Metro Transit audit returns clean opinion; commissioners discuss ARPA use and growing reserve

Metro Transit’s 2024 financial statements received an unmodified ("clean") audit opinion, the commission heard at its June 19 meeting, and officials said the agency has increased its reserve while relying temporarily on remaining ARPA and other COVID-relief funds.

Jody Dobson, partner at Baker Tilly, told the commission that auditors issued a "clean or an unmodified audit opinion," meaning the statements present a fair picture of Metro’s financial position and results of operations. She said there were "no findings related to the grant funds this year either" and that auditors issued a management letter highlighting transit-specific items.

The report included several headline figures that commissioners focused on in follow-up questions. Dobson pointed out Metro’s segregated reserve balance increased in 2024 from $190,000 to $690,000, a change staff said was enabled in part by drawing on federal relief funds so local levy dollars could be redirected into reserves. The audit also shows a negative change in net assets of about $283,007.31, which Dobson and staff attributed largely to non-cash depreciation (roughly $1,500,000) and to the accounting treatment of grant-funded capital.

During a commission exchange, Alderman Joe Piper pressed whether the roughly $3.2 million listed as "salaries and wages" reflected city employees or contracted staff. Staff answered that the figure is a combined total that includes Transdev employees, security and other contracted personnel. Dobson confirmed depreciation is non-cash and that most capital assets are funded through grants as they are placed into service.

Commissioners also discussed the agency’s remaining ARPA and related COVID-relief dollars. Staff reported the ARPA balance at the end of last year was about $1.2 million and that total COVID-related funds (including CARES and CRRSA) shown as available stood at roughly $3.6 million. "2029, all the the ARPA funds have to be used by 09/30/2029," staff said, adding that the agency expects to have spent or reserved most of the funds well before that deadline; much of the remaining balance is being held to seed capital replacements for buses coming due.

Ridership and fares were another focus. Commissioners heard that fixed-route ridership increased and is "almost at 500,000" annual rides, even as passenger-fare receipts declined compared with the prior year partly because county-level accounting changes shifted some revenue and ridership between providers (MCTS service was included in 2023 but not 2024). Staff noted Metro adopted a fare-capping policy to provide flexibility and mitigate rider impacts while recovering revenue incrementally.

Auditor Dobson and staff clarified the accounting for federal reimbursements: obligated federal/state funds cannot be recorded as an asset or receivable until eligible costs are incurred. "You have to basically spend the money on something before we can recognize it in these statements," Dobson said, and staff confirmed the city will recognize expenses or capital assets and then the offsetting reimbursement revenue when costs are incurred.

No formal commission action was required on the audit presentation; the body did, earlier in the meeting, approve the May 8 minutes in a recorded roll-call vote. The commission adjourned after the audit discussion.

Next steps staff noted include continued monitoring of reserve levels, potential fare-cap adjustments for 2026 to shore up revenue, and planned use of relief funds to support upcoming capital replacements.