Challenges facing Island Transit go beyond the financial mess that came to light this past summer.

Interim Director Ken Graska, who has been on the job for three months, said an aging bus fleet, a surplus of unneeded buses and other vehicles, and an uncertainty of state funding add to the challenges facing the agency.

In addition, Island Transit leaders have yet to resolve such issues as fares, advertising on buses, possible misuse of federal funding and a definitive schedule for restoring service cuts.

Nevertheless, Graska said IT is getting back on track and he’s optimistic about its future.

Island Transit has what it needs to succeed: a skilled and committed staff, a vigilant board, a fantastic facility and a community with a long history of supporting transit, he said.

“I call this kind of a new beginning for Island Transit,” he said. “We need to get back to basics.”

The agency laid off 23 staff members and cut bus service last summer after serious financial problems arose. The director and financial manager were replaced, as were all but one member of the board of directors.

The overall budget for this year is $12 million, with $7.8 million coming from a 0.09 percent sales tax.

Graska was hired as an interim director for a six-month period, but the board decided to put off plans to advertise for a permanent director.

Graska said the agency’s finances are stabilized and the management staff figured out a way to bring back 70 percent of the bus service that was cut last year, not including the loss of Saturday service.

To begin addressing the many issues facing the agency, the board started holding monthly workshop meetings, in addition to the regular monthly board meetings.

Oak Harbor City Councilman Rick Almberg, the chairman of the board, said he was surprised to learn that Island Transit didn’t have a vehicle-replacement fund or schedule.

“They’re being reliant on grants,” he said, “which are, by nature, unreliable.”

Almberg also questioned why the parking lot of the new facility is consistently filled with buses. He said it gives the public the impression that the agency has many more buses than are needed.

Graska said he’s working on addressing both inter-related problems.

He said some of the buses and support vehicles in the parking lot are so old that they are broken down, not needed or otherwise unusable.

Graska said he developed a plan to surplus both buses and some support vehicles, though he’s not sure how much money the agency might recoup since there’s not a lot of demand for old buses.

In addition, he said many of the buses in the active fleet have aged beyond what the federal government considers to be the usable life cycle. Older buses require costly maintenance.

The agency will be getting nine new light-duty buses next year through a federal grant that requires a 20-percent match. But, he said, additional grants could be three years away while the oldest of the full-size buses is 17 years old.

“We have an aging fleet that needs to turn around quickly,” he said, “but that’s just not going to happen.”

Graska hypothesized that the fleet was allowed to age because the former management was focused on building the new facility on State Highway 20.

The federal dollars went into the facility instead of buses, he said.

“The operation grew too fast,” he said. “It outgrew itself.”

As a result, Graska said, he and the board will focus on creating a replacement schedule, though he predicts that grants will likely continue to be the main source of funds for purchasing new buses.

It’s a priority for the agency to continue the connector bus service into Skagit County from Whidbey Island, Graska said, but he conceded that it’s likely to depend on the state.

The agency may be able to eke out a “skeletal service” to Skagit after state funding dries up, but he questions whether it would be useful to riders. As it stands now, the route is scheduled to end this summer.

Graska said he’s waiting to hear from the federal government on whether the agency must repay grant funds used to pay for three gazebos at the new facility and to purchase a landscaping tractor.

The State Auditor’s Office questioned whether it was an allowed use of federal grant dollars.

As for fares, Graska said Island Transit is “very rare” among transit agencies in not charging fares. He said the few other agencies across the nation that offer fare-free services receive outside subsidies. Chapel Hill, for example, gets money from the University of North Carolina, he said.

Still, before any fares are charged, Graska said the agency will need to hold public meetings, do community outreach and study the financial implications.

“It’s definitely worthy of debate and discussion,” he said, adding that figuring out what the right level for the fares will also be a challenge.

As for advertising on the buses, Graska said he’s all for it and said that can be instituted much sooner. Not only can advertisements be placed on buses, he said, but bus shelters have become popular places for ads.

“It can be a good source of funding,” he said, “but it depends on the market.”