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Waukesha transit audit returns clean opinion; reserve rises to $690,000
Summary
An independent audit of Metro Transit found no material misstatements and noted increased reserves after federal COVID relief funds were applied; commissioners discussed ridership gains, ARPA balances and how depreciation and reimbursement rules affect reported results.
Waukesha City Transit Commissioners received a presentation on the Metro Transit 2024 financial audit on June 19 and were told the audit produced a clean (unmodified) opinion with no material adjustments, while transit’s designated reserve grew to $690,000.
The audit presentation, delivered by Jody Dobson, partner at Baker Tilly, covered the full financial statements, a separate supplemental report for county services and a management letter specific to transit. Dobson told the commission the audit provided the highest level of assurance that the statements “are a fair presentation in all material respects of the financial position and the results of operations for the year.” She also said there were no findings related to grant funds this year.
Comprehensive context: why it matters
Commissioners discussed how federal COVID-era relief — including ARPA, CARES and other funds — affected Metro’s 2024 results and the composition of reported revenue. Staff said Metro used remaining federal funds to lower the local levy share in 2024 and to build the transit reserve, rather than to carry ongoing operating costs. The increased reserve gives “some flexibility in a future year if there were to be some unexpected costs,” Dobson said.
Key audit and financial points
- Audit opinion: Baker Tilly issued a clean (unmodified) opinion on Metro Transit’s 2024 financial statements; the firm issued a management letter with no material entries or corrections specific to transit.
- Reserve and cash presentation: Page 12 of the financial statements shows a segregated transit reserve tracked within the city’s pooled cash. That reserve increased from $190,000 to $690,000 in 2024 after using some federal funding.
- Revenue and ridership: Fixed-route ridership rose in 2024 (commission staff reported fixed-route ridership is approaching 500,000). Overall operating revenues were up slightly year over year, in part because remaining federal funds were applied before they would expire.
- Grants and reimbursable funding: Staff explained many federal and state dollars are reimbursements; funds obligated by grantors cannot be recognized as assets on the city’s balance sheet until eligible costs are incurred and Metro requests reimbursement. Commissioners were told approximately $3,600,000 of COVID-related federal funds (ARPA/CARES/other) were available at the end of the prior year, of which about $1,200,000 remained in ARPA specifically.
- Expenses and noncash items: The audit shows a negative change in net assets of $283,731 for the year; commissioners discussed that depreciation of about $1,500,000 is a noncash expense that affects that number. Salaries and wages were described on the handout as roughly $3,200,000; staff clarified that reported payroll includes wages and benefits for Transdev personnel and other contracted workers, not just direct city employees.
Commissioner questions and staff responses
Commissioners pressed for clarity on how bus-related borrowing and interest are reported. Staff said no debt is carried in the transit fund; interest and debt service for local shares of buses are accounted for in the city’s debt service and therefore do not appear on the transit fund financials. Commissioners also asked whether ARPA is being used to backstop operating shortfalls; staff responded that Metro has taken steps to reduce reliance on pandemic relief and does not plan to use ARPA to balance ongoing operations going forward.
Administrative items and next steps
Earlier in the meeting the commission approved the minutes from the May 8 meeting (motion by Joe Piper; recorded votes included Kasten, Kevin Riley and Piper voting aye; the motion passed). Two action items listed on the agenda were not considered because the city had not yet received operating assistance documentation (referred to in the meeting as a GRAMA/operating assistance item); those items were deferred.
The audit presentation was received as a report; no motion was required. Commissioners indicated continued attention to reserve funding and upcoming capital needs (notably multiple buses approaching replacement) as the city plans for future budgets.
