FCTA Board recommends rate changes following public hearing

Contingent on the result of a public hearing, Fulton County Transit Authority’s Board approved the recommendation of Executive Director Kenney Etherton Jan. 10 for proposed rate changes in the FCTA services provided.

Board members David Moss, Lew Jetton, Sandy Bellew, Carol Parker, Jessie Webb, Garrett Hutchins and Mike Gunn, in separate actions during the regular board session, approved the extension of FCTA hours of operation to 5 a.m. to 10 p.m., from the current hours of operation of 6 a.m. to 5 p.m.

Extension of hours of operation will take effect Feb. 1, with rate changes requiring a public hearing.

Rate changes proposed included charter trips, $75 per hour with a two hour minimum, and one one-hour fee added for vehicle pre-trip and vehicle fueling time, non profits charged half price; medical trips, add $50 ride along fee for out of region one only; weekly transportation days, Friday all Veterans half price, Veterans medical trips priced 41 cents per mile for medical trips outside of region one, one escort may ride free for medical trips; private medical trips, allowed one escort to ride for free; Amtrack service, FCTA lot to Amtrack station, $10 per person, from Amtrack Station to FCTA lot, $10 per person, from any Fulton County residence to Amtrack station, $15 per person, from Amtrack Station to one Fulton County residence, $15 per person, from any residence in Carlisle County or Hickman County, $25 per person, any pick ups in Ballard, Calloway, Marshall or McCracken County, $35 per person; From Amtrack Station to Ballard, Calloway, Marshall or McCracken Counties, $35 per person; and Amtrack Station to Tennessee, $1.75 per mile.

Transit employees will receive a 2% pay raise following board action, with Etherton providing figures to reflect an additional $2,264 in payroll per week for a 1 1/2% pay raise, and $2,312 additional payroll per week for a 2% pay raise for employees.

Also relating to employees, the board agreed with Etherton’s recommendation to forego the purchase of $25 city stickers for each FCTA employee, citing employee turnover issues and unnecessary expense to provide city stickers to employees who park on the FCTA lot each work day. The city of Fulton, Etherton said, recently adopted the issuance of city stickers required for those who live and work within the city. The board came to the decision each employee is responsible for the purchase of their vehicle’s city sticker.

The FCTA fleet vehicles, according to board member and city manage Mike Gunn, is exempt from the city sticker requirement.

Etherton reported the Fulton County Senior Citizens centers are current on bills owed for FCTA services, with only $700 currently owned, following the Fulton County Fiscal Court paying $700 on the balance.

He reported there was no further progress toward the FCTA purchase of property adjacent to the present location, as all information requested from the FDA had been forwarded, however with the recent federal government shutdown, no action had been taken.

The board approved the retention of The Citizens Bank for rates offered in a real estate secured revolving line of credit up to five years at a rate of 4.5%, in the amount of up to $150,000, as well as the provision of collateral for deposits if aggregate deposit balances exceed the FDIC insurance limit of $250,000.

Etherton reported he had first been approached by representatives of Security Bank, formerly Reelfoot Bank of Fulton, regarding the FCTA’s banking business, and following their proposal, he approached The Citizens Bank, as that bank currently has the FCTA’s account.

Etherton said he had not approached Heritage Bank, where the FCTA payroll account is held, with board member Garret Hutchins suggesting in the future, all local banks are given the opportunity to provide an offer.

Etherton shared with the board members present that the FCTA Simulator had trained 25 staff members Jan. 8-9 in Paducah, at $175 per student, with plans to transport the Simulator to Frankfort Jan. 14-16 for training, and also to schedule training at the Fulton County Detention Center in Hickman, as well as the Four Rivers Academy in Hickman, for auto mechanic and medical field students.

Craig Atwill with Alexander Thompson Arnold of Union City, Tenn., presented board members with the Financial Statements and Supplementary Information, the independent auditing report, as of June 30, 2018, for their review.

The documents reflected total assets in the general fund at $213,833, adjustments for vehicles, buildings and equipment at $1,655,707 and statement of net position, $1,869,540. Regarding liabilities and fund balance, total liabilities were at $65,400, fund balance/net position, unassigned, $148,433, and total liabilities and fund balance, $213,833, with total net position adjustments, $1,655,707 and statement of total net position, $1,804,140.

In the Statement of Activities and Governmental Fund Revenues, Expenditures and changes in Fund Balance, total revenues were at $2,964,545, adjustments, $24,283 and statement of Activities, $2,988,828. Expenditures reported at ($203,873) General Fund, revenues over (under) expenditures, adjustments, $299,344 and Statement of Activities at $95,471.

As to findings, segregation of duties, as to FCTA not segregating the record keeping and custodial functions of its accounting system, resulting in the risk of errors and misappropriations occurring and not being detected in a timely manner, a recommendation was made that management continue to assess the adequacy of the Transit Authority’s internal controls and implement procedures to properly segregate duties in its accounting system.

As to the FCTA Management’s response, stated was “FCTA has outsourced most of its accounting job functions, including payroll. Over the last several years we have added staff to issue purchase orders, review and approve expense reports. No one person can approve their own reports before passing on to the accounting firm for payment, the board of Directors reviews all bank statements at the board meetings as well. We will continue to look at ways to segregate duties.”

Uncollateralized Deposits was also a finding, with a notation that Jan. 24, 2018, The Citzens Bank issued a custodial agreement to pledge collateral for the FCTA deposits with the bank. Prior to that time, FCTA had deposits in financial institutions that were uninsured and uncollateralized. Kentucky Revised Statute 41.240 required pledge of securities for deposits in excess of amounts insured by the Federal Deposit Insurance Corporation by banks that receive public funds, and at times during the year, the FCTA had public funds subject to loss.

In response to the recommendation for management to monitor financial institutions’ bank deposits to ensure public funds are fully insured and collateralized throughout the year, the Management’s response was “FCTA entered into an agreement with The Citizens Bank of Hickman, Kentucky, to insure our over the FDIC amount. The Bank has pledged bank securities and ATA was provided a copy of this agreement during the audit process. We also opened a payroll account last fiscal year wit a local bank to help with this issue. We will from time to time have funds not insured by FDIC due to the timing of deposits from our Grant and Medicaid Broker. We will look for ways to insure our funds.”

The final finding reported was for Accounts Payable Not Reconciled, referencing the Management’s inability to provide a detailed listing of accounts payable at the time of the audit. Kentucky Revised Statute requires books of original entry must be organized and maintained so that financial repoting will comply with generally accepted accounting principles as outlined in the Governmental Accounting Standards Board Codification.

One characteristic of these standards is understandability, which means that the accounting system must provide a clear trail from the original transactions to the final financial reports.

Included in the finding was the effect that the FCTA’s accounts payable balance as of June 30, 2018 could not be tested for accuracy; failure to maintain accurate detail of general ledger accounts increases the risk that the FCTA financial statements will be misstated.

The recommendation was that management reconcile accounts payable balances to a detailed listing on a regular basis, such as monthly, with reconciliations and detailed listing kept on file int eh FCTA books and records. The Management’s response was “all accounts are reconciled by our outsourced accounting firm. FCTA will have discussions with the firm, referencing ATA, about making sure all accounts are reconciled.

Atwill indicated the accounts payable had not balanced for the second year, this year $6,500 off, and not what was on the general ledger. He noted that while “someone at ATA” has to review information submitted to them, it is still FCTA’s responsibility to reconcile the accounts payable balance.

Etherton said the difference was associated with the pre-payment of fuel.

Following adjournment from open session into closed executive session for the purpose of personnel, the board returned to open session with action taken reported the board approved a bonus for Etherton in the amount of $2,500.