611 2,292,861

Accounts Receivable and Accrued Interest 273,939 51,050

Due from Other Governments 43,648,411 24,328,716

Maintenance Parts Inventory 1,298,479 1,239,442

Prepaid Expenses 119,292 67,655

Total Current Assets 169,078,532 157,056,702

Noncurrent Assets:Capital Assets Not Being Depreciated:

Land 14,330,617 14,212,114

Intangible Property 1,800,680 1,800,680

Work in Progress 18,517,020 19,896,141

Capital Assets (Net of Accumulated Depreciation):

Buildings 36,181,149 35,884,256

Site Improvements 19,024,186 16,621,349

Vehicles, Machinery, and Equipment 85,698,054 66,447,079

Intangible Property 3,698,979 4,849,662

Capital Assets (Net of Accumulated Depreciation) 179,250,685 159,711,281

Total Noncurrent Assets 179,250,685 159,711,281

Total Assets 348,329,217 316,767,983

Deferred Outflows of Resources

Pensions 4,688,614 1,673,937

Total Deferred Outflows of Resources 4,688,614 1,673,937

Total Assets and Deferred Outflows of Resources 353,017,831$ 318,441,920$

Continued on the following page.

See accompanying notes to the financial statements.

36

Community TransitComparative Statements of Net Position

December 31, 2015 and 2014(Continued)

Liabilities 2015 2014

Current Liabilities:Warrants, Accounts Payable, and Accrued Expenses 6,439,064$ 5,945,622$

Accrued Payroll Liabilities 2,693,307 2,172,966

Compensated Absences Payable 3,461,688 2,850,888

Unearned Revenue 1,852,340 1,549,807

Current Liabilities Payable from Restricted Assets:

Interest Payable 22,500 44,313

Bonds Payable ‐ Current Portion 1,810,857 1,745,000

Provision for Workers' Compensation Claims 840,000 804,000

Total Current Liabilities 17,119,756 15,112,596

Noncurrent Liabilities:Compensated Absences Payable 1,021,199 1,171,179

Provision for Workers' Compensation Claims 1,569,000 1,621,000

Net Pension Liability 32,922,782 24,623,986

Other Postemployment Benefits 5,410,522 4,708,569

Bonds Payable ‐ Net ‐ 1,839,993

Total Noncurrent Liabilities 40,923,503 33,964,727

Total Liabilities 58,043,259 49,077,323

Deferred Inflows of Resources

Pensions 5,056,370 10,852,784

Total Deferred Inflows of Resources 5,056,370 10,852,784

Net PositionNet Investment in Capital Assets 178,831,358 157,546,954

Restricted For:

Debt Service 551,861 551,861

Workers' Compensation 1,803,750 1,741,000

Unrestricted 108,731,233 98,671,998

Total Net Position 289,918,202 258,511,813

Total Liabilities, Deferred Inflows of Resources,and Net Position 353,017,831$ 318,441,920$


37

Community TransitComparative Statements of Revenues, Expenses,

and Changes in Net PositionFor the Years Ended December 31, 2015 and 2014

2015 2014

Operating Revenues:Passenger Fares 20,798,527$ 19,769,863$

Regional Transit Service 16,600,685 16,870,539

Advertising 901,627 836,580

Total Operating Revenues 38,300,839 37,476,982

Operating Expenses:Operations 40,771,330 34,908,009

Maintenance 22,818,852 23,893,920

General and Administrative 22,396,557 21,012,151

Contracted Transportation 23,797,411 23,370,984

Depreciation and Amortization 16,886,860 15,150,735

Total Operating Expenses 126,671,010 118,335,799

Operating Loss (88,370,171) (80,858,817)

Nonoperating Revenues (Expenses):Subsidies 92,768,390 87,315,853

Investment Income 141,991 51,917

Miscellaneous 122,074 323,544

Interest Expense (55,401) (99,684)

Gain on Sale of Capital Assets 236,380 374,748

Total Nonoperating Revenues (Expenses) 93,213,434 87,966,378

Net Income Before Contributions 4,843,263 7,107,561

Capital Grants and Contributions 26,563,126 3,201,352

Change in Net Position 31,406,389 10,308,913

Net Position - Beginning of Year 258,511,813 282,005,733

Prior Period Adjustment for Change in Accounting

Principle ‐ (33,802,833)

Net Position - Beginning of Year, Restated 258,511,813 248,202,900

Net Position - End of Year 289,918,202$ 258,511,813$


38

Community TransitComparative Statements of Cash Flows

For the Years Ended December 31, 2015 and 2014

2015 2014

Cash Flows from Operating Activities:Cash Received for Operating Revenues 38,278,296$ 36,031,739$

Cash Received for Miscellaneous Revenue 83,652 345,420

Cash Paid to Vendors for Goods and Services (48,304,719) (48,666,440)

Cash Paid for Employee Services and Benefits (60,626,915) (53,630,110)

Net Cash Used for Operating Activities (70,569,686) (65,919,391)

Cash Flows from Noncapital Financing Activities:Operating Subsidies 93,135,477 88,788,008

Net Cash Provided by Noncapital Financing Activities 93,135,477 88,788,008

Cash Flows from Capital and Related Financing Activities:Acquisition of Capital Assets (35,753,039) (9,705,309)

Capital Grants and Contributions 7,016,953 5,385,444

Principal Payment on Bonds (1,745,000) (1,695,000)

Interest Paid on Bonds (106,350) (157,200)

Proceeds From the Sale of Capital Assets 248,226 383,595

Net Cash Used for Capital and Related Financing Activities (30,339,210) (5,788,470)

Cash Flows from Investing Activities:Investment Income 141,991 51,917

Net Cash Provided by Investing Activities 141,991 51,917

Net Increase (Decrease) in Cash and Cash Equivalents (7,631,428) 17,132,064

Cash and Cash Equivalents - Beginning of Year 131,369,839 114,237,775

Cash and Cash Equivalents - End of Year 123,738,411$ 131,369,839$

Continued on the following page.


39

Community TransitComparative Statements of Cash Flows

For the Years Ended December 31, 2015 and 2014(Continued)

2015 2014

Reconciliation of Operating Loss to Net Cash Used for Operating Activities:

Operating Loss (88,370,171)$ (80,858,817)$

Adjustments to Reconcile Operating Loss to Net Cash Used for Operating Activities:

Depreciation and Amortization 16,886,860 15,150,735

Miscellaneous Revenue 122,074 323,544

Pensions (512,295) ‐

Change in Assets - Decrease (Increase):Accounts Receivable (222,889) 1,983

Due from Other Governments (140,609) (1,643,569)

Maintenance Parts Inventory (59,037) (144,759)

Prepaid Expenses (51,637) 53,236

Change in Deferred Outflows of Resources - Decrease (Increase):

Accumulated Decrease in Fair Value of Hedging

Derivative ‐ 29,738

Change in Liabilities - Increase (Decrease):Warrants, Accounts Payable, and Accrued Expenses (191,629) (146,834)

Accrued Payroll Liabilities 520,341 247,248

Compensated Absences Payable 460,820 254,253

Unearned Revenue 302,533 218,219

Provision for Workers' Compensation Claims (16,000) 113,000

Other Postemployment Benefits 701,953 482,632

Net Cash Used for Operating Activities (70,569,686)$ (65,919,391)$

Schedule of Noncash Investing, Capital, and Financing Activities

Capital Grants and Contributions contain no noncash capital contributions.


40

41

Community Transit Notes to the Financial Statements

December 31, 2015

Note 1: Summary of Significant Accounting Policies

A. Reporting Entity

The Snohomish County Public Transportation Benefit Area Corporation, dba Community Transit,

was authorized to begin operation of a public transportation system in 1976. The agency was

incorporated under the provisions of Washington State law pertaining to public transportation

benefit area corporations (RCW 36.57A) and operates under the control of a Board of Directors.

Community Transit has an undivided interest in a nonequity joint venture, jointly governed with

six other agencies for the provision of regional smart card fare (ORCA) collection services.

Community Transit’s undivided interests in the assets, liabilities and operations of the ORCA

smart card are consolidated within these financial statements on a proportionate basis.

In fiscal year 2015, Community Transit implemented Governmental Accounting Standards

Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, GASB

Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement

Date—an amendment of GASB Statement No. 68, and GASB Statement No. 82, Pension Issues—

an amendment of GASB Statements No. 67, No. 68, and No. 73.

GASB Statement No. 68 requires governments providing defined benefit pensions for their

employees to recognize their proportional share of the pension plan’s net pension liability or

asset, which is measured as total pension liability less the amount of the pension plan’s

fiduciary net position. The statement also establishes standards for measuring and recognizing

pension liabilities or assets, deferred outflows of resources, deferred inflows of resources, and

pension expenses. For defined benefit pensions, this statement identifies the methods and

assumptions that should be used to project benefit payments, discount projected benefit

payments to their actuarial present value, and attribute that present value to periods of

employee service. Prior to implementing GASB Statement No. 68, employers participating in a

cost‐sharing plan recognized annual pension expense equal to their contractually required

contribution to the plan.

GASB Statement No. 71 amends GASB Statement No. 68 regarding the deferred outflows of

resources for governments whose current year pension contributions are reported subsequent

to the measurement date. GASB Statement No. 82 amends GASB Statement No. 68 regarding

the presentation of payroll‐related measures in required supplementary information.

Community Transit adopted these statements effective January 1, 2014. The collective financial

impact resulting from the implementation of these GASB statements is the restatement of 2014

unrestricted net position, reducing it by $33,802,833 for Community Transit’s portion of the net

42

pension liability, deferred outflows of resources, and deferred inflows of resources incurred in

prior years.

B. Basis of Accounting

The accounting policies of Community Transit conform to generally accepted accounting

principles applicable to governmental units. Community Transit applies all applicable GASB

pronouncements.

Community Transit uses an enterprise fund to account for its operations and prepares its

financial statements on the accrual basis of accounting. Under this method, revenues are

recorded when earned, and expenses are recorded as soon as the benefits are received.

Operating revenues and expenses generally result from providing transportation services.

Community Transit’s primary operating revenues include:

Passenger Fares: Charges to customers for transportation services.

Regional Transit Service: Reimbursements from Sound Transit for providing regional express bus service.

Advertising: Revenues earned from advertisements posted on buses.

Operating expenses consist of:

Transit Operations: Directly operated and provided under contract.

Vehicle and facility maintenance.

Administration expenses.

Depreciation and amortization of capital assets.

All revenues and expenses not meeting these definitions are reported as nonoperating

revenues and expenses and include:

Subsidies: tax revenues and operating grants.

Investment income.

Miscellaneous revenues.

Interest expense.

Gains or losses on the sale of capital assets and maintenance parts inventory.

Community Transit’s accounting records are maintained in accordance with methods

prescribed by the State Auditor under the authority of Washington State law.

Preparing financial statements in conformity with accounting principles generally accepted in

the United States of America requires management to make estimates and assumptions that

affect the amounts reported in the financial statements and accompanying notes. Actual results

could differ from those estimates.

43

C. Budget

Community Transit adopts its annual budget in December of the preceding fiscal year. The

budget is based on corporatewide goals and departmental programs and objectives. After these

programs and objectives are developed, revenue for the coming year is estimated. The

estimated revenue is used to determine the level of change in service to be provided the

following year.

Most operating revenues and expenditures are budgeted on the accrual basis. Significant

differences include depreciation and amortization, compensated absences payable, sales tax

revenue, actuarial accrual of future workers’ compensation losses, other postemployment

benefits, and miscellaneous revenues. Debt service is budgeted on a cash basis.

Capital projects are budgeted on a project basis. Projects are budgeted in their entirety when

approved, regardless of anticipated expenditure dates. Each year thereafter, the remaining

unexpended portion of each project, as well as related grant reimbursements, is rebudgeted.

Community Transit encumbers expenditures for management information. Encumbrances do

not constitute a legal reduction of appropriations and are not reported on the financial

statements.

The schedules that follow show budgeted versus actual revenues and expenditures for the

periods ended December 31, 2015, and December 31, 2014.

2015 Budget 2015 Actuals

VarianceOver (Under)

BudgetPassenger Fares 21,539,000$ 20,798,527$ (740,473)$

Regional Transit Service 18,530,000 16,600,685 (1,929,315)

Advertising 650,000 901,627 251,627

Sales Tax 82,047,991 83,358,802 1,310,811

State and Local Grants 21,579,998 8,824,294 (12,755,704)

Federal Grants - Operating 5,712,070 5,382,205 (329,865)

Federal Grants - Capital 32,661,071 20,663,571 (11,997,500)

Investment Income 107,000 141,991 34,991

Miscellaneous 172,500 122,074 (50,426)

Sale of Capital Assets and Inventory 15,000 248,225 233,225

Total Revenues 183,014,630$ 157,042,001$ (25,972,629)$

Revenues - Budgeted vs. Actual (Budgetary Basis)Year Ended December 31, 2015

44


VarianceOver (Under)

BudgetPassenger Fares 19,590,000$ 19,769,863$ 179,863$

Regional Transit Service 18,410,000 16,870,539 (1,539,461)

Advertising 790,000 836,580 46,580

Sales Tax 78,120,000 78,951,863 831,863

State and Local Grants 7,604,074 3,590,960 (4,013,114)

Federal Grants - Operating 5,333,000 4,526,912 (806,088)

Federal Grants - Capital 16,460,841 2,847,955 (13,612,886)

Investment Income 122,000 51,917 (70,083)

Miscellaneous 246,000 323,545 77,545

Sale of Capital Assets and Inventory 20,000 383,595 363,595

Total Revenues 146,695,915$ 128,153,729$ (18,542,186)$

Revenues - Budgeted vs. Actual (Budgetary Basis)Year Ended December 31, 2014


VarianceUnder (Over)

BudgetSalaries and Benefits 63,884,310$ 61,255,753$ 2,628,557$

Supplies and Materials 17,528,737 12,117,684 5,411,053

Services and Other Charges 43,353,872 36,384,757 6,969,115

Intergovernmental 2,499,662 2,212,549 287,113

Capital Acquisitions 90,873,208 33,617,038 57,256,170

Debt Service - Principal 1,745,000 1,745,000 -

Debt Service - Interest 106,350 106,350 -

Total Expenditures 219,991,139$ 147,439,131$ 72,552,008$

Expenditures - Budgeted vs. Actual (Budgetary Basis)Year Ended December 31, 2015

45


VarianceUnder (Over)

BudgetSalaries and Benefits 57,400,584$ 54,426,512$ 2,974,072$

Supplies and Materials 16,918,199 14,679,309 2,238,890

Services and Other Charges 38,918,301 33,016,012 5,902,289

Intergovernmental 2,358,979 2,046,505 312,474

Capital Acquisitions 58,940,388 8,070,278 50,870,110

Debt Service - Principal 1,695,000 1,695,000 -

Debt Service - Interest 157,200 157,200 -

Total Expenditures 176,388,651$ 114,090,816$ 62,297,835$

Expenditures - Budgeted vs. Actual (Budgetary Basis)Year Ended December 31, 2014

The following schedule reconciles the accrual to budgetary differences for 2015 and 2014.

2015 2014Revenues and Capital Grants Reported on the Accrual Basis

$ 158,132,800 128,744,396$

Accruals for Sales Tax (1,102,644) (599,514)

Net Book Value of Retired Equipment 11,845 8,847

Revenues Reported on the Budgetary Basis $ 157,042,001 128,153,729$

2015 2014

Expenses Reported on the Accrual Basis $ 126,726,411 $ 118,435,483

Capital Projects 36,438,109 9,903,437

Accrued Interest Expense 50,949 57,516

Change in Actuarial Accrual for Workers' Compensation

16,000 (113,000)

Change in Compensated Absences Payable (460,820) (254,253)

Change in Actuarial Accrual for Other Postemployment Benefits

(701,953) (482,632)

Pension Expense 512,295 -

Debt Service - Principal 1,745,000 1,695,000

Depreciation and Amortization (16,886,860) (15,150,735)

Expenses Reported on the Budgetary Basis 147,439,131$ 114,090,816$

46

D. Cash and Investments

Cash and cash equivalents include cash on hand, demand deposits, and short‐term investments

purchased with a remaining maturity of three months or less. Community Transit’s investment

policies are governed by regulations established for public funds by Washington State law.

Community Transit’s investment policy was updated effective October 15, 2015. Safety of

principal continues to be the top priority, with liquidity being the second most important

priority. The investment policy clearly states that safety and liquidity takes precedence over

return on investment. Investments as of December 31, 2015, consisted of demand deposits and

Local Government Investment Pool investments.

Allowable investments are limited to:

U.S. Treasury obligations.

U.S. Government agency obligations and U.S. Government sponsored enterprises.

Banker’s acceptances.

Commercial paper.

Certificates of deposit.

Repurchase agreements.

Bonds of Washington State and any local government in Washington State.

General obligation bonds of a state other than Washington State.

Washington State Local Government Investment Pool

Throughout 2015 Community Transit’s portfolio complied with the investment policies

discussed above. Investments are reported at fair value based on quoted market prices.

Changes in fair value are included as revenue in the financial statements.

E. Restricted Assets

Funds are classified as restricted assets when their use is limited by bond covenants, state

requirements for workers’ compensation, or other legally binding conditions. As of

December 31, 2015, restricted assets amount to $1,803,750 for the state‐required workers’

compensation reserve and $551,861 for bond reserve and interest according to the bond

covenant.

F. Maintenance Parts Inventory

Vehicle maintenance parts are held for consumption and valued at cost using the weighted‐

average method. The costs of maintenance parts are recorded as an expense when consumed

rather than when purchased.

47

G. Capital Assets and Depreciation

Assets with a useful life in excess of one year are capitalized if the individual cost is at least

$5,000. Capital assets are recorded at historical cost. Donated assets are stated at estimated

fair market value as of the date of acquisition. Replacements which improve or extend the lives

of property are capitalized. Repairs and maintenance are expensed as incurred.

Community Transit participates with the Washington State Department of Transportation in the

construction of passenger park‐and‐ride facilities within the transit service area. Community

Transit contributes funds to provide the local match required under the terms of federal

construction grants. The State of Washington retains park‐and‐ride facility ownership, but

Community Transit’s contribution allows us to use these facilities. The rights are valued at the

amount of the contribution made and are reported under capital assets as site improvements.

Depreciation is computed using the straight‐line method (without salvage values) over the

estimated useful life of the asset. When used assets are acquired, they are assigned a useful life

of one‐half the new life. Newly acquired assets are assigned useful lives as follows:

Asset Category Years

Land Not Depreciated

Work in Progress Not Depreciated

Intangible Property—Easements Not Depreciated

Buildings 10 to 30

Site Improvements 10 to 30

Buses 12 to 15

Other Vehicles 5

Machinery and Equipment 5 to 10

Computer Equipment 3 to 7

Intangible Property 3 to 10

H. Compensated Absences

Policies for the accrual and use of compensated absences vary depending on whether an

employee is represented by a labor contract or subject to the personnel policy. All employees

are covered in the same two plans: paid time off and major sick leave. Paid time off is payable

upon an employee’s termination. Major sick leave is payable at 25 percent of the hours accrued

with the exception of some union employees, who are paid out at 50 percent if retiring. The

portion of major sick leave payable at termination represents the vested portion of major sick

leave earned and is subject to accrual.

48

I. Unearned Revenue

Revenues received in advance are recorded as unearned revenue on the Comparative

Statements of Net Position. At December 31, 2015, unearned revenue amounted to

$1,852,340. Of this amount, $100,000 was an advertising insurance security deposit. The

remaining $1,752,340 included ORCA fare revenue amounting to $1,687,431 and payments for

employer Flex Pass contracts expiring in future periods in the amount of $64,909.

J. Pensions

Information about the fiduciary net position of all state‐sponsored pension plans and additions

to or deductions from the fiduciary net position of those plans has been determined on the

same basis as they are reported by the Washington State Department of Retirement Systems.

This information was used to measure net liability, deferred outflows of resources, deferred

inflows of resources, and expenses related to pensions. For this purpose, benefit payments

(including refunds of employee contributions) are recognized when due and payable in

accordance with the benefit terms. Investments are reported at fair value.

Note 2: Cash and Investments

As of December 31, 2015, and December 31, 2014, Community Transit had the following

investments:

Investment Type 2015 Fair Value 2014 Fair Value

Demand Deposits $ 12,419,071 $ 21,004,708

Local Government Investment Pool 111,319,340 110,365,131

Total $ 123,738,411 $ 131,369,839

Investments as of December 31, 2015, consisted of demand deposits and Local Government

Investment Pool (LGIP) investments. The LGIP is an investment trust fund of the state of

Washington operated by the Office of the State Treasurer. The State Finance Committee

provides statutory administrative oversight. The LGIP Advisory Committee provides advice on

the operation of the pool.

Eligible investments are limited only to those investments authorized by state law. The pool is

subject to an annual audit by the Washington State Auditor’s Office. On an annual basis, the

State Treasurer is required to provide a report which summarizes the activities of the

investment pool to the Governor, the State Auditor, and the state legislative budget committee.

The LGIP is an unrated, 2a7‐like pool, as defined by GASB Statement No. 31, Accounting and

Financial Reporting for Certain Investments and for External Pools. Accordingly, participant

balances in the LGIP are not subject to interest risk, as the weighted average maturity of the

49

portfolio will not exceed 90 days. Per GASB Statement No. 40, Deposit and Investment Risk

Disclosure—an amendment of GASB Statement No. 3, the balances are also not subject to

custodial credit risk. The credit risk of the LGIP is limited, as most investments are either

obligations of the U.S. Government; government‐sponsored enterprises; or insured, demand‐

deposit accounts and certificates of deposit. Investments or deposits held by the LGIP are all

classified as category 1 risk‐level investments. They are either insured or held by a third‐party

custody provider in the LGIP’s name.

Interest Rate Risk: Community Transit investment guidelines and policies state that safety of

funds is the number one priority in all investment decisions. The LGIP investment policy

requires a 90‐day maximum on the weighted average maturity. Thus, all investments held are

considered to have a low interest rate risk.

Credit Risk: Community Transit’s investment policy has only one direct, credit‐risk

requirement. The requirement applies to bonds of Washington State and any local government

in Washington State in which the rating must be one of the three highest credit ratings of a

nationally organized rating agency. Credit risk is indirectly controlled via the kind of investment

instruments allowed by the investment policy and by maturity requirements. The risk ranges

from minimal to none, based on the investment instruments Community Transit holds. There is

no credit risk for federally insured demand deposits.

Funds currently held at the LGIP have minimal to no risk. The LGIP investment policy limits the

types of securities available for investment to obligations of the U.S. Government or its

agencies, bankers’ acceptances, commercial paper, certificates of deposit, or obligations of the

state of Washington. All repurchase agreements must be rated AAA and be at least 102 percent

of the value of the agreement.

Custodial Credit Risk: There is no custodial risk for Community Transit’s demand deposits.

Custodial risk is minimal within our investment in the LGIP. The LGIP assets are primarily

allocated in U.S. Government‐backed obligations, federally insured demand deposits, and

certificates of deposit. Some exposure is present in the LGIP’s holdings of repurchase

agreements. This exposure has been limited by restrictions that require all agreements must be

rated AAA and the market value of securities utilized in repurchase agreements must be at least

102 percent of the value of the agreement.

50

Note 3: Receivables

As of December 31, 2015, and December 31, 2014, the following amounts were due to

Community Transit:

Accounts Receivable 2015 2014

Fares and Miscellaneous 264,576$ 43,092$

ORCA Fiscal Agent Receivables 9,363 7,958

Total Accounts Receivable 273,939$ 51,050$

Due from Other Governments 2015 2014

Sales Tax Received in January and February 15,889,647$ 14,787,003$

Operating Grants and Contributions 1,780,050 3,249,781

Capital Grants and Contributions 19,996,710 450,537

Sound Transit Regional Service 4,254,047 4,242,449

Fares and Miscellaneous 321,402 306,663

ORCA Fiscal Agent Receivables 1,406,555 1,292,283

Total Due from Other Governments 43,648,411$ 24,328,716$

51

Note 4: Fuel Hedge

To protect against the potential of rising prices of diesel fuel through the fiscal year ending

December 31, 2014, Community Transit purchased a forward‐starting cap at a cost of 5.8 cents

per gallon on 1,774,000 gallons in the amount of $102,892. There is no value at December 31,

2014, or at December 31, 2015; the contract expired on December 31, 2014, and no additional

instruments were purchased after that date.

The cap purchased for fiscal year 2014 qualified for hedge accounting under GASB Statement

No. 53, Accounting and Financial Reporting for Derivative Instruments; therefore all changes in

fair value are offset by corresponding deferred outflows of resources and deferred inflows of

resources in the Comparative Statements of Net Position. The fair value of the cap was

estimated using an independent proprietary pricing service.

There were no outstanding hedging derivatives as of December 31, 2015. The following table

displays the objective and terms of the last hedging derivative instrument purchased by

Community Transit, a summary of basic terms of the cap agreement, along with the credit

rating of the counterparty as of December 31, 2013:

Type Objective Notional Effective Date Maturity Date

Diesel Cap Hedge of changes in cash flows due to market price fluctuations related to expected purchases of diesel fuel.

1,774,000 Gallons 1/1/2014 12/31/2014

Terms Fair Value Bank Counterparty Counterparty Ratings Moody’s /S&P /Fitch

US Gulf Coast Ultra Low Sulfur Diesel Price Cap at $3.200 per Gallon

$ 73,154 Barclays Bank PLC A2/AA

Credit Risk, Basis Risk, and Termination Risk: As of December 31, 2015, Community Transit has

no credit risk exposure because the last fuel hedge contract expired December 31, 2014, and

was not replaced with a new contract.

52

Note 5: Capital Assets

The tables that follow summarize changes in capital assets for the years ending December 31,

2015, and December 31, 2014, respectively.

Beginning Balance

12/31/2014Additions/

Adjustments Retirements

Ending Balance

12/31/2015

Capital Assets Not Being Depreciated:

Land 14,212,114$ 118,503$ 14,330,617$ Work in Progress 19,896,141 (1,379,121) 18,517,020 Intangible Property 1,800,680 1,800,680

Subtotal 35,908,935 (1,260,618) - 34,648,317

Capital Assets Being Depreciated:

Buildings 56,217,400 2,359,788 58,577,188 Site Improvements 30,984,047 4,016,582 35,000,629 Vehicles/Machinery/Equipment 167,402,203 29,765,945 (2,196,020) 194,972,128 Intangible Property 5,570,258 1,556,412 (12,127) 7,114,543

Subtotal 260,173,908 37,698,727 (2,208,147) 295,664,488

Less Accumulated Depreciation For:

Buildings (20,333,144) (2,062,895) (22,396,039) Site Improvements (14,362,697) (1,613,746) (15,976,443) Vehicles/Machinery/Equipment (99,203,387) (12,254,957) 2,184,270 (109,274,074) Intangible Property (2,472,334) (955,357) 12,127 (3,415,564)

Subtotal (136,371,562) (16,886,955) 2,196,397 (151,062,120)

Total Capital Assets (Netof Accumulated Depreciation) 159,711,281$ 19,551,154$ (11,750)$ 179,250,685$

53

Beginning Balance

12/31/2013Additions/

Adjustments Retirements

Ending Balance

12/31/2014Capital Assets, Not Being Depreciated: Land 14,212,114$ 14,212,114$ Work in Progress 20,086,758 (190,617) 19,896,141 Intangible Property 1,761,362 39,318 1,800,680

Subtotal 36,060,234 (151,299) - 35,908,935

Capital Assets Being Depreciated: Buildings 54,070,170 2,153,150 (5,920) 56,217,400 Site Improvements 30,883,461 347,122 (246,536) 30,984,047 Vehicles/Machinery/Equipment 170,787,251 7,041,775 (10,426,823) 167,402,203 Intangible Property 5,053,569 516,689 5,570,258

Subtotal 260,794,451 10,058,736 (10,679,279) 260,173,908

Less Accumulated Depreciation For: Buildings (18,463,230) (1,875,834) 5,920 (20,333,144) Site Improvements (13,265,216) (1,344,017) 246,536 (14,362,697) Vehicles/Machinery/Equipment (98,264,285) (11,357,078) 10,417,976 (99,203,387) Intangible Property (1,898,528) (573,806) (2,472,334)

Subtotal (131,891,259) (15,150,735) 10,670,432 (136,371,562)

Total Capital Assets, Netof Accumulated Depreciation 164,963,426$ (5,243,298)$ (8,847)$ 159,711,281$

54

Note 6: Pension Plan

The table below represents the aggregate pension amounts for all Community Transit plans for

the years 2015 and 2014, subject to the requirements of GASB Statement 68, Accounting and

Financial Reporting for Pensions—an amendment of GASB Statement No 27.

2015 2014Pension Liability 32,922,782$ 24,623,986$

Deferred Outflows of Resources 4,688,614$ 1,673,937$

Deferred Inflows of Resources 5,056,370$ 10,852,784$

Pension Expense 3,716,047$ 3,332,623$

Aggregate Pension Amounts:PERS Plans 1, 2, and 3

Substantially all of Community Transit’s full‐time and qualifying part‐time employees

participate in the Public Employees’ Retirement System (PERS). This statewide retirement

system is administered by the Washington State Department of Retirement Systems as cost‐

sharing, multiple‐employer, public‐employee, defined‐benefit, and defined‐contribution

retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation

and administration of all public retirement systems.

The Department of Retirement Systems (DRS), a department within the primary government of

the state of Washington, issues a publicly available comprehensive annual financial report

(CAFR) that includes financial statements and required supplementary information for each

plan. The Department of Retirement Systems’ CAFR may be obtained by writing to:

Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA

98540‐8380, or it may be downloaded from the DRS website at www.drs.wa.gov.

Public Employees’ Retirement System (PERS) Plans 1, 2 and 3

PERS is a cost‐sharing, multiple‐employer retirement system comprised of three separate plans

for membership purposes. PERS members include elected officials; state employees; employees

of the supreme, appeals and superior courts; employees of the legislature; employees of

district and municipal courts; employees of local governments; and higher education

employees not participating in higher education retirement programs. PERS is comprised of

three separate pension plans for membership purposes. PERS Plans 1 and 2 are defined‐benefit

plans, and PERS Plan 3 is a defined‐benefit plan with a defined‐contribution component.

PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are

determined as 2 percent of the member’s average final compensation times the member’s

years of service. The average final compensation is the average of the member’s 24 highest

consecutive service months.

55

Members are eligible for retirement from active status at any age with at least 30 years of

service, at age 55 with at least 25 years of service, or at age 60 with at least five years of

service. Members retiring from active status prior to the age of 65 may receive actuarially

reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor

benefit.

Other benefits include duty and nonduty disability payments, an optional cost‐of‐living

adjustment (COLA), and a one‐time, duty‐related death benefit, if found eligible by the

Department of Labor and Industries. PERS Plan 1 members were vested after the completion of

five years of eligible service. The plan was closed to new entrants on September 30, 1977.

Contributions

The PERS Plan 1 member contribution rate is established by state statute at 6 percent. The

employer contribution rate is developed by the Office of the State Actuary and includes an

administrative expense component that is currently set at 0.18 percent. Each biennium, the

state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1

required contribution rates (expressed as a percentage of covered payroll) for 2014 and 2015

were as follows:

PERS Plan 1

Actual Contribution Rates: Employer Employee

January 2014 through June 2015 9.21% 6.00%

July 2015 through December 2015 11.18% 6.00%

Community Transit’s actual contributions to the plan, including the Plan 1 unfunded actuarial

accrued liability1 funded through Plan 2/3 rates, were $1,866,781 and $1,480,324 for the years

ended December 31, 2015, and December 31, 2014, respectively.

PERS Plan 2/3 provides retirement, disability, and death benefits. Retirement benefits are

determined as 2 percent of the member’s average final compensation times the member’s

years of service for Plan 2 and 1 percent of average final compensation for Plan 3. The average

final compensation is the average of the member’s 60 highest‐paid consecutive service months.

There is no cap on years of service credit.

Members are eligible for retirement with a full benefit at age 65 with at least five years of

service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3

members who have at least 20 years of service credit and are 55 years of age or older, are

1 Unfunded actuarial accrued liability (UAAL): The excess, if any, of the actuarial accrued liability over the actuarial value of assets. In other words, the present value of benefits earned to date that are not covered by current plan assets (definition courtesy of the Washington State Office of the State Actuary). For purposes of this discussion, the UAAL is the amount of retirement that is owed to an employee in future years that exceeds current assets and their projected growth.

56

eligible for early retirement with a benefit that is reduced by a factor that varies according to

age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service

credit and are at least 55 years old can retire under one of two provisions:

With a benefit that is reduced by 3 percent for each year before age 65.

or

With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return‐to‐work rules.

PERS Plan 2/3 members hired on or after May 1, 2013, have the option to retire early by

accepting a reduction of 5 percent for each year of retirement before age 65. This option is

available only to those who are age 55 or older and have at least 30 years of service credit.

PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor

benefit. Other PERS Plan 2/3 benefits include duty and nonduty disability payments, a cost‐of‐

living allowance (based on the Consumer Price Index) and capped at 3 percent annually, and a

one‐time, duty‐related death benefit, if found eligible by the Department of Labor and

Industries.

PERS Plan 2 members are vested after completing five years of eligible service. Plan 3 members

are vested in the defined‐benefit portion of their plan after ten years of service or after five

years of service if 12 months of that service are earned after age 44.

PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and

investment earnings on those contributions. PERS Plan 3 members choose their contribution

rate upon joining membership and have a chance to change rates upon changing employers.

As established by statute, Plan 3 required defined contribution rates are set at a minimum of

5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute

to the defined contribution benefits. PERS Plan 3 members are immediately vested in the

defined contribution portion of their plan.

Contributions

PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the

State Actuary to fully fund Plan 2 and the defined‐benefit portion of Plan 3. The Plan 2/3

employer rates include a component to address the PERS Plan 1 unfunded actuarial accrued

liability and an administrative expense that is currently set at 0.18 percent.

Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee

contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates

(expressed as a percentage of covered payroll) for 2014 and 2015 follow:

57

PERS Plans 2/3

Actual Contribution Rates: Employer, Plans 2/3

Employee, Plan 2

Employee, Plan 3

January 2014 through June 2015 9.21% 4.92% Varies

July 2015 through December 2015 11.18% 6.12% Varies

Community Transit’s actual contributions to the plan, excluding the Plan 1 unfunded actuarial

accrued liability contributions, were $2,373,759 and $1,806,240 for the years ended

December 31, 2015, and December 31, 2014, respectively.

Actuarial Assumptions

The total pension liability for each of the DRS plans was determined using the most recent

actuarial valuation completed in 2015 with a valuation date of June 30, 2014. The actuarial

assumptions used in the valuation were based on the results of the Office of the State Actuary’s

2007‐2012 Demographic Experience Study.

Additional assumptions for subsequent events and law changes are current as of the 2014

actuarial valuation report. The total pension liability was calculated as of the valuation date and

rolled forward to the measurement date of June 30, 2015. Plan liabilities were rolled forward

from June 30, 2014, to June 30, 2015, reflecting each plan’s normal cost (using the entry‐age

cost method), assumed interest, and actual benefit payments.

Inflation: 3 percent total economic inflation; 3.75 percent salary inflation.

Salary increases: In addition to the base 3.75 percent salary inflation assumption, salaries are also expected to grow by promotions and longevity.

Investment rate of return: 7.5 percent.

Mortality rates were based on the RP‐2000 report’s Combined Healthy Table and Combined

Disabled Table published by the Society of Actuaries. The Office of the State Actuary applied

offsets to the base table and recognized future improvements in mortality by projecting the

mortality rates using 100 percent Scale BB2. Mortality rates are applied on a generational basis;

meaning, each member is assumed to receive additional mortality improvements in each future

year throughout his or her lifetime.

2 The Society of Actuaries uses Scale BB to determine pension valuations. Scale BB is based on more recent data and newly developed techniques and can be used immediately without any changes to existing valuation software. (Society of Actuaries, Mortality Improvement Scale BB Report, September 2012, http://www.soa.org)

58

There were minor changes in methods and assumptions since the last valuation.

The Office of the State Actuary updated demographic assumptions (consistent with the changes from the 2007‐2012 Demographic Experience Study) used when valuing the PERS 1 basic minimum COLA.

The Office of the State Actuary corrected how valuation software calculates a member’s entry age under the entry age normal actuarial cost method. Previously, the funding age was rounded, resulting in an entry age one year higher in some cases.

For purposes of calculating the Plan 2/3 entry age normal cost contribution rates, the Office of the State Actuary now uses the current blend of Plan 2 and Plan 3 salaries rather than using a long‐term membership assumption of two‐thirds Plan 2 members and one‐third Plan 3 members.

The Office of the State Actuary changed the way it applies salary limits, as described in their 2007‐2012 Demographic Experience Study.

Discount Rate

The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent.

To determine that rate, an asset sufficiency test included an assumed 7.7 percent long‐term

discount rate to determine funding liabilities for calculating future contribution rate

requirements. (All plans use 7.7 percent.)

Consistent with the long‐term expected rate of return, a 7.5 percent future investment rate of

return on invested assets was assumed for the test. Contributions from plan members and

employers are assumed to continue being made at contractually required rates, including

PERS 2/3 whose rate includes a component for PERS Plan 1 liabilities. Based on these

assumptions, the pension plans’ fiduciary net position was projected to be available to make all

projected future benefit payments of current plan members. Therefore, the long‐term expected

rate of return of 7.5 percent was used to determine the total liability.

Long-Term Expected Rate of Return

The long‐term expected rate of return of 7.5 percent on DRS pension plan investments was

determined using a building‐block‐method. The Washington State Investment Board (WSIB)

used a best estimate of expected future rates of return (expected returns, net of pension plan

investment expense, including inflation) to develop each major asset class. Those expected

returns make up one component of the WSIB’s capital market assumptions. WSIB uses the

capital market assumptions and their target asset allocation to simulate future investment

returns at various future times. The long‐term expected rate of return of 7.5 percent

approximately equals the median of the simulated investment returns over a 50‐year time

horizon.

59

Estimated Rates of Return by Asset Class

Best estimates of arithmetic real rates of return for each major asset class included in the

pension plan’s target asset allocation as of June 30, 2015, and June 30, 2014, are summarized in

the following table. The inflation component used to create the table is 2.2 percent and

represents the WSIB’s most recent long‐term estimate of broad economic inflation.

Asset Class

2015 Target

Allocation

2015 % Long-Term Expected Real Rate

of Return Arithmetic

2014 Target

Allocation

2014 % Long-Term Expected Real Rate

of Return Arithmetic

Fixed Income 20% 1.70% 20% 0.80%

Tangible Assets 5% 4.40% 5% 4.10%

Real Estate 15% 5.80% 15% 5.30%

Global Equity 37% 6.60% 37% 6.05%

Private Equity 23% 9.60% 23% 9.05%

100% 100%

Sensitivity of Net Pension Liability

The tables below presents Community Transit’s proportionate share of the net pension liability

calculated using the discount rate of 7.5 percent, as well as what Community Transit’s

proportionate share of the net pension liability would be if it were calculated using a discount

rate that is one percentage point lower (6.5 percent) or one percentage point higher

(8.5 percent) than the current rate.

As of June 30, 2015:

1% Decrease(6.5%)

Current Discount Rate (7.5%)

1% Increase(8.5%)

PERS 1 21,410,835$ 17,585,864$ 14,296,739$

PERS 2/3 44,845,945$ 15,336,918$ (7,257,037)$

As of June 30, 2014:

1% Decrease(6.5%)

Current Discount Rate (7.5%)

1% Increase(8.5%)

PERS 1 20,103,133$ 16,309,562$ 13,053,155$

PERS 2/3 34,681,244$ 8,314,424$ (11,824,919)$

Pension Plan Fiduciary Net Position

Detailed information about the state’s pension plans’ fiduciary net position is available in the

separately issued DRS financial report.

60

Liabilities, Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions

At June 30, 2015, and June 30, 2014, Community Transit reported total pension liabilities of

$32,922,782 and $24,623,986, respectively, for its proportionate share of the net pension

liabilities as shown:

2015 Liability 2014 Liability

PERS 1 17,585,864$ 16,309,562$

PERS 2/3 15,336,918$ 8,314,424$

Community Transit’s proportionate share of the collective net pension liabilities was as follows:

Proportionate

Share 6/30/2015 Proportionate

Share 6/30/2014 Change in Proportion

PERS 1 0.336190% 0.323760% 0.012430%

PERS 2/3 0.429238% 0.411328% 0.017910%

Employer contribution transmittals received and processed by the DRS for the fiscal years

ended June 30, 2015, and June 30, 2014 were used as the basis for determining each

employer’s proportionate share of the collective pension amounts reported by the DRS in their

Schedules of Employer and Nonemployer Allocations.

The collective net pension liabilities were based on the actuarial valuation date of June 30,

2014. Update procedures were used to roll forward the total pension liability to the

measurement date of June 30, 2015.

Pension Expense

For the years ended December 31, 2015, and December 31, 2014, Community Transit

recognized pension expense as shown:

2015 Pension Expense

2014 Pension Expense

PERS 1 1,739,216$ 1,501,068$

PERS 2/3 1,976,831$ 1,831,555$

61

Deferred Outflows of Resources and Deferred Inflows of Resources

At December 31, 2015, Community Transit reported deferred outflows of resources and

deferred inflows of resources related to pensions from the following sources:

PERS 1Deferred

Outflows of Resources




Differences between expected and actual experience

-$ -$ -$ -$

Net difference between projected and actual investment earnings on pension plan investments

- 962,139 - 2,039,419

Changes of assumptions - - - -

Changes in proportion and differences between contributions and proportionate share of contributions

- - - -

Contributions subsequent to the measurement date

1,072,667 - 751,450 -

Total 1,072,667$ 962,139$ 751,450$ 2,039,419$

2015 2014

PERS 2/3Deferred

Outflows of Resources




Differences between expected and actual experience

1,630,319$ -$ -$ -$

Net difference between projected and actual investment earnings on pension plan investments

- 4,094,231 - 8,813,365

Changes of assumptions 24,711 - - -

Changes in proportion and differences between contributions and proportionate share of contributions

576,281 - - -

Contributions subsequent to the measurement date

1,384,636 - 922,487 -

Total 3,615,947$ 4,094,231$ 922,487$ 8,813,365$

2015 2014

Deferred outflows of resources related to pensions resulting from Community Transit’s

contributions subsequent to the measurement date will be recognized as a reduction of the net

pension liability in the subsequent fiscal year.

62

Other amounts reported as deferred outflows and deferred inflows of resources related to

pensions will be recognized in pension expense as shown:

Year EndedDecember 31

PERS 1

2016 (372,892)$

2017 (372,892)

2018 (372,892)

2019 156,537

Thereafter -

Total (962,139)$

Year EndedDecember 31

PERS 2/3

2016 (942,107)$

2017 (942,107)

2018 (942,111)

2019 963,405

Thereafter -

Total (1,862,920)$

Note 7: Risk Pool

In December 1988, Community Transit signed an interlocal government agreement with seven

Washington public transit systems for the joint purchase of liability insurance, joint self‐

insurance, and joint contracting for hiring of personnel to provide risk management, claims

handling, and administrative services. The agreement created an agency known as the

Washington State Transit Insurance Pool (WSTIP). The purpose of the pool is stabilization of

present insurance costs and reduction of costs in the long‐term future.

The pool is governed by a Board of Directors consisting of a representative of each member

system. Participating transit systems as of December 31, 2015, include:

Asotin County PTBA.

Ben Franklin Transit.

Clallam Transit System.

Columbia Area Transit.

Community Transit.

C‐Tran.

Everett Transit.

Grant County Transit.

Grays Harbor Transportation Authority.

Intercity Transit.

Island Transit.

Jefferson Transit Authority.

Kitsap Transit.

Link Transit.

Mason Transit Authority.

Pacific Transit System.

Pierce Transit.

Pullman Transit.

River Cities Transit.

Skagit Transit.

Spokane Transit.

Twin Transit.

Valley Transit.

Whatcom Transit Authority.

Yakima Transit.

63

The pool self‐insures the first $2 million of all liability claims; after the first $2 million, the next

$3 million is provided by Government Entities Mutual, Inc. PCC. Private carriers supply the

remaining liability coverages up to the $20 million limit on a per‐occurrence basis for auto and

general liability and on a per‐claim basis for errors and omissions. In addition, the pool provides

property, comprehensive, auto physical damage, and crime coverage. A complete annual report

including financial statements is available at http://www.wstip.org.

The next table summarizes audited financial information for the pool as of December 31, 2014.

2014

Assets 37,159,570$

Liabilities 175,031

Reserve for Claims 16,555,981

Net Position 20,428,558

Total Liabilities & Net Position 37,159,570

Operating Revenues 11,783,693

Operating Expenses 12,289,462

Operating Income (Loss) (505,769)

Nonoperating Revenues (Expenses) 438,009

Change in Net Position (67,760)

Net Position - Beginning of Year 20,496,318

Net Position - End of Year 20,428,558$

Washington State law prohibits the distribution of profits from insurance pools to member

agencies. Accordingly, the financial statements do not reflect any equity in the Washington

State Transit Insurance Pool.

64

Note 8: Insurance

A. Liability Insurance

Community Transit joined the Washington State Transit Insurance Pool (WSTIP) in December

1988 for coverage effective January 1, 1989. Community Transit assumes the liability for claims

up to the deductible amounts listed in the following table for each type of risk. Risk of claims in

excess of the deductible amount has been transferred to WSTIP.

In 2015 WSTIP provided the coverage as shown in this table.

Comprehensive General Liability $20,000,000 per occurrence with no deductible

Auto Liability, Garage Keepers, and Garage Legal Liability

$20,000,000 per occurrence with no deductible

Public Official Liability $20,000,000 per occurrence with $5,000 deductible

Crime Coverage/Public Employee Dishonesty $1,000,000 per occurrence with $10,000 deductible

Property Damage Insurance:

Property—Building, Personal, Auto Physical (All Vehicles), Boiler, Machinery, and Cyber Liability

$1,000,000,000 blanket limit with $5,000 deductible

Pollution Liability $5,000,000 aggregate with $100,000 self-insured retention and $5,000 deductible

Pollution Liability

(Underground Fuel Storage Tanks

$1,000,000 per occurrence with $25,000

deductible

Claim settlements in the past three years did not exceed insurance coverage.

B. Self-Insured Workers’ Compensation and Unemployment Compensation

Community Transit continues to be self‐insured for unemployment compensation and workers’

compensation (industrial insurance), with excess workers’ compensation retained consistent

with statutory requirements.

On December 31, 2015, cash and investments set aside for self‐insurance totaled $6,517,408.

Community Transit reported a liability on December 31, 2015, of $2,409,000, which represents

the estimated liability for workers’ compensation claims for which Community Transit may

ultimately be liable, including a provision for claims incurred but not yet reported. Of the

$2,409,000 estimated liability, Community Transit expects to pay out $840,000 within the

coming year, and the remaining $1,569,000 is expected to be paid out later than one year.

No outstanding liabilities have been removed from the Comparative Statements of Net Position

due to the purchase of annuity contracts from third parties in the name of the claimants. In

addition to the reserve, Community Transit purchased a commercial workers’ compensation

65

policy with a $1,000,000 limit per occurrence and a $550,000 self‐insured retention per

occurrence.

In 2015, Community Transit paid out $53,484 in unemployment compensation claims, and

$86,637 in 2014. There is no accrued liability for future unemployment claims. The following

table shows the claims liabilities for Workers’ Compensation:

2015 2014

Total Claims Liability : Beginning of Year 2,425,000$ 2,312,000$

Incurred Claims:

Provision for Incurred Claims 1,411,000 1,374,000

Change in Provision for Incurred Claims, Prior Year (373,305) (203,108)

Total Provision for Incurred Claims 1,037,695 1,170,892

Total Incurred 3,462,695 3,482,892

Payments:

Payment Made for Current-Year Claims 288,695 379,330

Payment Made for Prior-Year Claims 765,000 678,562

Total Payments 1,053,695 1,057,892

Total Claims Liability: End of Year 2,409,000$ 2,425,000$

Note 9: Changes in Long-Term Liabilities

During the year ended December 31, 2015, the following changes occurred in long‐term

liabilities:

Note DescriptionBeginning

Balance 12/31/2014 Additions Reductions

Ending Balance

12/31/2015Due Within One Year

9 A. General Obligation Bonds 3,545,000$ -$ (1,745,000)$ 1,800,000$ 1,800,000$

Premiums 39,993 - (29,136) 10,857 10,857

Total Bonds Payable 3,584,993 - (1,774,136) 1,810,857 1,810,857

9 B. Compensated Absences 4,022,067 460,820 - 4,482,887 3,461,688

Workers' Compensation 2,425,000 - (16,000) 2,409,000 840,000

9 C. Pension Obligations 24,623,986 8,298,796 - 32,922,782 -

9 D. OPEB Obligations 4,708,569 701,953 - 5,410,522 -

Total Long-Term Liabilities 39,364,615$ 9,461,569$ (1,790,136)$ 47,036,048$ 6,112,545$

66

A. Bonds Payable

Limited sales tax, general‐obligation bonds were issued in 2004 for the purchase of capital

assets. Of the total 2004 bond proceeds, $1,200,000 was used to fund the reserve account, and

$180,673 was used to pay the bond issue costs. On June 3, 2010, Community Transit issued

$5,240,000 in limited sales tax, general‐obligation refunding bonds, Series 2010, to fully refund

outstanding 2004 bonds and pay for issuance costs for the Series 2010 bonds. An economic gain

of $54,256 resulted from the refunding transaction. The difference between the cash flows

required to service the outstanding 2004 bonds and to service the new debt was a loss that is

recorded as a deferred outflow of resources and is being amortized over the remaining life of

the 2004 bonds.

The Series 2010 bond interest is payable on February 1 and August 1 of each year commencing

February 1, 2011, and ending August 1, 2016. The bonds are not subject to redemption prior to

their maturity. The bonds have a coupon rate of 3 percent with varying maturities ranging from

2014 to 2016. These bonds are subject to federal arbitrage rules. As of December 31, 2015, the

2010 bonds are the only outstanding issued debt held by Community Transit.

As of 12/31/2015

As of 12/31/2014

Current Portion of Bonds Payable 1,800,000$ 1,745,000$

Long-Term Portion of Bonds Payable - 1,800,000

Total Bonds Payable 1,800,000$ 3,545,000$

The table below reflects 2015 bonds payable activity.

Bond Type

Beginning Balance

12/31/2014 IssuanceReductions via

Principal

Ending Balance

12/31/2015

Amount Duein 2016 -

Principal Only

Series 2010 3,545,000$ -$ 1,745,000$ 1,800,000$ 1,800,000$

The following table presents the annual principal and interest debt service amounts:

Year Rate Principal InterestTotal Debt

Service

2016 3.00% 1,800,000 54,000 1,854,000

1,800,000$ 54,000$ 1,854,000$

Annual Debt Service

Total

B. Compensated Absences

The two categories of compensated absences are paid time off (PTO) and major sick leave

(MSL). As of December 31, 2015, PTO payable was $3,209,907 as compared to $2,833,483 for

the same period in 2014. The 2015 current portion amounted to $3,103,980, which was an

67

increase of $383,836 compared to the 2014 amount of $2,720,144. The amount classified as

long term was $105,927, which was a decrease of $7,412 over the 2014 amount of $113,339.

As of December 31, 2015, the vested portion of MSL payable was $1,272,979 as compared to

$1,188,583 for the same period in 2014. The 2015 current portion amounted to $357,707,

which was an increase of $226,963 compared to the 2014 amount of $130,744. The amount

classified as long term was $915,272, which was a decrease of $142,567 over the 2014 amount

of $1,057,839. Schedules for all categories of compensated absences follow.

The PTO short‐term and long‐term classification is based on a five‐year historical average of

leave paid as a percentage of the liability.

Paid Time Off (PTO) 2015 2014

Beginning Balance - Current Liability 2,720,144$ 2,509,251$

PTO Earned 5,092,847 4,334,348

PTO Paid (4,709,011) (4,123,455)

Ending Balance - Current Liability 3,103,980 2,720,144

Beginning Balance - Long-Term Liability 113,339 132,066

PTO Earned 138,228 153,084

PTO Paid (145,640) (171,811)

Ending Balance - Long-Term Liability 105,927$ 113,339$

The MSL short‐term and long‐term classification is based on a five‐year historical average on

leave paid as a percentage of the liability.

Major Sick Leave (MSL) 2015 2014

Beginning Balance - Current Liability 130,744$ 157,709$

MSL Earned 412,231 32,325

MSL Paid (185,268) (59,290)

Ending Balance - Current Liability 357,707 130,744

Beginning Balance - Long-Term Liability 1,057,839 968,787

MSL Earned 333,835 568,758

MSL Paid (476,402) (479,706)

Ending Balance - Long-Term Liability 915,272$ 1,057,839$

68

C. Pensions

Please refer to Note 6–Pensions.

D. Other Postemployment Benefits (OPEB)

In 2009, Community Transit implemented GASB Statement No. 45, Accounting and Financial

Reporting by Employers for Postemployment Benefits Other Than Pensions, which establishes

accounting and financial reporting standards for benefits that are earned during an employee’s

active service but will not be paid until after the employee retires.

Plan Description: During the working careers of active employees, Community Transit

contributes to the state Public Employees Benefits Board (PEBB), a cost‐sharing, multiple‐

employer, defined‐benefit, healthcare program administered by the Washington State Health

Care Authority (HCA), an agent. The program provides medical, prescription drug, and vision

coverage.

HCA issues a publicly available financial report that includes financial statements and required

supplementary information for the program. That report may be obtained by writing to HCA,

P.O. Box 42682, Olympia, WA 98504‐2682. No stand‐alone financial statements are available

for the program.

Under state law, active Community Transit employees who are covered by the state public

employee retirement system are eligible upon retirement to obtain medical, prescription drug,

and vision coverage through the state PEBB program at the retiree rate associated with the

elected plan. Because the rate is based on a pool of both active employees and retirees, the

rate paid by pre‐Medicare retirees is less than the full cost of the benefits, based on their age

and other demographic factors.

This creates an implicit subsidy where the “underpayment” of retiree premiums is funded

through the premiums paid by Community Transit for active employees. Additionally, an explicit

subsidy exists for Medicare‐eligible retirees enrolled in Medicare Parts A and B. For 2015, the

explicit subsidy is the lessor of 50 percent of the monthly premium or $150.00 per month. The

rate was $150.00 for 2014. This explicit subsidy is also funded through premiums paid by

Community Transit for active employees.

Funding Policy: The HCA calculates the premium amounts each year that are sufficient to fund

the program on a pay‐as‐you‐go basis. These costs are passed through to all participating

agencies based on active employee headcount.

69

Annual OPEB costs and the net OPEB obligation for 2015, 2014, and 2013 follow.

Annual OPEB Cost 2015 2014 2013

Annual Required Contribution (ARC) 908,174$ 680,651$ 680,651$

Interest on Net OPEB Obligation 211,886 190,167 167,169

Adjustment to ARC (289,065) (259,435) (228,060)

Annual OPEB Cost 830,995$ 611,383$ 619,760$

Net OPEB Obligation 2015 2014 2013

Net OPEB Obligation—Beginning of Year 4,708,569$ 4,225,937$ 3,714,857$

Annual OPEB Cost 830,995 611,383 619,760

Employer Contribution Made (129,042) (128,751) (108,680)

Net OPEB Obligation—End of Year 5,410,522$ 4,708,569$ 4,225,937$

Increase/Decrease in Net OPEB 701,953$ 482,632$ 511,080$

Employer Percentage Contribution 16% 21% 18%

Funded Status and Funding Progress: The disclosures for the funded status and funding

progress are presented immediately after the Notes to the Financial Statements in the required

supplementary information section. The disclosures are based on a biannual basis.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and

assumptions about the probability of occurrence of events far into the future. Examples include

assumptions about future employment, mortality, investment rate of return, payroll growth

rate, and the healthcare cost trend.

Amounts determined regarding the funded status of the plan and the annual required

contributions of the employer are subject to continual revision as actual results are compared

with past expectations and new estimates are made about the future.

Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes

are based on the substantive plan (the program as understood by the employer and the plan

members) and include the types of benefits provided at the time of each valuation and the

historical pattern of sharing of benefit costs between the employer and program members to

that point.

The actuarial methods and assumptions used include techniques that are designed to reduce

the effects of short‐term volatility in actuarial accrued liabilities and the actuarial value of

assets, consistent with the long‐term perspective of the calculations.

70

Community Transit performed an actuarial study as of December 31, 2015, in accordance with

the parameters of GASB Statement No. 45. The actuary calculated the OPEB obligation based

on individual Community Transit employee data, including age, retirement eligibility, and length

of service. The probability of an employee of a given age and length of service retiring and

receiving OPEB benefits is based on statewide historical data.

Community Transit will use a third‐party vendor to complete the actuarial report every two

years. In the interim years between valuations, the actuary will update the annual OPEB cost

and the net OPEB obligation. All other assumptions and data will remain the same. The

actuarial report is available upon request from Community Transit. The next table summarizes

actuarial assumptions used:

Description Actuarial Assumption

Valuation Date December 31, 2015

Actuarial Cost Method Projected Unit Credit

Investment Rate of Return 4.5% per year

Inflation Rate 3% per year

Projected Salary Increases 2% for 2015 adjustment of covered payroll

Health Care Cost Trend Rates All years: 5%

Post-Retirement Benefit Increases No increases are projected.

Amortization Method Level dollar amount on an open basis over a period of 30 years.

Note 10: Net Position

Portions of Community Transit’s net position are restricted for the following purposes:

Debt Service: Funds restricted by bond covenant for payment of principal and interest.

Workers’ Compensation: Funds legally restricted by Washington State Department of Labor and Industries for payment of self‐insured workers’ compensation claims.

In addition, Community Transit’s Board of Directors has designated portions of Community

Transit’s net position under the following categories:

Vehicle Replacement: Funds set aside for future replacement of buses, paratransit vehicles, and vanpools.

Future Capital Improvements: Amounts designated to fund capital projects.

Workers’ Compensation: Additional funds set aside in excess of the state‐required restrictions for the payment of workers’ compensation claims.

71

The next table shows net position as reported on the balance sheets, including the breakdown

of designated and undesignated net position, as of December 31, 2015, and December 31,

2014.

2015 2014

Net Investment in Capital Assets 178,831,358$ 157,546,954$

Restricted Net Position

Debt Service 551,861 551,861

Workers' Compensation 1,803,750 1,741,000

Total Restricted Net Position 2,355,611 2,292,861

Unrestricted Net Position

Designated - Vehicle Replacement 39,878,935 37,636,848

Designated - Future Capital Improvements 38,851,648 39,277,694

Designated - Workers Compensation 2,272,890 1,789,450

Undesignated 27,727,759 19,968,006

Total Unrestricted Net Position 108,731,233 98,671,998

Net Position 289,918,202$ 258,511,813$

Note 11: Commitments

A. Paratransit Service (DART)

On September 9, 2011, Community Transit entered into a five‐

year contract with Senior Services of Snohomish County for the

provision of paratransit service.

The contract terms cover the period October 1, 2011, through

September 30, 2016, with renewal options for five additional

one‐year terms. The annual cost for 100,000 annual revenue

hours over the five‐year period is shown in the table at right.

The annual cost of paratransit service is within the annual

budget. Contracted services with Senior Services amounted to $6,533,980 during 2015

compared to $6,704,149 in 2014. Actual annual vehicle hours amounted to 85,058 for 2015,

compared to 84,349 for 2014.

Year Annual Cost

1 6,417,520$

2 6,569,659

3 6,726,583

4 6,886,620

5 7,051,588

100,000Revenue Service Hours

72

B. Commuter Service

On May 9, 2012, Community Transit entered into a multiyear contract with First Transit. Under

the terms of the contract, First Transit will operate Community Transit’s express commuter bus

service for a five‐year, seven‐month period with renewal options for five additional one‐year

term extensions beginning January 1, 2018.

First Transit operates the service from Community Transit’s Kasch Park Base under the terms of

the facility lease provisions of the commuter service agreement. The annual cost of the service

for the five‐year, seven‐month period, which includes 92,560 service hours of Sound Transit

express commuter service, is shown below.

Revenue Service Hours Annual Cost

Jun 09, 2012 to Dec 31, 2013 196,133 25,102,589$

Jan 01, 2014 to Dec 31, 2014 124,040 16,352,081$

Jan 01, 2015 to Dec 31, 2015 124,040 16,842,643$

Jan 01, 2016 to Dec 31, 2016 124,040 17,347,923$

Jan 01, 2017 to Dec 31, 2017 124,040 17,868,360$

Contract Period

The annual cost is within the annual budget. Contract service with First Transit for Community

Transit service amounted to $4,638,123 in 2015 compared to $4,448,041 in 2014. Actual annual

revenue hours amounted to 37,907 in 2015 as compared to 36,876 in 2014.

Contract service with First Transit for Sound Transit service amounted to $12,625,307 in 2015

compared to $12,218,794 in 2014. Actual revenue hours amounted to 92,752 in 2015 as

compared to 91,065 for 2014.

C. Central Puget Sound Regional Fare Coordination System

Community Transit has an undivided interest in a nonequity joint venture, jointly governed with

six other Puget Sound‐area public transit agencies for the provision of regional ORCA card fare

collection services.

On April 14, 2009, Community Transit entered into an amended interlocal agreement with King

County Metro Transit, Pierce Transit, Sound Transit, Everett Transit, Kitsap Transit, and the

Washington State Ferries to provide for joint operation of the Central Puget Sound Regional

Fare Coordination System. The regional fare coordination system began a phased

implementation on April 1, 2009, with substantial deployment in 2010. The system is governed

by a joint board consisting of one representative from each participating agency. The

participating agencies have committed to use the system for a minimum of ten years and fund

a proportional share of regional shared costs.

Under the terms of the interlocal agreement, Sound Transit acts as the fiscal agent.

Participating agencies remit all funds collected through the sale of ORCA fare media to Sound

73

Transit. When customers use ORCA cards to pay transit fares, statistical information is collected

which determines how Sound Transit remits fare revenue back to participating agencies.

Community Transit’s undivided interests in the assets, liabilities, and operations of the ORCA

smart card are consolidated within these financial statements on a proportionate basis.

Expenses associated with the regional fare coordination system are shared proportionally by

each participating agency. The joint venture does not publish public financial statements.

Please direct requests for information about the joint venture’s financial statements to Lori Fox

at the address shown in the Management’s Discussion and Analysis section of this report.

The following table represents the amount included in Community Transit’s financial

statements that is an undivided interest:

Current Assets 2015 2014Cash and Cash Equivalents 2,051,669$ 1,838,891$

Accounts Receivable 2,546,315 2,200,205

Total Assets 4,597,984$ 4,039,096$

Current LiabilitiesAccounts Payable and Accrued Liabilities 2,932,888 2,732,280

Deferred Receipts 1,665,095 1,306,816

Total Liabilities 4,597,983$ 4,039,096$

Total Operating Revenues 15,146,551$ 14,254,517$

Total Expenses 449,803$ 504,313$

D. Transit Police Contract with Snohomish County

On December 4, 2014, Community Transit’s Board of Directors approved a new interlocal

agreement with Snohomish County to continue the police services which the Snohomish

County Sheriff’s Office has provided since April 2003.

Under the terms of the new agreement, the county provides

one full‐time sergeant, one full‐time administrative staff

person, one full‐time master patrol deputy, and nine full‐time

commissioned sheriff’s deputies who patrol Community

Transit’s services and facilities on a regular basis and perform

other related services.

The contract term is January 1, 2015, to December 31, 2017. The annual cost of these services

over the life of the contract is summarized above.

Costs in 2015 were slightly below the annual budget. The cost of police services provided to

Community Transit amounted to $1,452,638 in 2015 as compared to $1,198,808 in 2014.

Year Annual Cost

2015 1,560,598$

2016 1,607,416

2017 1,655,638

74

E. Double-Decker Coach Contract

On July 2, 2009, Community Transit entered into a five‐year contract with Alexander Dennis for

the purchase of up to 120 double‐decker coaches over the term of the contract. Future price

changes are limited to the change in the Producer Price Index for similar equipment. The actual

number of future purchases depends on Community Transit’s future needs and available

funding.

Under the terms of this contract, other transit agencies may purchase buses provided that such

purchases are within the stated quantity and the participating agency assumes all purchasing

responsibilities. The Board approved an initial order of 23 coaches at a cost of $21,675,238. All

were delivered by the end of June 2011. No purchases were made in 2012. An order for 17

coaches was placed in 2013; 16 coaches were delivered in 2015, and the remaining coach is

scheduled for 2016 delivery. An additional five coaches were ordered in 2014 with delivery

scheduled for 2016.

F. Transit Technologies

On February 7, 2008, Community Transit awarded a contract to INIT in the amount of

$13,377,228 to develop and implement a suite of transit technologies. (In financial reports for

previous years, this suite of technologies was referred to as Advanced Public Transportation

Systems or APTS.) The transit technologies suite includes automatic vehicle locators, automated

passenger counters, automated stop annunciation, computer‐aided dispatch, advanced traveler

information systems, data radio, and mobile data terminals.

Phase I was completed in 2011 with implementation of the system for paratransit service.

Phase II, installation of the system for fixed‐route service, was completed in 2013.

Implementing these technologies has improved agency efficiency through faster access to more

reliable system data, leading to better fleet management and improved on‐time performance,

and providing consumers with access to real‐time transit information.

Ten percent retainage in the amount of $1 million was returned to INIT in July 2015. Annual

project costs are within the 2015 budget. For 2015, Community Transit’s transit technologies

contract costs amounted to $1,513,036 as compared to $1,072,650 in 2014.

G. Express Bus Operating Agreement with Sound Transit

Community Transit has operated Sound Transit’s express bus service since September 1999. On

June 4, 2015, Community Transit’s Board of Directors approved a new agreement with Sound

Transit to continue operating Sound Transit express bus service. The agreement covers various

aspects of providing the service including operations, vehicle maintenance, fare collection, and

security. The first year of this agreement ended on December 31, 2015; all subsequent years of

this agreement begin on January 1 and end on December 31. The agreement expires on

December 31, 2017, but includes an option to extend for two additional one‐year periods. In

75

2015, Community Transit received $16,600,685 from Sound Transit compared to $16,870,539 in

2014.

H. Five-Year Bus Purchase Contracts

Community Transit entered into five‐year contracts with New Flyer of America on June 4, 2010,

and GILLIG LLC ‐ USA on June 29, 2010, for the purchase of up to 203 coaches over the term of

the contracts.

Future price changes are limited to the change in the Producer Price Index for similar

equipment. The actual number of future purchases depends on Community Transit’s needs and

available funding. Under the terms of this contract other transit agencies may purchase buses

provided that such purchases are within the stated quantity and the participating agency

assumes all purchasing responsibilities.

In 2015 Community Transit placed an order with New Flyer of America amounting to

$9,553,460 for nineteen 40‐foot coaches; these coaches were delivered in 2015. Community

Transit also placed two more coach orders in 2015: ten 60‐foot coaches from New Flyer of

American and five double‐decker coaches from Alexander Dennis Limited. The 60‐foot coaches

and double‐deckers are scheduled for delivery in 2016.

I. Lease Obligation

As of December 31, 2015, Community Transit had no capital leases and various operating

leases. Total operating lease expense for 2015 was $318,687 compared to $299,318 in 2014.

The leases consist of the park‐and‐pool lot program, communication sites, Pitney Bowes, and

copiers. Both the park‐and‐pool lot program and the

communication site leases are cancellable by either party with a

30‐ to 90‐day notice depending on the contract. The Pitney Bowes

and copier leases are more than one year and noncancelable.

Future minimum lease commitments for noncancelable leases of

more than one year are listed here.

Note 12: Contingencies

A. Legal Proceedings

There are several pending lawsuits in which Community Transit is involved. Community

Transit’s attorney estimates that the potential claim against Community Transit not covered by

insurance resulting from such litigation would not materially affect the financial statements.

Year Annual Cost

2016 33,927$

2017 8,251

2018 2,461

76

B. Federal Grants

Community Transit has received several federal grants for specific purposes that are subject to

review and audit. Such audits could lead to requests for reimbursement of expenditures

disallowed under the terms of the grant. In the opinion of management, such disallowances, if

any, will be immaterial and will not have any significant effect on the financial position of

Community Transit.

C. Environmental Liability

As a public transit operation, Community Transit has certain environmental risks related to its

operation involving the storage, liability, and disposal of certain petroleum products. In the

opinion of management, any potential claim not covered by insurance would not materially

affect the financial statements of Community Transit.

Note 13: Subsequent Events

Community Transit has evaluated subsequent events through June 2016. On July 16, 2015, the

Board of Directors adopted Resolution No. 08‐15, calling for an election to ask the voters to

authorize Community Transit to impose an additional three‐tenths of 1 percent (0.3 percent)

retail sales and use tax as authorized by RCW 82.14.045.

This proposition, known as Snohomish County Proposition 1, was passed by voters in the

Snohomish County general election on November 3, 2015. It authorized 0.3 percent additional

sales and use tax to fund operating, maintenance, and capital improvements to the existing

Community Transit system. These improvements will include more bus trips and connections,

operation of a second line of Swift bus rapid transit, and new routes and service throughout the

county, including connections to the future regional light‐rail network.

The additional 0.3 percent sales and use tax will take effect April 1, 2016. Community Transit

will receive distributions of the additional 0.3 percent tax beginning in late June 2016.

This additional funding has allowed Community Transit to plan substantial service increases in

2016, 2017, and 2018, and more modest increases from 2019 through 2021. A small increase of

about 4,700 annualized revenue hours occurred in March 2016 and a larger increase will occur

in September 2016.

The September 2016 service increase consists of 32,000 annualized hours, including two new

bus routes and numerous service enhancements. Community Transit plans to add

approximately 27,000 annualized hours in 2017 and 45,000 annualized hours in 2018. The 2018

service increase is due primarily to implementation of a new Swift II bus rapid transit line.

77

Note 14: Status of Active Grants

The status of Federal Transit Administration operating grants active as of December 31, 2015,

follows:

Operating Grants

FTA Grant No.Total Grant:

Federal Share

Accrued ReceiptsTo-Date

UnexpendedGrant

Accrued Receipts

Current Year

GCB1947 173,726$ 173,726$ -$ 71,320$

GCB2036 372,727 66,703 306,024 66,703

WA-54-0005 919,210 919,210 - 919,210

WA-90-X527 5,169,710 3,650,794 1,518,916 1,505,971

WA-90-X574 5,121,185 5,121,185 - 2,121,185

WA-95-X062 860,000 860,000 - 267,265

WA-95-X087 884,391 394,306 490,085 394,306

The status of Federal Transit Administration capital grants active as of December 31, 2015,

follows:

Capital Grants

FTA Grant No.Total Grant:

Federal Share

Accrued ReceiptsTo-Date

UnexpendedGrant

Accrued Receipts

Current Year

GCB1855 1,376,000$ 1,376,000$ -$ 1,376,000$

New TrAMS Grant A 486,035 486,035 - 486,035

New TrAMS Grant B 862,299 611,257 251,042 611,257

WA-04-0083 894,578 894,578 - 721,684

WA-04-0096 1,337,512 1,337,512 - 289,053

WA-34-0006 1,380,671 1,380,671 - 1,380,671

WA-54-0005 5,677,575 4,965,454 712,121 4,965,454

WA-90-X454 1,349,267 1,349,267 - 1,349,267

WA-90-X493 500,000 454,757 45,243 172,658

WA-90-X519 1,600,000 1,590,078 9,922 628,904

WA-90-X520 2,157,858 2,148,314 9,544 1,356,398

WA-90-X588 2,240,000 1,174,795 1,065,205 1,174,795

WA-90-X589 9,098,220 4,615,623 4,482,597 4,615,623

WA-95-X062 1,380,000 1,380,000 - 1,380,000


Schedule of Proportionate Share of the Net Pension LiabilityLast 10 Fiscal Years* (as of June 30)

PERS Plan 1

2015 2014

Employer's proportion of the net pension liability 0.336190% 0.323760%

Employer's proportionate share of the net pension liability

17,585,864$ 16,309,562$

Employer's covered payroll 203,389$ 212,639$

Employer's proportionate share of the net pension liability as a percentage of covered payroll

8,646.42% 7,670.07%

Plan fiduciary net position as a percentage of covered payroll

59.10% 61.19%

PERS Plans 2/3

2015 2014

Employer's proportion of the net pension liability 0.429238% 0.411328%

Employer's proportionate share of the net pension liability

15,336,918$ 8,314,424$

Employer's covered payroll 38,087,086$ 35,246,857$

Employer's proportionate share of the net pension liability as a percentage of covered payroll

40.27% 23.59%

Plan fiduciary net position as a percentage of covered payroll

89.20% 93.29%

* Until a full ten-year trend is completed, information is presented only for the years available.

78


Schedule of Employer ContributionsLast 10 Fiscal Years* (as of December 31)

PERS Plan 1

2015 2014

Statutorily or contractually required contributions 1,866,781$ 1,480,324$

Contributions in relation to the statutorily or contractually required contributions (1,866,781) (1,480,324)

Contribution deficiency (excess) -$ -$

Covered employer payroll 166,584$ 223,361$

Contributions as a percentage of covered employee payroll

1,120.62% 662.75%

PERS Plans 2/3

2015 2014

Statutorily or contractually required contributions 2,373,759$ 1,806,240$

Contributions in relation to the statutorily or contractually required contributions (2,373,759) (1,806,240)

Contribution deficiency (excess) -$ -$

Covered employer payroll 42,403,091$ 36,083,840$

Contributions as a percentage of covered employee payroll

5.60% 5.01%

* Until a full ten-year trend is completed, information is presented only for the years available.

79

Actuarial Valuation

Date

Actuary Value of Assets

Actuary Accrued Liability (AAL)

Unfunded AAL (UAAL)

Funded Ratio

Covered Payroll

UAAL as a Percent of Covered Payroll

12/31/2011 $0 6,107,919$ 6,107,919$ 0.0% 36,554,787$ 17%

12/31/2013 $0 6,179,625$ 6,179,625$ 0.0% 32,900,679$ 19%

12/31/2015 $0 7,407,700$ 7,407,700$ 0.0% 39,542,354$ 19%

GASB Statements No. 25 and 27 now require only biennial valuations with no updates between valuations.

Fiscal Year Ended

Annual OPEB Cost

Actual Employer

Contribution Percentage Contributed

Net OPEB Obligation

12/31/2011 790,915$ 111,571$ 14% 3,066,673$

12/31/2012 779,780$ 131,595$ 17% 3,714,858$

12/31/2013 619,760$ 108,680$ 18% 4,225,937$

12/31/2014 611,383$ 128,751$ 21% 4,708,569$

12/31/2015 830,995$ 129,042$ 16% 5,410,522$


Schedule of Funding Progress

Schedule of Employer Contributions

Other Postemployment Benefits Plan (OPEB)

80

Stat

istic

al S

ectio

n

With Choice Connections from Community Transit, when you choose a smart alternative to driving alone, your efforts reduce traffic, save money and time, and help the environment.

Daniel D.Edmonds Community College

BikeChoice Connections 2015Smart Commuter of the 4th Quarter


83

Statistical Section

This section of the comprehensive annual financial report presents statistical information that will assist in the understanding of the financial statements, notes to the financial statements, and required supplementary information in order to assess the financial condition of Community Transit.

Financial Trends: schedules contain trend information to assist the reader in understanding how the PTBA’s financial performance has changed over time. Net Position, Ten‐Year Comparison .................................................................................. 85 Change in Net Position, Ten‐Year Comparison ................................................................. 86 Expenses, Ten‐Year Comparison ....................................................................................... 88

Revenue Capacity: schedules contain information to aid the reader in assessing the PTBA’s revenue sources. Revenues, Ten‐Year Comparison ...................................................................................... 90 Retail Taxable Sales, Ten‐Year Comparison ...................................................................... 92 Snohomish County Overlapping Sales Tax Rates, Ten‐Year Comparison ......................... 94

Debt Capacity: schedules contain information to assist the reader in understanding the PTBA’s debt obligations. Bond Coverage, 2004 and 2010 Bond Issues, Last Ten Fiscal Years ................................. 95 Snohomish County Assessed Valuation, Ten‐Year Comparison ....................................... 96 Outstanding Debt by Type, Ten‐Year Comparison ........................................................... 97 Legal Debt Margin Information, Ten‐Year Comparison .................................................... 98

Demographic and Economic Information: schedules reflect demographic and economic data to aid the reader in understanding the environment within which the PTBA’s activities occur. Snohomish County Demographic and Economic Statistics, Ten‐Year Comparison ....... 100 Snohomish County Principal Employers, Fiscal Year Ending December 31, 2014 .......... 101 Snohomish County Population Demographics Statistics, Ten‐Year Comparison ........... 102

Operating Information: schedules contain information to assist the reader in understanding how the data within the PTBA’s financial report relates to the services and activities it performs. Snohomish County Public Transportation Benefit Area Map 2015 ................................ 103 Service Statistical Data, Ten‐Year Comparison ............................................................... 104 Ridership, Ten‐Year Comparison .................................................................................... 106 Service Hours, Ten‐Year Comparison ............................................................................. 107 Service Miles, Ten‐Year Comparison .............................................................................. 108 Fare Structure, Ten‐Year Comparison ............................................................................ 109 Miscellaneous Operational Data, December 31, 2015 ................................................... 110 Capital Assets, Active Revenue Vehicles, Ten‐Year Comparison .................................... 111

84


Year

Invested in Capital Assets Restricted Unrestricted

TotalNet Position

2006 93,189,394 3,685,180 119,697,615 216,572,189

2007 105,658,202 3,720,024 121,181,872 230,560,098

2008 126,520,909 3,874,245 110,655,747 241,050,901

2009 149,815,020 4,080,211 93,836,119 247,731,350

2010 162,530,193 2,633,111 88,278,617 253,441,921

2011 171,846,068 2,430,611 89,293,465 263,570,144

2012 159,570,248 2,220,611 103,365,034 265,155,893 *

2013 161,104,099 2,314,361 118,587,273 282,005,733

2014 157,546,954 2,292,861 98,671,998 258,511,813 **

2015 178,831,358 2,355,611 108,731,233 289,918,202

* - Beginning net position for 2012 was restated by ($85,828) as described in the 2013Comprehensive Annual Financial Report (CAFR).** - Ending net position for 2014 was restated by ($33,789,479) as described in the 2015Comprehensive Annual Financial Report (CAFR).

Net PositionTen-Year Comparison

Financial Trends

85

2006 2007 2008 2009

Expenses Operations 31,714,304$ 35,071,689$ 36,703,941$ 41,365,571$ Maintenance 18,205,463 20,571,667 23,500,745 20,774,959 General and Administration 17,859,054 20,306,884 22,103,250 22,019,197 Contracted Transportation 19,613,051 21,724,068 23,178,212 23,906,548 Depreciation and Amortization 9,823,000 10,870,929 12,063,533 13,228,886 Total Operating Expense 97,214,872 108,545,237 117,549,681 121,295,161

Interest Expense 336,858 313,026 282,995 248,808 Environmental Expense - Net - - - - Total Expenses 97,551,730 108,858,263 117,832,676 121,543,969

Operating Revenues Passenger Fares 13,612,075 15,803,748 17,640,715 17,818,868 Regional Transit Service 8,346,780 9,594,412 10,842,580 10,928,689 Advertising 1,013,177 1,075,447 1,139,451 1,045,638 Total Operating Revenues 22,972,032 26,473,607 29,622,746 29,793,195

Nonoperating Revenues Subsidies (including sales tax) 77,123,176 82,423,475 75,155,379 76,381,384 Investment Income 5,578,833 6,337,114 3,256,105 854,800 Capital Grants and Contributions 2,512,146 7,340,982 19,998,153 20,915,633 Gain (Loss) on Sale of Capital Assets 160,939 194,971 168,099 149,235 Miscellaneous 62,146 76,023 122,997 130,171 Total Nonoperating Revenue 85,437,240 96,372,565 98,700,733 98,431,223

Change in Net Position 10,857,542$ 13,987,909$ 10,490,803$ 6,680,449$

Source: Comprehensive Annual Financial Report

Financial Trends

Ten-Year ComparisonChange in Net Position

86

2010 2011 2012 2013 2014 2015

39,601,847$ 37,726,737$ 32,845,965$ 32,837,759$ 34,908,009$ 40,771,330$ 21,606,835 23,770,972 23,081,564 22,847,341 23,893,920 22,818,852 20,241,863 19,662,212 20,544,387 19,748,865 21,012,151 22,396,557 24,433,274 24,109,118 22,883,391 22,547,152 23,370,984 23,797,411 15,650,181 16,903,602 17,726,870 15,573,477 15,150,735 16,886,860

121,534,000 122,172,641 117,082,177 113,554,594 118,335,799 126,671,010

191,056 121,103 121,103 121,103 99,684 55,401 733,334 (787,496) 2,043 (559) - -

122,458,390 121,506,248 117,205,323 113,675,138 118,435,483 126,726,411

19,265,394 18,808,975 17,633,704 19,331,239 19,769,863 20,798,527 13,356,867 14,050,993 16,474,072 16,402,918 16,870,539 16,600,685

670,922 586,006 878,743 784,946 836,580 901,627 33,293,183 33,445,974 34,986,519 36,519,103 37,476,982 38,300,839

75,973,776 77,123,349 80,469,900 83,455,798 87,315,853 92,768,390 259,161 103,664 113,277 85,009 51,917 141,991

18,318,315 20,752,349 3,015,353 9,801,132 3,201,352 26,563,126 86,721 (192,886) 99,347 171,733 374,748 236,380

237,805 402,021 192,504 492,203 323,544 122,074 94,875,778 98,188,497 83,890,381 94,005,875 91,267,414 119,831,961

5,710,571$ 10,128,223$ 1,671,577$ 16,849,840$ 10,308,913$ 31,406,389$

87

2006 2007 2008 2009

Operations 31,714,304$ 35,071,689$ 36,703,941$ 41,365,571$

Maintenance 18,205,463 20,571,667 23,500,745 20,774,959

General and Administrative 17,859,054 20,306,884 22,103,250 22,019,197

Contracted Transportation 19,613,051 21,724,068 23,178,212 23,906,548

Depreciation and Amortization 9,823,000 10,870,929 12,063,533 13,228,886

Environmental Expense - Net - - - -

Debt Service - Interest 336,858 313,026 282,995 248,808

Total 97,551,730$ 108,858,263$ 117,832,676$ 121,543,969$

Note - negative environmental expense is the result of insurance recoveries.

ExpensesTen-Year Comparison

Financial Trends

88

2010 2011 2012 2013 2014 2015

39,601,847$ 37,726,737$ 32,845,965$ 32,837,759$ 34,908,009$ 40,771,330$

21,606,835 23,770,972 23,081,564 22,847,341 23,893,920 22,818,852

20,241,863 19,662,212 20,544,387 19,748,865 21,012,151 22,396,557

24,433,274 24,109,118 22,883,391 22,547,152 23,370,984 23,797,411

15,650,181 16,903,602 17,726,870 15,573,477 15,150,735 16,886,860

733,334 (787,496) 2,043 (559) - -

191,056 121,103 121,103 121,103 99,684 55,401

122,458,390$ 121,506,248$ 117,205,323$ 113,675,138$ 118,435,483$ 126,726,411$

89

2006 2007 2008 2009

Passenger Fares 13,612,075$ 15,803,748$ 17,640,715$ 17,818,868$

Regional Transit Service 8,346,780 9,594,412 10,842,580 10,928,689

Advertising 1,013,177 1,075,447 1,139,451 1,045,638

Investment Income 5,578,833 6,337,114 3,256,105 854,800

Sales Tax 70,783,649 76,918,858 69,185,113 62,185,478

Federal Operating Grants 5,482,944 4,877,750 4,787,859 12,808,075

State and Local Grants 856,583 626,867 1,182,407 1,387,831

Miscellaneous 62,146 76,023 122,997 130,171

Gain (Loss) on Sale of CapitalAssets and Inventory 160,939 194,971 168,099 149,235

Capital Grants and Contributions 2,512,146 7,340,982 19,998,153 20,915,633

Total 108,409,272$ 122,846,172$ 128,323,479$ 128,224,418$

Ten-Year ComparisonRevenues

Revenue Capacity

***********

90

2010 2011 2012 2013 2014 2015

19,265,394$ 18,808,975$ 17,633,704$ 19,331,239$ 19,769,863$ 20,798,527$

13,356,867 14,050,993 16,474,072 16,402,918 16,870,539 16,600,685

670,922 586,006 878,743 784,946 836,580 901,627

259,161 103,664 113,277 85,009 51,917 141,991

62,633,947 63,707,622 67,474,497 74,783,559 79,551,377 84,461,446

8,636,696 10,018,375 8,912,452 5,420,276 4,501,976 5,382,205

4,703,133 3,397,352 4,082,951 3,251,963 3,262,500 2,924,739

237,805 402,021 192,504 492,203 323,544 122,074

86,721 (192,886) 99,347 171,733 374,748 236,380

18,318,315 20,752,349 3,015,353 9,801,132 3,201,352 26,563,126

128,168,961$ 131,634,471$ 118,876,900$ 130,524,978$ 128,744,396$ 158,132,800$

91

Community Transit received approximately 53 percent of its 2015 revenue from local sales and use taxes. The ratecharged in 2014 was nine-tenths of 1 percent on all taxable sales within the Snohomish County Public TransportationBenefit Area (PTBA). The amount received for collections in 2015 amounted to $84,461,446. The Department ofRevenue collects and distributes this tax for the State of Washington. The amount received has been reduced bya fee for this service.

The tax information listed below reflects only taxable retail sales and does not include use tax.Stand-alone data for the PTBA is no longer available; therefore, the following information includes sales forSnohomish County less sales in the City of Everett and has been restated as such for all prior years. Although the dataincludes taxable retail sales from portions of unincorporated Snohomish County that are not within the PTBA, the trendsover time should approximate the actual results for the PTBA.

2006 2007 2008 2009

Retail Trade 4,140,851,777$ 4,424,155,373$ 4,082,462,414$ 3,799,047,083$

Services 1,189,264,509 1,266,419,222 1,260,678,108 1,166,536,764

Construction 1,587,580,249 1,713,036,394 1,491,391,846 1,298,227,184

Manufacturing 191,865,370 214,432,199 186,417,855 121,198,945

Utilities/Trans/Warehousing 24,762,221 26,921,867 26,833,197 22,379,409

Wholesaling 432,180,802 472,375,278 414,440,567 382,596,361

Information/Finance/Insurance/ 533,652,801 600,717,495 590,072,785 511,899,970 Real Estate

Other Business 86,042,640 90,286,402 79,023,517 70,867,942

Total 8,186,200,369$ 8,808,344,230$ 8,131,320,289$ 7,372,753,658$

Source:Annual Quarterly Business Review tables, prepared by the Department of Revenue, and available at:

http://dor.wa.gov/content/AboutUs/StatisticsAndReports/Default.aspx

Retail Taxable Sales

Revenue Capacity

Ten-Year Comparison

92

2010 2011 2012 2013 2014 2015

3,951,343,507$ 4,110,736,250$ 4,434,861,770$ 4,776,585,174$ 5,094,954,029$ 5,389,818,610$

1,203,374,337 1,265,885,029 1,339,152,739 1,415,327,911 1,526,760,475 1,645,458,103

1,150,000,367 928,487,118 996,643,693 1,266,602,241 1,245,768,615 1,374,640,163

118,603,778 114,846,515 113,867,225 125,252,673 141,909,617 157,524,936

22,239,390 22,714,141 24,808,872 23,877,203 24,555,477 26,348,215

401,424,972 432,293,228 443,307,713 466,040,552 527,040,180 557,248,332

511,206,729 492,407,859 509,717,328 566,088,660 613,207,570 697,387,982

70,265,331 73,490,727 76,333,910 79,764,871 83,672,206 99,481,593

7,428,458,411$ 7,440,860,867$ 7,938,693,250$ 8,719,539,285$ 9,257,868,169$ 9,947,907,934$

93

Year

Direct PTBA Sales

Tax Rate

Other Local Sales

Tax RateState Sales

Tax Rate

Total PTBA Sales Tax

Rate

2006 0.9% 1.5% 6.5% 8.9%

2007 0.9% 1.5% 6.5% 8.9%

2008 0.9% 1.5% 6.5% 8.9%

2009 0.9% 2.1% 6.5% 9.5%

2010 0.9% 2.1% 6.5% 9.5%

2011 0.9% 2.1% 6.5% 9.5%

2012 0.9% 2.1% 6.5% 9.5%

2013 0.9% 2.1% 6.5% 9.5%

2014 0.9% 2.1% 6.5% 9.5%

2015 0.9% 2.1% 6.5% 9.5%

Source: Department of Revenue, sales and use tax rates.

Snohomish CountyOverlapping Sales Tax Rates

Ten-Year Comparison

Revenue Capacity

94

95

Debt Capacity Bond Coverage

2004 and 2010 Bond Issues Last Ten Fiscal Years

Net Revenue Debt Service Requirements Fiscal Year

Gross Revenues (1)

Operating Expenses (2)

Available for Debt Service Principal Interest Total Coverage

2006 105,897,126 87,391,872 18,505,254 1,065,000 345,733 1,410,733 13.12 x

2007 115,505,190 97,674,308 17,830,882 1,095,000 324,433 1,419,433 12.56 x

2008 108,325,326 105,486,148 2,839,178 1,125,000 297,058 1,422,058 2.00 x

2009 107,308,785 108,066,275 (757,490) 1,160,000 263,308 1,423,308 -0.53 x

2010 109,850,646 105,883,819 3,966,827 * 190,890 190,890 20.78 x

2011 110,882,122 105,269,039 5,613,083 * 176,413 176,413 31.82 x

2012 115,861,547 99,355,307 16,506,240 * 157,200 157,200 105.00 x

2013 120,723,846 97,981,117 22,742,729 * 157,200 157,200 144.67 x

2014 125,543,044 103,185,064 22,357,980 1,695,000 157,200 1,852,200 12.07 x

2015 131,569,674 109,673,575 21,896,099 1,745,000 106,350 1,851,350 11.83 x In June 2010, Community Transit sold $5,240,000 in limited sales tax general obligation refunding bonds. The resulting funds were used to refund the 2004 bond issue outstanding and to pay the cost of issuing the 2010 bonds. As of December 31, 2015, the current portion was $1,810,857 and the long-term portion was zero, resulting in a total bonds payable of $1,810,857. The bonds are the only debt of Community Transit. These bonds are subject to federal arbitrage rules. (1) Total revenues excluding capital contributions. (2) Exclusive of depreciation and amortization, debt service, and environmental expense. * Principal payments were not required until 2014. Sources: Limited sales tax general obligation bond official statement and the Comprehensive Annual Financial Report.

96

Debt Capacity Snohomish County Assessed Valuation Ten-Year Comparison

(in thousands)

Valuation Collection

Year Year Valuation*

2006 2007 84,124,564

2007 2008 99,315,203

2008 2009 101,983,434

2009 2010 94,125,213

2010 2011 85,710,607

2011 2012 76,647,037

2012 2013 72,621,622

2013 2014 79,448,742

2014 2015 88,260,207

2015 2016 96,080,092

Source: Snohomish County Assessor’s Annual Report, Snohomish County Assessor’s

Office. http://www.snohomishcountywa.gov/175/Assessor * Includes real and personal property and utilities. Excludes commercial boats and a

portion of senior citizens’ property that qualifies for a credit. Community Transit’s service area covers only the portion of Snohomish County that falls within the boundaries of the Snohomish County Public Transportation Benefit Area.

97

Debt Capacity Outstanding Debt by Type

Ten-Year Comparison

Fiscal Year

Limited Sales Tax General Obligation

Bonds - Net (1)Total Debt Per

Capita (2)

Percentage of Personal

Income (3)2006 9,870,000 21$ 0.04%2007 8,775,000 18 0.03%2008 7,650,000 15 0.03%2009 6,490,000 13 0.02%2010 5,424,611 11 0.02%2011 5,388,515 10 0.02%2012 5,381,050 10 0.02%2013 5,326,870 10 0.02%2014 3,584,993 7 0.01%2015 1,810,857 3 not available

(1) Limited sales tax general obligation bonds are the only debt of Community Transit. (2) Based on Snohomish County PTBA population. (3) Based on countywide per capita income. Source: Community Transit Comprehensive Annual Financial Reports Snohomish County Assessor Annual Reports Washington State Office of Financial Management

98

Debt Capacity Legal Debt Margin Information

Ten-Year Comparison (in thousands)

Assessed valuation in 2015 for collection of taxes in 2016: $ 67,905,520Debt limit (0.375 percent of assessed value) 254,645Less: outstanding bond issues - net 1,810Legal debt margin $ 252,835

2006 2007 2008 2009

Debt limit $ 194,094 $ 240,168 $ 284,433 $ 275,355

Total net debt applicable to limit 9,870 8,775 7,650 6,490

Legal debt margin $ 184,224 $ 231,393 $ 276,783 $ 268,865

Total net debt applicable to the limit as a percentage of debt limit 5.1% 3.7% 2.7% 2.4%

Source: Tax Account Parcels and Real Property Assessment Data, Snohomish County Assessor.

99

2010 2011 2012 2013 2014 2015

$ 272,134 $ 247,417 $ 220,917 $ 220,894 $ 228,921 $ 254,645

5,425 5,389 5,381 5,327 3,584 1,810

$ 266,709 $ 242,028 $ 215,536 $ 215,567 $ 225,337 $ 252,835

2.0%

2.2% 2.4% 2.4% 1.6%

0.7%

(2) (2)Personal Per

(1) Income Capita (3)PTBA (thousands Personal Unemployment

Year Population of dollars) Income Rate

2006 469,650 24,666,204 37,115 4.5%

2007 485,655 27,179,614 40,302 4.0%

2008 494,440 29,200,407 42,610 5.1%

2009 498,815 30,294,394 43,616 10.1%

2010 516,099 30,324,620 42,391 9.8%

2011 524,954 31,266,357 43,281 8.6%

2012 528,849 33,570,183 45,796 7.5%

2013 533,746 34,858,553 46,733 6.7%

2014 542,727 34,156,348 44,967 4.6%

2015 555,637 Not Available Not Available 5.0%

Sources: (1) State of Washington Office of Financial Management(2) U.S. Bureau of Economic Analysis(3) Employment Security Department

Snohomish CountyDemographic and Economic Statistics

Ten-Year Comparison

Demographic and Economic Information

100

Employer Employees Rank

Percent of Total County

Employment Employees Rank

Percent of Total County

EmploymentBoeing 38,000 1 11.09% 23,000 1 10.06%U.S. Navy 6,500 2 1.90% 6,100 2 2.67%Washington State 5,400 3 1.58% 3,000 5 1.42%Providence Regional Med. Ctr. 3,500 4 1.02% 3,240 4 1.44%Tulalip Tribes Enterprises 3,200 5 0.93% 2,100 7 0.92%Snohomish County Government 2,700 6 0.79% 2,650 6 1.16%Premera Blue Cross 2,400 7 0.70% 3,300 3 1.31%Everett Clinic 2,150 8 0.63% - - n/aWalmart 2,056 9 0.60% - - n/aEverett School District 2,025 10 0.59% 1,760 9 0.77%Rinker Materials Northwest - - n/a 2,000 8 0.88%Verizon Northwest - - n/a 1,600 10 0.70%

Total county employment 342,600 228,518

Percentage principal employers to total county 19.83% 21.33%

Source:Snohomish County EDC and Snohomish County.


Snohomish CountyPrincipal Employers

Fiscal years ending December 31, 2015 and 2006

2015 2006

101

County PTBAYear Population Population 0-19 20-64 65+

2006 671,800 469,650 28.7% 61.9% 9.4%

2007 686,300 485,655 28.5% 62.0% 9.5%

2008 696,600 494,440 28.4% 61.9% 9.7%

2009 704,300 498,815 28.2% 61.9% 9.9%

2010 711,100 516,099 28.0% 61.9% 10.1%

2011 717,000 524,954 26.8% 62.7% 10.5%

2012 722,900 528,849 26.0% 62.9% 11.1%

2013 730,500 533,746 25.7% 62.8% 11.6%

2014 741,000 542,727 25.3% 62.6% 12.1%

2015 757,600 555,637 not available not available not available

Source: State of Washington Office of Financial Management

County population by age and genderhttp://www.ofm.wa.gov/pop/default.asp

Age Distribution for Snohomish County


Population Demographic StatisticsTen-Year Comparison

Snohomish County

102

103

Operating Information

Snohomish County

Public Transportation Benefit Area Map

2015

PTBA Area = 1308 square Miles PTBA Population = 555,637

104


Service Statistical Data: Ten-Year Comparison

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Directly Operated Service

Average Weekly Ridership 138,561 154,394 170,475 163,867 141,105 133,676 124,481 Passengers per Hour 17.08 18.60 20.20 18.95 16.50 17.10 19.94 Fare Revenue per Passenger 0.94$ 1.03$ 1.02$ 1.08$ 1.33$ 1.38$ 1.50$ Cost per Passenger 7.77$ 7.73$ 7.51$ 8.07$ 9.09$ 9.38$ 9.19$ Cost per Mile 8.37$ 9.15$ 9.72$ 9.74$ 9.33$ 10.13$ 11.42$ Farebox Return 12.1% 13.3% 13.6% 13.3% 14.6% 14.7% 16.3%

Motor Bus Directly OperatedAverage Weekly Ridership 102,143 112,920 117,368 Passengers per Hour 18.53 19.77 18.43 Fare Revenue per Passenger 1.41$ 1.28$ 1.27$ Cost per Passenger 9.10$ 8.56$ 9.48$ Cost per Mile 11.12$ 11.37$ 11.68$ Farebox Return 15.4% 15.0% 13.4%

Commuter Bus Directly OperatedAverage Weekly Ridership 22,489 22,980 22,613 Passengers per Hour 34.03 30.10 29.38 Fare Revenue per Passenger 2.97$ 3.20$ 3.44$ Cost per Passenger 9.76$ 10.83$ 11.82$ Cost per Mile 15.65$ 16.53$ 17.62$ Farebox Return 30.5% 29.5% 29.1%

Contract Commuter ServiceAverage Weekly Ridership 33,853 36,427 38,167 34,061 31,586 30,899 28,951 28,838 31,269 31,851 Passengers per Hour 28.11 29.79 31.06 27.71 30.18 37.57 46.15 41.95 40.01 40.00 Fare Revenue per Passenger 2.84$ 2.98$ 3.11$ 3.30$ 4.04$ 3.74$ 3.36$ 3.54$ 3.26$ 3.45$ Cost per Passenger 7.16$ 7.03$ 7.03$ 7.65$ 7.77$ 7.31$ 6.71$ 5.95$ 5.60$ 5.15$ Cost per Mile 8.74$ 9.17$ 9.59$ 9.27$ 10.03$ 11.43$ 12.59$ 10.25$ 10.18$ 9.53$ Farebox Return 39.7% 42.4% 44.3% 43.1% 52.0% 51.1% 50.0% 59.6% 58.3% 67.0%

105


Service Statistical Data: Ten-Year Comparison (continued)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015DART/Paratransit

Average Weekly Ridership 4,060 4,082 4,126 4,191 4,186 3,929 3,747 3,620 3,704 3,661 Passengers per Hour 2.22 2.12 2.07 2.11 2.20 2.31 2.28 2.27 2.28 2.24 Fare Revenue per Passenger 1.15$ 1.11$ 1.28$ 1.05$ 1.29$ 1.42$ 1.43$ 1.69$ 1.67$ 1.86$ Cost per Passenger 33.04$ 36.84$ 39.15$ 38.28$ 39.16$ 41.33$ 37.60$ 38.48$ 39.22$ 38.93$ Cost per Mile 3.94$ 4.64$ 4.85$ 4.57$ 4.79$ 5.28$ 4.62$ 4.64$ 4.83$ 4.73$ Farebox Return 3.5% 3.0% 3.3% 2.7% 3.3% 3.4% 3.8% 4.4% 4.3% 4.8%

VanpoolAverage Weekly Ridership 13,702 14,239 16,439 16,583 16,222 17,172 17,697 17,840 17,787 17,551 Passengers per Hour 10.07 9.75 9.70 10.23 10.32 5.76 6.13 6.25 6.26 6.37 Fare Revenue per Passenger 2.20$ 2.24$ 2.50$ 2.99$ 3.09$ 3.30$ 2.85$ 2.97$ 3.02$ 3.21$ Cost per Passenger 3.85$ 4.50$ 4.09$ 4.24$ 4.38$ 4.44$ 4.17$ 4.27$ 4.65$ 4.39$ Cost per Mile 0.72$ 0.81$ 0.73$ 0.76$ 0.79$ 0.82$ 0.78$ 0.82$ 0.89$ 0.85$ Farebox Return 57.0% 49.8% 61.1% 70.6% 70.5% 74.4% 68.4% 69.4% 64.9% 73.2%

Data Source: FTA National Transit Database Report

Notes:

Hours are defined as service (revenue) hours. Miles are defined as service (revenue) miles. Beginning in 2013 the FTA National Transit Database discontinued the Directly Operated category and replaced it with two new

categories: Motor Bus Directly Operated and Commuter Bus Directly Operated. Cost per passenger is not net of fare revenue.

106


Ridership: Ten-Year Comparison

YearDirectly

Operated

Motor Bus Directly

Operated

Commuter Bus Directly

Operated

Contract Commuter

DART Paratransit

VanpoolTotal:

Community Transit Service

Sound Transit

2006 7,205,180 - - 1,760,378 211,108 712,485 9,889,151 1,792,728

2007 8,028,472 - - 1,894,227 212,263 740,451 10,875,413 2,027,851

2008 8,864,677 - - 1,984,681 214,568 854,850 11,918,776 2,477,782

2009 8,521,071 - - 1,771,177 217,909 862,341 11,372,498 2,642,636

2010 7,337,474 - - 1,642,463 217,648 843,551 10,041,136 2,631,195

2011 6,951,171 - - 1,606,732 204,291 892,936 9,655,130 3,136,067

2012 6,473,033 - - 1,505,441 194,862 920,252 9,093,588 3,467,994

2013 - 5,311,451 1,169,446 1,499,566 188,222 927,660 9,096,345 3,226,043

2014 - 5,871,817 1,194,937 1,625,988 192,633 924,912 9,810,287 3,676,480

2015 - 6,103,118 1,175,876 1,656,233 190,366 912,637 10,038,230 3,646,063

Data Source: FTA National Transit Database Report.

Beginning in 2013 the FTA National Transit Database discontinued the Directly Operated category and replaced it with two new categories: Motor Bus Directly Operated and Commuter Bus Directly Operated.

107


Service Hours: Ten-Year Comparison

YearDirectly

Operated

Motor Bus Directly

Operated


Operated

Contract Commuter

DART Paratransit

VanpoolTotal:


Sound Transit

2006 421,786 - - 62,631 94,890 70,773 650,080 66,670

2007 431,703 - - 63,594 100,254 75,943 671,494 72,390

2008 438,796 - - 63,894 103,795 88,136 694,621 74,994

2009 449,565 - - 63,922 103,188 84,326 701,001 80,736

2010 444,619 - - 54,426 99,012 81,716 679,773 87,210

2011 406,586 - - 42,766 88,623 155,119 693,094 90,976

2012 324,576 - - 32,623 85,353 150,057 592,609 91,982

2013 - 286,645 34,365 35,745 82,832 148,411 587,998 89,822

2014 - 297,022 39,699 40,635 84,349 147,749 609,454 113,606

2015 - 331,147 40,022 41,403 85,057 143,209 640,838 114,896


Notes:

Service hours are defined as revenue hours. Beginning in 2013 the FTA National Transit Database discontinued the Directly Operated category and replaced it with

two new categories: Motor Bus Directly Operated and Commuter Bus Directly Operated.

108


Service Miles: Ten-Year Comparison

YearDirectly

Operated

Motor Bus Directly

Operated


Operated

Contract Commuter

DART Paratransit

VanpoolTotal:


Sound Transit

2006 6,692,956 - - 1,441,844 1,769,306 3,836,396 13,740,502 1,863,987

2007 6,779,994 - - 1,451,485 1,685,505 4,129,623 14,046,607 2,019,710

2008 6,848,299 - - 1,454,047 1,733,901 4,810,407 14,846,654 2,043,660

2009 7,057,907 - - 1,461,601 1,824,704 4,782,731 15,126,943 2,159,803

2010 7,153,098 - - 1,272,040 1,778,032 4,664,437 14,867,607 2,347,355

2011 6,433,509 - - 1,027,925 1,598,833 4,866,450 13,926,717 2,433,091

2012 5,212,202 - - 802,860 1,587,283 4,906,497 12,508,842 2,444,935

2013 - 4,348,641 729,406 870,208 1,560,027 4,857,847 12,366,129 2,448,842

2014 - 4,422,817 783,031 893,801 1,565,104 4,817,228 12,481,981 2,512,980

2015 - 4,953,326 789,259 894,394 1,566,883 4,711,901 12,915,763 2,510,798


Notes:

Service miles are defined as revenue miles. Beginning in 2013 the FTA National Transit Database discontinued the Directly Operated category and replaced it with two

new categories: Motor Bus Directly Operated and Commuter Bus Directly Operated.

109


Fare Structure: Ten-Year Comparison

Year Regular YouthSenior/

Disabled Regular YouthSenior/

Disabled Regular YouthSenior/

DisabledParatransit Fares

2006 1.25 0.75 0.50 3.00 2.25 1.50 3.75 3.00 1.75 1.25

2007 1.25 0.75 0.50 3.00 2.25 1.50 3.75 3.00 1.75 1.25

Jan–Sep 2008 1.25 0.75 0.50 3.00 2.25 1.50 3.75 3.00 1.75 1.25

Oct–Dec 2008 1.50 1.00 0.50 3.50 2.75 1.50 4.50 3.75 1.75 1.50

2009 1.50 1.00 0.50 3.50 2.75 1.50 4.50 3.75 1.75 1.50

Jan–May 2010 1.50 1.00 0.50 3.50 2.75 1.50 4.50 3.75 1.75 1.50

Jun–Dec 2010 1.75 1.25 0.75 3.50 2.75 1.50 4.50 3.75 1.75 1.75

2011 1.75 1.25 0.75 3.50 2.75 1.50 4.50 3.75 1.75 1.75

2012 1.75 1.25 0.75 3.50 2.75 1.50 4.50 3.75 1.75 1.75

Jan 2013 1.75 1.25 0.75 3.50 2.75 1.50 4.50 3.75 1.75 1.75

Feb–Dec 2013 2.00 1.50 1.00 4.00 3.00 2.00 5.25 4.00 2.50 2.00

2014 2.00 1.50 1.00 4.00 3.00 2.00 5.25 4.00 2.50 2.00

2015 2.25 1.50 1.00 4.25 3.00 2.00 5.50 4.00 2.50 2.25

Local Service Commuter – South County Commuter – North & East County

110


Miscellaneous Operational Data: December 31, 2015

Date of Incorporation 1976

Form of Government Public Transportation Benefit Area Corporation (PTBA)

Began Operation

Number of Board of Directors 10—nine voting and one nonvoting

Type of Tax Support Nine-tenths of 1 percent local sales tax

County in Which PTBA Operates Snohomish County

Population - County 757,600

Population of PTBA 555,637

Park-and-Ride Lots 22

Directly Operated 124 Operations 411 Swift Bus Rapid Transit Routes 1

Commuter Service 70 Maintenance 88 Local Snohomish County Routes 21

Vanpool Vans 408 General and Administrative 116 Boeing Commuter Routes 3

Contract Commuter 73 615 University of Washington Routes 6

DART/Paratransit 52 Intercounty Commuter Routes 13

727 44

October 04, 1976

Active Revenue Vehicles Employees Number of Scheduled Routes

111


Capital Assets—Active Revenue Vehicles

Ten-Year Comparison

YearDirectly

Operated

Motor Bus Directly

Operated

Commuter Bus

Directly Operated

Contract Commuter

DART Paratransit Vanpool Total

2006 178 - - 91 52 333 654

2007 178 - - 92 54 384 708

2008 190 - - 92 54 419 755

2009 199 - - 92 54 402 747

2010 178 - - 88 53 396 715

2011 174 - - 65 54 396 689

2012 159 - - 65 54 395 673

2013 - 104 56 65 54 414 693

2014 - 99 63 65 54 412 693

2015 - 124 70 73 52 408 727


Beginning in 2013 the FTA National Transit Database discontinued the Directly Operated category and replaced it with two new categories: Motor Bus Directly Operated and Commuter Bus Directly Operated.


STRATEGIC FRAMEWORK

Vision

Mission

Strategy

Together we will do the extraordinary so that people will always think transit fi rst.

Provide appealing choices for customers to travel to their destinations.

Values

We provide a safe, reliable, and enjoyable public transit experience each and every time. Our services move people and connect communities within a regional

transportation network. We make it easier for everyone to get totheir destination.

Safety/Security/Environmental Keep people, property, and environment safe.

Operational Excellence Customers value what we do and trust we will do it well.

Financial Stewardship We make every dollar count for the benefi t of our community.

Employment Experience Everyone feels valued and inspired to contribute as part of a world-class team.

Partnerships & Advocacy As the trusted partner of choice,Community Transit is positioned for success.

Planning for the Future We are integral partners in planning for sustainable growth and development in Snohomish County and the region.

Strategic Priorities

· Customers First · Continuous Learning · Rewarding Initiative & Innovation· Integrity · Respect for the Communities We Serve

· Safety Conscious · Mutual Respect · Accountability · Environmental Stewardship