,ji - ac transit · 75 which records for other post-employment benefits (opeb), in a manner similar...

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,JI Report No: Meeting Date: 18-285 November 14, 20118 Alameda-Contra Costa Transit District STAFF RE PO RT TO: FROM: SUBJECT AC Transit Board of Directors Michael A. Hursh, GeneralManager Year-End FinancialStatements and Independent Auditor's Report for June 30, 2018 BRIEFING ITEM RECOMMENDED ACTION(S Consider receiving the Year-End FinancialStatements and Independent Auditor's Report for the fiscaIYear Ended June 30, 2018. BUDaETARy/EISCAUWPAg. During FiscaIYear 2017-18, prior to the mandatory application of the GovernmentaIAccounting Standard Board(GASBI 75 for Other Post-Employment Benefits(OPEB) plans the District's total revenues, including capital funds earned during the period exceeded total expenses This helped keep net position positive once the impact of GASB75 was incurred. While a significant decrement to Net Position was anticipated, the result was a year over year decrease of$127.1 million to net position. The District's Auditors, Crowe LLP, issued an unqualified ("clean") opinion on the District's financials for the year ending June 30, 2018 BACKGROUND/RATIONALE The Statement ol Fund /Vet Pos/t/on (Formerly Statement of /Vet Assets)presents information about assets and liabilities with the difference between the two reported as nef pos/t/on. In accordance with Fiscal Policy 308, Accounting Policies, the annual audit of the financial statements has been completed and the report prepared by Crowe Horwath LLP has been issued to the District. The auditors have rendered a clean opinion and "found the District's Financial Statements presented, in all material respects, the financial position of the District at June 30, 2018, and the results of its operations and cash flows of enterprise funds for the year ended in conformity with the generally accepted accounting principles in the United States of America" ICrowe, 2018). Staff encourages readers to considerthe financialinformation presented in the attached financial statements, along with the transmitted letter contained in the introductory section of the Basic flnancialStatements and related notes contained in the FinancialSection. 1 of 119

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Page 1: ,JI - AC Transit · 75 which records for Other Post-Employment Benefits (OPEB), in a manner similar to GASB Statement No. 68 for pension in that organizations were required to record

,JI Report No:Meeting Date:

18-285

November 14, 20118

Alameda-Contra Costa Transit District

STAFF RE PO RTTO:FROM:

SUBJECT

AC Transit Board of Directors

Michael A. Hursh, General Manager

Year-End FinancialStatements and Independent Auditor's Report for June 30,2018

BRIEFING ITEM

RECOMMENDED ACTION(S

Consider receiving the Year-End FinancialStatements and Independent Auditor's Report for thefiscaIYear Ended June 30, 2018.

BUDaETARy/EISCAUWPAg.

During FiscaIYear 2017-18, prior to the mandatory application of the GovernmentaIAccountingStandard Board(GASBI 75 for Other Post-Employment Benefits(OPEB) plans the District's totalrevenues, including capital funds earned during the period exceeded total expenses This helpedkeep net position positive once the impact of GASB 75 was incurred. While a significantdecrement to Net Position was anticipated, the result was a year over year decrease of$127.1million to net position.

The District's Auditors, Crowe LLP, issued an unqualified ("clean") opinion on the District'sfinancials for the year ending June 30, 2018

BACKGROUND/RATIONALE

The Statement ol Fund /Vet Pos/t/on (Formerly Statement of /Vet Assets) presents information

about assets and liabilities with the difference between the two reported as nef pos/t/on.

In accordance with Fiscal Policy 308, Accounting Policies, the annual audit of the financialstatements has been completed and the report prepared by Crowe Horwath LLP has been issuedto the District. The auditors have rendered a clean opinion and "found the District's Financial

Statements presented, in all material respects, the financial position of the District at June 30,2018, and the results of its operations and cash flows of enterprise funds for the year ended inconformity with the generally accepted accounting principles in the United States of America"ICrowe, 2018).

Staff encourages readers to considerthe financialinformation presented in the attached financialstatements, along with the transmitted letter contained in the introductory section of the BasicflnancialStatements and related notes contained in the FinancialSection.

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Report No.18-285Page 2 of4

Financial Highlights

e At June 30, 20].8, totalassets and deferred outflow of resources were$667.8 million, anincrease of$12.3 million, or 2 percent, compared to June 30, 2017, when it was $655.5million. Total current assets at June 30, 2018 were $215.6 million, a decrease of $5.7million, or 3 percent, primarily related to a decrease in cash largely offset by an increasein receivables at year end, due to timing. Capital assets, net of accumulated depreciationincreased by $51.4 mi]]ion or ].5 percent, to $400.1 million. Other Non-Current Assetsdecreased by $1.4 million. Deferred outflows decreased by$32.0 million to$51.0 million

due to the pension related net of investment gains and the amortization of investmentlosses from prior periods.

8 At June 30, 2018, totalliabilities and deferred inflow of resources were$644.3 million, anincrease of $139.5 million, or 28 percent, compared to June 30, 2017 when they were$504.8 million. Total current liabilities decreased by $2.2 million over fiscal year 2017when they were $88.3 million primarily due to a net decrease in allsubcategories at yearend. Other non-current liabilities decreased by $0.8 million, or lpercent, from June 30,2017. AUune 30, 2018 net pension liability was 255.0 million, a decrease of$53.0 million,or 17 percent, over fiscalyear 2017 when it was $308.0 million. This change is attributableto investment and actuarial gains. At June 30, 2018 net OPEB liability was 151.3 million,an increase of $128.9 million, or 575 percent, over the fiscal year 2017 net OPEB

obligation when it was $22.4 million. The increase is due to the implementation ofGovernmental Accounting Standards Board (GASBI Statement No. 75. The increase indeferred inflows of $66.6 million is also the product the implementation of GASBStatement No. 75.

e for FiscaIYear 2018, operating revenues increased by$1.5 million, or 2 percent, to$70.6million. There were increases in passenger fare revenues of $2.1 million; offset bydecreases in contract services of $0.6 million, or 5 percent, and in "other" operatingrevenues of$0.7 million, or 2 percent. At June 30, 2017, operating revenues were $69.1million. Of $2.5 million of farebox revenue is attributable to the JPA joint ventures forParatransit and Dumbarton.

e In fiscaIYear 2018, before the implementation of GASB Statement No. 75, totalexpenseswere $476.0 million, an increase of $24.1 million, or 5 percent, compared to $451.9million at June 30, 2017. The expense categories of salary and wages, depreciation,outside services and insurance showed the larger increases, with salary and wagesincreasing by $8.3 million or 6%, due in part to CBA driven wage increases, depreciationincreased by $4.7 million due to an increase in depreciable base due to the District'scapitalacquisitions program, and insurance increased by $6.0 million due to the absenceof an favorab]e offsetting actuaria] adjustment as was the case in 20]-7. The increase inthe outside services number of $4.3 million is primarily attributable to the increase in"Pass Thru" expenditures which during the period grew by $3.5 million. ("Pass Thru"revenues and expenditures are generated from projects belonging to other agencies,which may directly or indirectly benefit the District's operations.) There was a notable

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Report No.18-285Page 3 of4

reduction in other expenses in the amount of $3.6 million mainly due to the lack ofelection expenses during the period. The remaining line items in this section of thefinancialstatements allhad increases, comprising the net result.

© for FiscaIYear 2018, non-operating revenues were $370.6 million, which is an increase of35.3 million, or ll percent, compared to Fiscal Year 2017 when it was $335.3 million.Notable increases occurred in the following categories; property taxes of $10.2 million,localfunding of$13.3 million, and non-operating revenues ofJPA and consortium of$11.0million. There were no notable decreases during the period.

e At June 30, 2018, net position was $23.5 million, a decrease of $127.2 million, or 84percent, from June 30, 2017 when it was $150.7 million. This 2018 decrease in netposition was significantly driven by the required implementation of GASB Statement No.75 which records for Other Post-Employment Benefits (OPEB), in a manner similar toGASB Statement No. 68 for pension in that organizations were required to record the fullOPEB liability. This significant impact however was partially offset by the net result oftotal revenues and expenses during the fiscal year of $441.1 million, combined withcapitalfunds earned during the period of $74.5 million, totaling$515.6 million, over total

expenses of $476.0 million.

ADVANTAGES/DISADVANTAGES

Receipt by the Board of Directors of the AnnuaIAudited FinancialStatements formally closes the2017-18 Fiscal Year.

ALTERNATIVES ANALYSIS

This report does not recommend an action

PRIOR RELEVANT BOARD ACTION/POLICIES

Board Policy No. 340 Accounting Policies (Adopted 4/1992, most recently revised 1/2016)

ATTACHMENTS

1. Audited Basic Financia] Statements forthe Fisca] Year Ended June 30, 20].82. Measure B3. Measure BB4. Measure J5. Measure VV

6. Prop lll (Gann Limit)7. Evaluation of Board of Director Expenses

8. Special Transit Service District I/District 29. Single Audit10. Prop IB - (PTMISEA &TDAI11. Memorandum on InternalControl12.LCTOP

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Report No.18-285Page 4 of4

Approved by: Claudia L. Allen, Chief Financial Officer

Reviewed by: Ralph Martini, Controller

Prepared by: Ralph Martini, Controller

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DRAFTSR18-285Attachment I

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

FINANCIAL STATEMENTSJune 30.2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

FINANCIALSTATEMENTSJune 30, 2018

CONTENTS

INDEPENDENTAUDITOR'S REPORT

FINANCIAL STATEMENTS

STATEMENT OF NET POSITION- ENTERPRISE FUND

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NETPOSITION - ENTERPRISE FUND .........,..........................

STATEMENT OF CASH FLOWS - ENTERPRISE FUND

STATEMENT OF FIDUCIARY NET POSITION - PENSION TRUST FUND

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - PENSION TRUST FUND

NOTES TO FINANCIAL STATEMENTS ...........................

4

6

7

9

10

1 1

REQUIRED SUPPLEMENTARY INFORMATION

PENSION PLAN - SCHEDULE OF CHANGES IN THE EMPLOYER'SNET PENSION LIABILITY AND RELATED RATIOS.........

PENSION PLAN - SCHEDULE OF EMPLOYER'S CONTRIBUTIONS

OPEB PLAN QRUSD - SCHEDULE OF CHANGES IN THE EMPLOYER'SNET PENSION LIABILITY AND RELATED RATIOS ..............................................

OPEB PLAN QRUSD - SCHEDULE OF EMPLOYER'S CONTRIBUTIONS

OPEB PLAN(NON-TRUSS - SCHEDULE OF CHANGES IN THE EMPLOYER'SNET PENSION LIABILITY AND RELATED RATIOS ........

OPEB PLAN(NON-TRUSS - SCHEDULE OF EMPLOYER'S CONTRIBUTIONS

41

42

43

44

45

46

SUPPLEMENTARYINFORMATION

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF FUND NET POSITION

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF REVENUES. EXPENSES,AND CHANGESINFUND NETPOSITION

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF CASH FLOWS

BUDGETARY BASIS - ENTERPRISE FUND - TRANSIT ONLY - COMPARATIVESCHEDULES OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

BUDGETARY BASIS - ENTERPRISE FUND - TRANSIT ONLY - SCHEDULE OFREVENUES, SUBSIDIES AND EXPENSES - BUDGET VERSUS ACTUAL

BUDGETARY BASIS - ENTERPRISE FUND - TRANSIT ONLY - SCHEDULE OFREVENUES AND EXPENSES BY SERVICE AREA ...............

NOTES TO SUPPLEMENTARY INFORMATION ....

47

49

50

52

53

54

55

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DRAFT

INDEPENDENT AUDITOR'S REPORT

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities and fiduciaryactivities of Alameda-Contra Costa Transit District (the District), as of and for the year ended June 30, 201 8.and the related notes to the financial statements. which collectively comprise the District's basic financialstatements 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 inaccordance with accounting principles generally accepted in the United States of American this includes thedesign. implementation. and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not auditthe financial statements of the AC Transit Employees' Retirement Plan. which represents the fiduciaryactivities of the District. Those statements were audited by other auditors whose report has been furnishedto us. and our opinion, insofar as it relates to the amounts included for the AC Transit EmployeesRetirement Plan , is based solely on the report of the other auditors. We conducted our audit in accordancewith auditing standards generally accepted in the United States of America and the standards applicable tofinancial audits contained in Government ,Auditing Standards. issued by the Comptroller General of theUnited States. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from materialmisstatement. The financial statements of theAC Transit Employees' Retirement Plan were not audited in accordance with Government ,4udffingStandardsn r

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments. the auditor considers internal control relevant to the entity's preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances. but not for the purpose of expressing an opinion on the effectiveness of the entity's internalcontrol. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of significant accounting estimates made bymanagement, 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 ouraudit opinions.

l

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DRAFT

Opinions

In our opinion. based on our audit and the report of other auditors, the financial statements referred toabove present fairly. in all material respects, the respective financial position of the business-type activitiesand fiduciary activities of the District. as of June 30, 201 8, and the respective changes in financial positionand, where applicable, cash flows thereof for the year then ended in accordance with accounting principlesgenerally accepted in the United States of America.

Emphasis of Matter

As discussed in Note <> to the financial statements. the District adopted new accounting guidance, GASBStatement No.. 75, Accounting and Financial Reporting for Postemployment Benefits other than Pensions .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'sDiscussion and Analysis. the Schedule of Changes in Employer's Net Pension Liability and Related Ratios,Schedule of Changes in Net Other Postemployment Benefits (OPEB) Liability and Related Ratios, Scheduleof Employer's Contributions, and Schedule of Funding Progress, as listed in the table of contents, bepresented to supplement the basic financial statements. Such information, although not a part of the basicfinancial statements. is required by Governmental Accounting Standards Board who considers it to be anessential part of financial reporting for placing the basic financial statements in an appropriate operational.economic, or historical context. We and other auditors have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in the UnitedStates of America, which consisted of inquiries of management about the methods of preparing theinformation 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 financialstatements. We do not express an opinion or provide any assurance on the information because the limitedprocedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit for the year ended June 30, 2018 was conducted for the purpose of forming opinions on thefinancial statements that collectively comprise the District's basic financial statements. The accompanyingIntroductory Section, Other Supplementary Information for the year ended June 30, 2018, and StatisticalSection, as listed in the table of contents, are presented for purposes of additional analysis and are not arequired part of the basic financial statements.

The Other Supplementary Information for the year ended June 30, 2018 is the responsibility of managementand was derived from and relates directly to the underlying accounting and other records used to preparethe basic financial statements. The Other Supplementary information has been subjected to the auditingprocedures applied in the audit of the basic financial statements for the year ended June 30, 2018 andcertain additional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the basic financial statements or to the basicfinancial statements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States of America. In our opinion, the Other Supplementary Information isfairly stated, in all material respects. in relation to the basic financial statements as a whole for the yearended June 30.2018.

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DRAFTWe also previously audited, in accordance with auditing standards generally accepted in the United Statesof America, the basic financial statements of the District as of and for the year ended June 30, 2017 (notpresented herein), and have issued our report therein dated December 13, 2017, which containedunmodified opinions on the respective financial statements of the business-type activities and fiduciaryactivities. The Comparative Schedules of Net Position, Comparative Schedules of Revenues, Expensesand Changes in Net Position, Comparative Schedules of Cash Flows, and Comparative Schedules ofRevenues, Expenses, and Changes in Net Position -- Budgetary Basis (referred to collectively asComparative Schedules') as of and for the year ended June 30. 2017. as listed in the table of contents.

are presented for purposes of additional analysis and are not a required part of the basic financialstatements. Such information is the responsibility of management and was derived from and relates directlyto the underlying accounting and other records used to prepare the 2017 financial statements. TheComparative Schedules as of and for the year ended June 30, 2017, as listed in the table of contents, havebeen subjected to the auditing procedures applied in the audit of the 2017 basic financial statements andcertain additional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare those financial statements or to those financialstatements themselves, and other additional procedures in accordance with auditing standards generallyaccepted in the United States of America. In our opinion, the Comparative Schedules are fairly stated in allmaterial respects in relation to the basic financial statements as a whole for the year ended June 30, 201 7.The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in theaudit of the basic financial statements, and accordingly, we do not express an opinion or provide anyassurance on them.

Other Reporting Required by Government 4ud/ting Standards

In accordance with Govern?ment Aud;fir?g Sfar7dards, we have also issued our report dated November <>,2018, on our consideration of the District's internal control over financial reporting and on our tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.The purpose of that report is to describe the scope of our testing of internal control over financial reportingand compliance and the results of that testing, and not to provide an opinion on internal control over financialreporting or on compliance. That report is an integral part of an audit performed in accordance withGovern?ment 4ud/fang Standards in considering the District's internal control over financial reporting andcompliance.

Crowe LLP

San Francisco. CaliforniaNovember <>, 201 8

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - STATEMENT OF NET POSITIONJune 30,2018(in thousands)

ASSETSCurrent assets

Cash and cash equivalents (Note 3)Restricted cash and cash equivalents:

Restricted for capital purchases (Note 3)

$ 59,375

22,769

37,531Investments (Note 3)

Receivables:Federalandlocalgrants:

CapitalPlanning, operating and other (Note 7)

PropertytaxLocalsalestaxOther trade receivables

18,46112,98713,03011,63511.344

Total receivables, net 67.457

Due from Pension Trust Fund (Note 5)InventoryPrepaid expenses

9,67011,209

215.578Total current assets

Noncurrent assetsRestricted cash and cash equivalents:

Restricted for certificates of participation (Note 3)Capital assets (Note 4)

NondepreciableDepreciable, net

1,138

96,778303.328

Total capital assets, net 400.106

401,244

616.822

Total noncurrent assets

Total assets

DEFERRED OUTFLOWS OF RESOURCESPension related (Note 9)OPEB related (Note lO)

48,534

Total deferred outflows of resources 50,994

667.816Total assets and deferred outflows of resources £

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - STATEMENT OF NET POSITIONJune 30,2018(in thousands)

LIABILITIESCurrent liabilities

Accounts payable and accrued expensesAccrued salaries and wagesCurrent portion of accrued vacation and sick leaveDue to Pension Trust Fund (Note 5)Unearned revenueOther accrued liabilitiesAccrued interest payable

Current portion of remediation obligations (Note 1 2)Current portion of certificates of participation (Note 8)

Current portion of claims liabilities (Note 1 3)ren

$l

l

7.8813,7497.2574,9598,4142.141

3758,947

67

l

l

Total current liabilities 86.010

NoncurrentliabilitiesAccrued vacation and sick leaveClaims liabilities (Note 1 3)Remediation obligations(Note 12)Certificates of participation (Note 8)Net pension liability (Note 9)Net OPEB liability (Note lO)

8.96353.752

95211,169

254,935151.324

Total noncurrent liabilities 481.095

567.105Totalliabilities

DEFERRED INFLOWS OF RESOURCESPension related (Note 9)OPEB related (Note lO)

27,45349.715

77.168

644.273

Total deferred inflows of resources

Total liabilities and deferred inflows of resources

N ET POSITIONNet investment in capital assetsRestricted for capital purchases (Note I I)Restricted for debt serviceUnrestricted

386,71422.769

763r386.703)

Total net position

The accompanying notes are an integral part of these financial statements

5

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUNDSTATEMENT OF REVENUES. EXPENSES, AND CHANGES IN NET POSITION

Year Ended June 30. 201 8(in thousands)

OPERATING REVENUESPassengerfaresContract servicesOperating revenues of JPA and consortium (Note 1 4)Other

$52.24511,5792,477

70.562Total operating revenues

OPERATING EXPENSESOperator wagesOther wagesFringe benefitsDepreciation (Note 4)Fueland oilOther material and suppliesServicesInsuranceExpenses of JPA and consortium (Note 1 4)Other

85.73364.353

172,33540,23012,73413,95140,8587,425

30,177

Total operating expenses 476,039

(405.477)Operating loss

NON-OPERATING REVENUES(EXPENSES)Operating assistance:

PropertytaxesLocal sales tax (Note 7)Local funds (Note 7)State (Note 7)Federal (Note 7)

134,69499,98291.55513,6815.598

25,878(1 )

575

Non-operating revenues of JPA and consortiumLoss on sale ofcapitalassetsInterest incomeInterest expense

Net non-operating revenues(expenses) 370.616

Loss before capital contributions (34,861)

74.470Capital contributions(Note 6)

Change in net position 39,609

Net position at beginning of year, as previously stated 150,691

:16.066)

Cumulative effect of adoption of GASB 75 (Note I)

Net position at beginning of year, as restated

Net position atend ofyear

The accompanying notes are an integral part of these financial statements

6

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DRAFTALAMEDA-CONTF]A COSTA TRANSIT DISTRICT

ENTERPRISE FUND - STATEMENT OF CASH FLOWSYear Ended June 30. 201 8

(in thousands)

Cash flows from operating activities:Cash received from customersCash payments to suppliers for goods and servicesCash payments to employees for servicesOther operating receipts

$ 63,899(117.906)(320,576)

Net cash used in operating activities (370,322)

Cash flows from noncapital financing activitiesOperating assistance received 362.417

362.417Net cash provided by noncapital financial activities

Cash flows from capital and related financing activities:Acquisition and construction of capital assetsCapital contributions receivedPrincipal paid on certificates of participationInterest paid on certificates of participation

(91.612)71,657(3,754)

Net cash used in capital and related financial activities (25,064)

Cash flows from investing activitiesProceeds from investmentsPurchase of investmentsInvestment income

62,117(68,065)

575

Net cash used in investing activities

Change in cash and cash equivalents (38,342)

121.624Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

7

Summary of cash and cash equivalents reported onon the Statement of Net Position:

Unrestricted cash and cash equivalentsRestricted cash and cash equivalentsRestricted for certificates of partici pation

$ 59,37522.769

Total cash and cash equivalents reported on theStatement of Net Position

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - STATEMENT OF CASH FLOWSYear Ended June 30. 201 8

(in thousands)

Reconciliation of operating loss to net cash usedin operating activities:

Operating lossAdjustments to reconcile operating loss to

net cash used in operating activities:DepreciationEffect of changes in assets and liabilities:

Other trade receivablesInventoryDue to/from Pension Trust FundPrepaid expensesAccounts payable and accrued expensesAccrued salaries and wagesAccrued vacation and sick leaveUnearned revenueOther accrued liabilitiesClaims liabilitiesNet pension liability and deferred outflows/inflows from pensionNet pension OPEB and deferred outflows/inflows from OPEB

$ (405.477)

40,230

(6,155)(411)

(5,930)(1,788)

1352)(151)211

3,753(1,868)

(99)(1,681)

Net cash used in operating activities

Supplemental disclosure of cash flow informationNon-cash investing. capital and financing transactions

Loss on sale ofcapitalassetsNet appreciation in fair value of investments

$ (1 )271

The accompanying notes are an integral part of these financial statements

8

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DRAFTALAMEDA-CONTF3A COSTA TRANSIT DISTRICT

PENSION TRUST FUND - STATEMENT OF FIDUCIARY NET POSITIONDecember 31 . 201 7

(in thousands)

ASSETSContributions receivable from the District (Note 5)Interest receivable and other investment receivablesInvestments at fair value (Note 3):

Short-term investmentsEquity securitiesEquityfundsFixed income fundsRealestatefunds

$ 4.674115

8,55079,479

275,670281,48434.232

Total investments 679.415

684.204Total assets

LIABILITIESAccounts payable and accrued expensesDue to the District (Note 5)

810

Total liabilities

Net position restricted for pensions

The accompanying notes are an integral part of these financial statements

9

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

PENSIONTRUSTFUNDSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION

Year Ended December 31 , 2017(in thousands)

Additions:Employer contributionsInvestment income:

Dividends and interest incomeNet appreciation in fair value of investmentsInvestment expenses

$ 52,369

7,06582.176

Net investment income 87,481

139,850Total additions

Deductions:Benefit paymentsAdministrative expenses

54,631

Totaldeductions S5,6@

84,186Netincreasein netposition

Net position restricted for pensions, at beginning of year 594.698

Net position restricted for pensions. at end of year

The accompanying notes are an integral part of these financial statements

10

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 1- THE FINANCIAL REPORTING ENTITY

QlgBl1lza11Qn: The Alameda-Contra Costa Transit District (the District) is a political subdivision of the Stateof California established in 1956 and is subject to Transit District Law as codified in the California PublicUtilities Code.

Reoortina Entitv: The District follows the provisions of Governmental Accounting Standards Board (GASB)Statement No. 1 4, The FJnanch/ f?epodir?g Ehfify, as amended. This statement sets forth accountability ofa government's elected officials to their constituents as the basic criteria for inclusion of an organization ina governmental reporting entity. The governmental reporting entity consists of the District (primarygovernment) and organizations for which the District is financially accountable. Financial accountability isdefined as the appointment of a voting majority of the component unit's board, and (i) either the District'sability to impose its will on the organization or (ii) the potential for the organization to provide a financialbenefit to, or impose a financial burden on the District.

The basic financial statements include legally separate component units, which are so financiallyintertwined with the District that they are, in substance, part of the District and are therefore consideredblended component units. The component units discussed below are included in the District's reportingentity because of the significance of their operational or financial relationships with the District.

For financial reporting purposes. the District's basic financial statements include all financial activities thatare controlled by or are dependent upon actions taken by the District's Board of Directors. As such, thebasic financial statements include the financial activities of the District's Special Transit Service Districts(Special Districts) No. I and No. 2 and other areas in which the District has contracted to provide transitservice. Because these districts are not legally separate entities. they are not considered component unitsunder GASB Statement No. 14. Special District No. I was the designation used from the creation of theDistrict for its original territory, consisting of the cities and unincorporated areas from roughly Richmondand San Pablo through Hayward. Special District No. 2 was created by annexation agreements among thecities of Fremont and Newark, the County of Alameda and the District and ratified by a subsequent specialelection in November 1974 in Fremont and Newark. All property within the Special Districts is subject totaxes that may be levied by the District.

In May 1988. the District created AC Transit Financing Corporation (the Corporation), a nonprofit publicbenefit corporation incorporated in the State of California under the guidelines of the Nonprofit PublicBenefit Corporation Law. Legally separate from the District, the Corporation is blended with the primarygovernment because its sole purpose is to provide financial assistance to the District by financing.refinancing, acquiring, constructing, improving, leasing and selling buildings, equipment, land, buildingimprovements, and other public improvements.

The financial activities of the Alameda-Contra Costa Transit District Employees' Pension Plan (the Plan)are reported within a fiduciary fund in the basic financial statements because the Plan exclusively servesthe employees of the District. The financial position and changes in financial position of the Plan arereported on a calendar year basis.

The Plan is administered by the five-member Retirement Board made up of two representatives of thegeneral public selected by the District's Board, two District employees who are elected officials of theAmalgamated Transit Union, Local 1 92 (ATU) and one District employee selected by the District's Board ofDirectors from the employees who are not represented by ATU. The Retirement Board has administrativeand fiduciary responsibility over the Plan. The Retirement Board utilizes a third-party banking institution ascustodian overthe Plan's assets.

Separate financial statements for the Corporation and the Plan may be obtained from the District Controller

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accounting policies of the District conform to accounting principles generallyaccepted in the United States of America (GAAP) as applicable to governmental units. The basic financialstatements provide information about the District's enterprise fund and the pension trust fund. Separatestatements for each fund category - enterprise and fiduciary - are presented. The basic financial statementsare reported using the economic resources measurement focus and the accrual basis of accounting.Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless ofthe timing of the related cash flows. On an accrual basis, revenues from property taxes are recognized inthe fiscal year for which the taxes are leviedl revenue from sales taxes are recognized in the fiscal yearwhen the underlying exchange occursl revenue from grants is recognized in the fiscal year in which alleligibility requirements have been satisfiedl and revenue from investments is recognized when earned.

EntQrpri$Q Fur)d (prQprjQlarv blind): The accounts of the District are organized on the basis of a proprietaryfund-type, specifically an enterprise fund. The activities of this fund are accounted for with a set of self-balancing accounts that comprise the District's assets, deferred outflows, liabilities, deferred inflows andnet position, revenues and expenses. Enterprise funds account for activities (i) that are financed with debtthat is secured solely by a pledge of the net revenues from fees and charges of the activityl or (ii) that arerequired by laws or regulations that the activity's cost of providing services. including capital costs (such asdepreciation or debt service), be recovered with fees and charges. rather than with taxes or similarrevenuesl or (iii) with pricing policies that establish fees and charges designed to recover its costs, includingcapital costs (such as depreciation or debt service).

Enterprise funds distinguish operating revenues and expenses from non-operating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with an enterprise fund's principal ongoing operations. The principal operating revenues of theDistrict's enterprise fund are charges to passengers for services provided. Operating expenses include thecost of services, administrative expenses, and depreciation on capital assets. All revenues and expensesnot meeting this definition are reported as non-operating revenues and expenses

When both restricted and unrestricted resources are available for use, it is the District's policy to userestricted resources first, then unrestricted resources as they are needed.

Pension Trust Fund: The Pension Trust Fund accounts for the accumulated resources to be used forretirement annuity payments to all members of the Plan.

Cp$1l Brig Qppr) EqUjyqjQnlp: For purposes of the statement of cash flows, the District considers all highlyliquid investments with a maturity of three months or less when purchased to be cash equivalents. Anyrestricted cash and investments used to service debt principal and interest payments of the District wouldnot be considered cash equivalents.

!11veslme!!b: The District applies the provisions of GASB Statement No. 31, .4ccounfhg and Finar7c;a/f?eporthg for Cern/n /nvesfmenfs and for Ekferr7a/ /nvesfment Poo/s, which required governmental entitiesto report certain investments at fair value in the statement of net position and the statement of plan netposition and recognize the corresponding change in fair value of investments in the year in which thechange occurred. In accordance with GASB Statement No. 72, the District has reported its investments atfair value based on quoted market information obtained from fiscal agents or other sources.

Restricted for Certificates of Participation: in connection with the 2007 Certificates of Participation, theDistrict was required to establish and maintain a reserve fund in the amount of $1 .35 million. Pursuant to atrust agreement by and between the Corporation, the District, and the trustee, the restricted assets in thefund can only be used to service lease payments on the outstanding certificates of participation.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCtALSTATEMENTSJune 30,2018

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

In connection with the 2009A Certificates of Participation, the District was required to establish and maintaina reserve fund in the amount of $1.138 million. Pursuant to a trust agreement by and among theCorporation, the District, and the trustee. the restricted assets in the fund can only be used to service leasepayments on the outstanding certificates of participation.

The reserves are reported as non-current assets

Pension P an: The District's noncontributory pension plan provides retirement benefits for all qualifyingunion and non-union employees. The District's annual contribution to fund the Plan is actuarially determinedbased on a percentage of gross payroll, which includes the normal cost of the Plan plus amortization ofprior service costs over a period of not more than thirty years. Cash and investments in the Plan arerestricted by law to provide for the future payment of pension benefits and related expenses. For purposesof measuring the net pension liability, deferred outflows of resources and deferred inflows of resourcesrelated to pensions, pension expense, information about the fiduciary net position of the Plan and additionsto/deductions from the Plan's fiduciary net position have been determined on the same basis as they arereported by the Plan. For this purpose, benefit payments (including refunds of employee contributions) arerecognized when due and payable in accordance with the benefit terms. Investments are reported at fairvalue

Inventor es: Inventories consist primarily of bus replacement parts and fuel and are stated at average cost.Inventory usages are charged to expense, on a weighted-average basis, at the time that individual itemsare withdrawn from inventory.

QapllaLAgselg: Capital assets are stated at cost and are depreciated using the straight-line method overthe estimated useful lives of the assets, as follows:

Building. structures and other improvementsRevenue equipmentService vehicles and other equipmentEngines and transmissionsRevenue vehicles (Mini Vans)

30 years12 years

3to 10 years5 years7 years

The District's policy is to capitalize all property and equipment with a cost greater than $5,000 and a usefullife of more than one year.

Qpera1111a.A$slslanfe: Grants are accounted for as non-operating revenue as soon as all eligibilityrequirements have been met.

Contract Serv ces: The District entered in to an agreement with San Francisco Bay Area Rapid TransitDistrict's (BAR'D in which payments are allocated to the District from BART for feeder services to facilitatethe coordination of transit service and encourage transit use and improve the quality of transit service. SeeNote 1 4 for related party disclosures on the Consortium.

Prooertv Taxes. Collection and Maximum Rates: The State of California (State) Constitution Article Xlll Aprovides that the maximum basic property tax rate on any given property may not exceed 1% of its assessedvalue unless an additional amount for general obligation debt has been approved by voters. Assessed valueis calculated at 1 00% of market value as defined by Article Xlll A and may be increased by no more than2% per year unless the property is sold, transferred or improved. The State Legislature has determined themethod of distribution of receipts of the tax levy among the counties, cities, school districts and otherdistricts. including the District.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Alameda and Contra Costa Counties assess properties, bill for, collect and distribute property taxes.Property taxes are recorded as non-operating revenue (including secured delinquent property taxes) net ofestimated uncollectible amounts. in the fiscal year of levy.

Assessed values are determined annually by the Assessor's Offices of Alameda and Contra Costa Countieson January 1, and become a lien on the real properties at January 1. The levy date for secured andunsecured properties is July I of each year. Secured taxes are due November I and February I and aredelinquent if not paid by December 10 and April 1 0, respectively. Unsecured property tax is due on July 1and becomes delinquent after August 31 .

The District accrues delinquent property taxes from Contra Costa County. The cumulative amount ofdelinquent taxes uncollected for the current and prior years has been recorded as a receivable. The District.through the County of Alameda (County), is under the Teeter plan whereby, delinquent taxes are receivedby the District from the County's own funds in the event that delinquent taxes are not received by a certaindue date. In return, the District forgoes the penalties and interests that would accrue on these delinquentpropertytaxes.

On November 30, 2004, the voters approved Measure BB, which superseded the Measure AA parcel tax.Measure BB increased the amount of annual parcel tax to $48 per year and the term of the tax to 1 0 yearsfrom the date of implementation. The tax became effective on July 1, 2005 and was to terminate on June 30.201 5. However, on November 4, 2008. the voters approved Measure VV. which supersedes the MeasureBB parcel tax. Measure VV became effective July 1 , 2009 and increased the annual parcel tax to $96 perparcel. Measure VV is effective through June 30, 2019. The revenue derived from this measure is to beused to sustain public transportation services provided by the District in Special District No. 1 . The Districtreceived approximately $29.7 million in Measure VV taxes during the year ended June 30, 201 8.

Qenlpensaled..Ab$engss: The personnel policies of the District generally allow employees to accrue up to240 hours of vacation and 140 days of sick leave. Unused accrued vacation is paid to the employee upontermination from District employment. Unused accrued, vested sick leave is paid, upon retirement. to thoseemployees with ten or more years of District service.

Qgellgl..Qg!!!1lbU11gnS: The District receives grants from the Federal Transit Administration (FTA) and stateand local transportation funds for the acquisition of buses and other equipment and improvements. Capitalcontributions are recorded as revenues after net non-operating revenues, and the cost of the related assetsis included in capitalassets.

Net Pos t on: The financial statements utilize a net position presentation. Net position is subdivided into netinvestment in capital assets, restricted and unrestricted.

e Net investment in capital assets - This category groups all capital assets into one component of netposition. Accumulated depreciation and the outstanding balances of debt that are attributable to theacquisition, construction or improvement of these assets reduce the balance in this category.Restricted net position - This category represents restrictions on net position externally imposed bycreditors or imposed by law through constitutional provisions or enabling legislation. At June 30, 201 8,the District has restricted net position in the amount of $0.8 million related to the 2009 Certificates ofParticipation (COPS) and $22.8 million for the future acquisition of buses (See Note 11) and othercapital expenditures. The net position restricted for debt service is maintained in a reserve fund toservice lease payments on the outstanding 2009 COPS.

Unrestricted net position - This category represents net position of the District, not restricted for anyprojects or other purposes.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Use of Estimates: Management has made estimates and assumptions relating to the reporting of assetsand liabilities and revenues and expenses to prepare the basic financial statements in conformity with USGAAP. Actual results could differ from those estimates.

Deferred Outflows/Inflows of Resources: Deferred outflows of resources represent a consumption of netposition that applies to a future period(s). Deferred inflows of resources represent an acquisition of netposition that applies to a future period(s). These amounts will not be recognized as expense or revenueuntil the applicable period. The District's activities are related to recognition of changes in its defined benefitplan's net pension liability that will be amortized in future periods

Recent Accounting Pronouncements Adopted:GASP S\alemen\ No. 75, Accounting and Financial Reporting for Postemployment Benefits Other ThanPensions, issued on June 2015. The provisions of this Statement are effective for periods beginningafter June 15, 2017. The primary objective of this Statement is to improve accounting and financialreporting by state and local governments for postemployment benefits other than pensions (otherpostemployment benefits or OPEB). It also improves information provided by state and localgovernmental employers about financial support for OPEB that is provided by other entities. As a resultof adopting this Statement, the District reduced fiscal year 201 8 beginning unrestricted net position by$166,757,448.

GASB Statement No. 81 . /rrevoca6/e Sp//r-/nreresf Agreements, issued March 201 6. The provisions ofthis Statement are effective for periods beginning after December 15, 2016. The objective of thisStatement is to improve accounting and financial reporting for irrevocable split-interest agreements byproviding recognition and measurement guidance for situations in which a government is a beneficiaryof the agreement. The adoption of this Statement has no effect on the District's net position or changestherein

GASB Statement No. 85, Omn/bus 2077, issued March 2017. The provisions of this Statement areeffective for periods beginning after June 15, 2017. The objective of this Statement is to addresspractice issues that have been identified during implementation and application of certain GASBStatements. This Statement addresses a variety of topics including issues related to blendingcomponent units, goodwill, fair value measurement and application, and postemployment benefitsjpensions and other postemployment benefits [OPEB]). The adoption of this Statement has no effecton the District's net position or changes therein.

GASB Statement No. 86, Cdna;n Deaf Ektfnguishmenfs /ssues. issued May 2017. The provisions ofthis Statement are effective for periods beginning after June 1 5, 2017. The objective of this Statementis to improve consistency in accounting and financial reporting for in-substance defeasance of debt byproviding guidance for transactions in which cash and other monetary assets acquired with only existingresources--resources other than the proceeds of refunding debt--are placed in an irrevocable trust forthe sole purpose of extinguishing debt. The adoption of this Statement has no effect on the District'snet position or changestherein.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 3 - CASH AND INVESTMENTS

!nve$!iden!.Ee!!gy: The District's investment policy, which is more restrictive than required by the CaliforniaGovernment Code, stipulates the type, maturity limit, and diversification of securities held by the District.The objectives of the policy. in order of priority, are compliance with applicable laws, preservation of capital,liquidity to meet required cash demands and maximization of income. The District's investment policy doesnot permit investments in medium term notes. municipal securities or reverse repurchase agreements.which are permitted by the California Government Code. In accordance with the District's investment policy,the District may invest in the following types of Investments, subject to certain restrictions, such as ratingquality or maximum percentages of the porHolio:

Repurchase agreementsSecurities of U.S. government and its agenciesCalifornia Local Agency Investment FundNegotiable certificates of depositCommercial paperBankers'acceptancesMoney market accounts (Non U.S. government)

The AC Transit Employees' Retirement Plan's (Plan) investments are invested pursuant to investmentpolicy guidelines established by the Retirement Board. The long-term asset allocation of the investmentportfolio is to have 28% of the porHolio invested in domestic equities, 17% in international equities, 32% indomestic fixed income securities, 12% in global asset allocation funds, 5% in real estate, 5% in privatedebt, and 1% in cash. The portfolio is managed by investment managers hired by the Retirement Board.The Retirement Board utilizes both active and passive management in the domestic equity portf ono. TheRetirement Board has chosen to manage the investment risks described by GASB Statement No. 40 byrequiring investment managers to abide by certain guidelines that are tailored to the portfolio that themanager manages. These guidelines specify the amount of credit, interest. and foreign currency risk that amanager may take and the performance objective of the portfolio.

The allocation to global asset allocation funds allow the investment managers to adjust the porta onomanaged based on which asset classes (primarily stocks and bonds) they consider desirable. The specificasset allocation decisions are made by the investment managers within their investment policy limits. Globalasset allocation results in the placement of the asset allocation decision on the investment manager. ratherthan the Retirement Board.

El9$e!!!g119n: At June 30, 2018 (December 31 , 2017 for the Plan)consisted of the following (in thousands):

the District's cash and investments

Cash and cash equivalentsinvestments

$ 83,282716.946

Total

Reported in the Enterprise Fund as:Cash and cash equivalentsRestricted - current cash and cash equivalentsRestricted - noncurrent cash and cash equivalentsInvestments

$59.37522,769

1,13837.531

Reported in the Pension Trust Fund as:Investments restricted for payment of accruedpension costs(at December 31, 2017)

120,813

679.415

800,228Total

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 3 CASH AND INVESTMENTS(Continued)

Fair Va ue: The District categorizes its fair value measurements within the fair value hierarchy establishedby accounting principles generally accepted in the United States of America. The hierarchy is based on thevaluation inputs useti to measure fair value of the asset. Level I inputs are quoted prices in active marketsfor identical assetsl Level 2 inputs are significant other observable inputs; Level 3 inputs are significantunobservable inputs.

The District has the following recurring fair value measurements as of June 30, 2018

U.S. Treasury bills and notes of $36.8 million are based on quoted market prices in active markets foridentical assets using the market approach(Levellinputs).Negotiable certificates of deposit of $249,000 are based on quoted market prices of similar securitieswitty similar due dates using the market approach (Level 2 inputs).

e

The fair value of mutual funds, some U.S. equity securities, and some international equity securities heldby the Plan are based on quoted prices in active markets using the market !pproach. (Level I inputs) Thefair value of short term investment funds, pooled investments. some U.S. equity securities, and someinternational equity securities held by the Plan are based on pricing vendors using matrix pricing. (Level 2inputs)LJ

Fair Value Measurements UsingQuoted Prices in SignificantActive Markets Other

for Identical ObservableAssets InputsLevel l} (Level 2) Total

Plan Investments:Short term investment fundsMutual fundsPooled investmentsU.S. equity securitiesInternational equity securities

$$

45,3728,550 $ 8,550

45,372214.349204,768ISQ.382

120.55271.144

214.34984,21679,238

$ 237.068 $ 386.353 ;23.421

Plan Investments Measure at Net Asset Value (NAV)

BalanceUnfunded

Commitments Redemotion

Fixed incomeRealestate

$ 21,76234,232

$

$

4,6352,311

Not eligible for redemptionQuarterly redemption with45-60 day notice

Fred /ncome - The fixed income portf ono consists of investments in two funds that make direct loans tocompanies. These funds are valued at the net asset value of the units held at the end of the.period basedupon the fair value of the underlying investments. These funds are not eligible for redemption but ratherdistribute proceeds over the funds' lifespans.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 3 CASH AND INVESTMENTS(Continued)

Rea/ Esfafe - The primary objective of the real estate portf ono is income and appreciation. The real estateporHolio consists of Investments in four commingled funds. These funds invest primarily in U.S, commercialreal estate (office, industrial, retail, multi-family, and other). These funds are structured as open-endcommingled funds and closed-end limited partnerships. The fair value of the investments in each fund isdetermined using third-party appraisals or internal valuations. For the two open-end funds, distribution ofincome is made quarterly and redemptions can be made from these funds on a quarterly basis with 45-60days' notice. Under certain conditions. the fund manager may not allow redemptions from the open-endfunds. The two closed-end limited partnerships pay distributions of income and investment sale proceedsat the manager's discretion. They do not allow client-directed redemptions.

Enterprise Fund -- Specific Risks

/r?feresf Rare Risk - The District has limited exposure to interest rate risk due to its liquidity needs to meetcash flow demand requirements. All of its investments have a remaining maturity at date of purchase ofeighteen months or less. None of the District's investments are highly sensitive to interest rate changes.

Cred/f R/sk - The District's credit rating risk is governed by the California Government Code 53601 whichlimits investments in money markets to the highest ranking attained by the rating agency which is Aaa/AA+.The District had no investments in money market accounts as of June 30. 2018. There are no credit limitson the securities of U.S. Treasury since these investments are backed by the full faith and credit of theUnited States government.

The District had $36.8 million of U.S. Treasury notes and bills as of June 30, 2018, which were all rated

Concenfraf/on of Cred/f R/sk - The District manages this risk by requiring that no more than 20% of its totalinvestment portfolio (with the exception of securities of the U.S. Treasury or U.S. government agencies) beinvested in a single security type or with a single financial institution. The District did not have any individualsecurity holdings meeting or exceeding 20% of its total portfolio as of June 30, 201 8.

Cusfod/a/ Cred/f Risk - Custodial credit risk for deposits is the risk that in the event of a bank failure, theDistrict's deposits may not be returned to it. The California Government Code requires California banks andsavings and loan associations to secure governmental deposits by pledging government securities ascollateral. The market value of pledged securities must equal at least 110% of the District's deposits.California law also allows financial institutions to secure governmental deposits by pledging first trust deedmortgage notes having a value of 150% of the District's total deposits. Such collateral is considered to beheld in the District's name.

Foreldr7 Currency f?;sk - Foreign currency risk is the risk that the changes in foreign exchange rates willaffect the fair value of an investment denominated in a foreign currency. At June 30, 2018, there was noexposure to foreign currency risk as all of the District's cash equivalents and investments are denominatedin U.S. dollar currency.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 3 CASH AND INVESTMENTS(Continued)

Pension Trust Fund - Specific Risks

/nferesf Rare f?;sk - For the Plan, interest rate risk is managed through the duration of its fixed incomesecurities. Bond prices are highly sensitive to the movement of interest rates. A decline in interest rates willtend to increase bond prices while an increase in rates will depress prices. Duration is a measure of interestrate risk with a higher duration signifying greater price volatility in response to a change in interest rates.As of December 31 . 2017, the Plan had the following investments in fixed income funds. (Amounts are inthousands, Duration in years)

Fund Amount Duration

SSgA Aggregate Bond Index FundLoomis, Sayles Credit Asset FundPIMCO Diversified Income FundInvestec Emerging Market Debt FundPark SquareCrescent

$ 126.742.845.444.812.59.3

6.03.95.05.10.52.5

Total fixed income funds

Credit Risk - For the Plan, fixed income assets are invested in two pooled investment vehicles and with anoutside money manager. As of December 31, 2017, $8.5 million was invested in a short term pooledinvestment fund managed by State Street Corporation. This fund is not rated.

Concenfraf/on of Credff Risk - Concentration of credit risk is the risk of loss attributed to the magnitude ofthe Plan's investment in a single issuer. As of December 31 , 201 7, the Plan had no investments in a singleissuer that equaled or exceeded 5% of the Plan's net position or the Plan's total investments.

Cusfod;a/ Cred/t R;sk - Custodial credit risk for investments is the risk that, in the event of the failure of thecounterparty to a transaction, the Plan will not be able to recover the value of investments or collateralsecurities that are in the possession of an outside party. All of the Plan's securities except those owned ina mutual fund or a commingled fund are held by the Plan's custodial bank in the Plan's name

ForeJOn Currency R/sk - Foreign currency risk is the risk that the changes in foreign exchange rates willaffect the fair value of an investment denominated in a foreign currency. The Plan has, or could have.exposure to foreign currencies through its investment in several commingled investments. As of December31, 2017, Investments in international equity funds(including emerging markets) totaled$150.4 million. ThePlan had $145.5 million as of December 31, 2017 in fixed income investments that could have foreigncurrency exposure. As of December 31 , 201 7, the Plan had no direct exposure to foreign currency risk.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 4 - CAPITAL ASSETS

Following is a summary of capital assets at June 30, 201 7 (in thousands)

June 30. 2017 Additions Retirements Transfers June 30.2018

Non-depreciable capital assetsLandWork in progress

$ 28.686 $25.864

54.550

$

91.612

91.612

$ - $(49.384)

28.68668.092

96.778Total (49.384)

Depreciable capitalassets:Revenue equipmentService vehicles and other

equipmentBuildings. structure and

Improvements

369.476 (1 )

(34)

29.407

3.512

16,465

49.384

398.882

120,465

290.915

780.856

123,943

307.380

830.205Total

Less accumulated depreciationRevenue equipmentService vehicles and otherequipment

Buildings, structure andimprovements

(202,260)

(110,190)

(25.360)

(3.972)

([Q.898]

l

33

(227,620)

(114.128)

(I S5,129)

Tota .486.681 (40.230) 34

l

(526.877)

Depreciable capitalassets netofaccumulated depreciation 294.175 (40.230) 49.384 303.328

Capital assets, net ofaccumulated depreciation

NOTE5 INTERFUND RECEIVABLES/PAYABLES

The Enterprise Fund in the accompanying basic financial statements is reported as of June 30, 201 8 andthe Pension Trust Fund is reported as of December 31 , 201 71 therefore, interfund payables and receivablesdo not equal. Interfund receivables and payables arise due to the following two reasons:

First, the timing of reimbursements from the Pension Trust Fund for administration costs and retiree benefitspayments made by the District. At June 30, 201 8 and December 31 , 201 7, the Pension Trust Fund had apayable from the Enterprise Fund of $0.5 million and $4.5 million, respectively, for these administrationcosts and retiree benefits payments made by the District.

Second, payments to the Pension Trust Fund for contributions based on covered payroll. At June 30, 201 8and December 31 , 201 7, the Pension Trust Fund had a receivable from the Enterprise Fund of $5.0 millionand $4.7 million, respectively, for contributions to be made by the Enterprise Fund to the Pension TrustFundn

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 6 - CAPITAL ASSISTANCE

The District has several grant contracts in process with the FTA that provide federal funds for the acquisitionof buses, other equipment and improvements. Under the terms of the grants, proceeds from equipmentsold or retired are refundable to the federal government in proportion to the original federal capital grantfunds used in the purchase. The District has also received allocations of funds generated from net bridgetoll revenues of the San Francisco-Oakland Bay Bridge and from PTMISEA grants. see Note ll . Thesefunds are received under provisions of the California Streets and Highways Code and are allocated basedon claims approved by the Metropolitan Transportation Commission (MTC). These grants are summarizedfor the year ended June 30, 201 8 as follows (in thousands):

FederalgrantsState and local grants

$ 38,24536.225

74.47

NOTE7-OPERATING ASSISTANCE

State and Local Operating Assistance: The Transportation Development Act (TDA) creates in each localjurisdiction a Local Transportation Fund that is funded by a 1/4 cent from the retail sales tax collectedstatewide. State Transit Assistance (STA) funds are generated by the state's sales tax on diesel fuel. TheCalifornia Department of Tax and Fee Administration (CDTFA) (previously known as the State Board ofEqualization) returns these funds to the local jurisdiction according to the amount of sales taxes collectedin that jurisdiction. TDA funds are allocated to the District from Alameda and Contra Costa counties to meet,in part, the District's operating requirements. The allocation is based on population within the District.

In 2004, voters approved Regional Measure 2 (RM2), raising the toll on regional state-owned toll bridgesby $1 . The measure established a Regional Traffic Relief Plan to help finance highway, transit, bicycle andpedestrian projects in the bridge corridors and their approaches. and to provide operating funds for keytransitservices.

Below is a summary of state and local operating assistance for the year ended June 30, 2018 (inthousands):

Localoperating assistance:Operating revenuesTransportation Development ActRegional Measure 2Less amount reported within non-operating revenues of JPA and consortium

$8.117

71,61818.840

State operating assistance:State Transit AssistanceSupplementary service/Welfare-to-WorkPassthruLess amount reported within non-operating revenues of JPA and consortium

$ 15,173(1,150)

767

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 7 OPERATING ASSISTANCE(Continued)

Local Sales Tax: The local sales tax assistance (AB 1 107) is derived from the one-half percent retail taximposed on the three BART counties (Alameda. Contra Costa and San Francisco). Of the total amountcollected, 75% is a direct BART subsidy with the District and the San Francisco Municipal Railway System(MUNI) sharing the remaining 25% equally.

In 1 987. the District began receiving local sales tax revenue under Measure B. Approved by the voters ofAlameda County, Measure B provides for the collection and distribution by the Alameda CountyTransportation Authority of a one-half percent transactions and use tax. The District is authorized to receive1 1 .617% of the annual tax collected under the condition that the money be used for service exclusively inAlameda County.

In 2009, the District began receiving local sales tax revenue under Measure J, which is an extension ofexisting Measure C one-half percent sales tax for financing of transportation projects in Contra CostaCounty. As a transit operator in Contra Costa County, the District is eligible to submit project proposals tothe Contra Costa Transportation Authority (CCTA) for funding under Measure J.

In 2015, the District began receiving local sales tax revenue under Measure BB. Approved by the voters ofAlameda County, Measure BB provides for the collection and distribution by the Alameda CountyTransportation Authority of an existing one-half percent transaction and use tax scheduled to terminate onMarch 31 , 2022 and the augmentation of the tax by an additional one-half percent. The District is authorizedto receive 23.3% of the annual tax collected under the condition that money be used for transportationimprovements benefitting Alameda County.

Local sales tax assistance for the year ended June 30, 201 8, is summarized below (in thousands)

ABl107Measure BMeasure JMeasure BBLess amount reported within non-operating revenues of JPA and consortium

$ 43,00930.8274,878

33,990(12,722)

$QQliQ $gQ7 qr)d 9309 Funding Sources: All federal funding sources are distributed by FTA after approvalby the MTC. Federal funding sources for the year ended June 30, 2018 are summarized below (inthousands):

5307 and 5309 operating grantsAmericans with Disabilities program - ADA set asideAmericans with Disabilities Act paratransit program -- leaseLess amount reported within non-operating revenues of JPA and consortium

$ 5.5983,8561,169

At June 30. 201 8, Federal Section 5307 and 5309 funds totaling $5.2 million were recorded as a receivable

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE8-LONG-TERM LIABILITIES

The following is a summary of changes in the District's long-term liabilities for the year ended June 30, 201 8(in thousands):

OriginalIssue

Amount

Balance Balance AmountJune 30, June 30. Due Within

2017 Additions Retirements 2018 0neYear

2007 COP

4% -4.75a%,dueAugust8,2017 $ 13,500 $Less unamortized premium

1,605 $2

$ (1,605) $(2)

$

2009ACOP3a% - 6.125%, due August 1 , 2034

Less unamortized discount15,000 12,340

(314)(430) 11,910

18 (296)445

2012 Refunding COP4a% - 4.75%, due August 1 . 2018 9,840 3.510

17.143

26,00972,798

(15,363)(21,947)

13.389

26.22072,699

1.019

17,25718,947

67

Total long-term debt

Accrued vacation and sick leaveClaims liabilities (Note 13)Remediation obligations (Note 1 2)

15.57421,848

Total long-term liabilities

On December 1 9, 2007, proceeds from the issuance of $1 3.5 million of Certificates of Participation, Series2007 (2007 COPS) were used to acquire and install a financial and human resources/payroll softwaresystem, including wiring and implementation of support services during the first year following completion.Interest on the 2007 COPS was payable semi-annually on February I and August I of each year. The finalprincipal payments were made in fiscal year 201 8.

On February 1 , 2009, proceeds from the issuance of $1 5 million of Certificates of Participation Series 2009A(2009A COPS) were used to acquire the land at 66th Avenue and all existing facilities and improvements.Interest on the 2009A COPS is payable semiannually on February I and August I of each year through theyear20348

On February 1 . 2012, the District issued Refunding Certificates of Participation Series 201 2 (201 2 COPS).The proceeds from the issuance of the $9.84 million were used to refund and retire the 2001 COPS. Intereston the 2012 COPS is payable semi-annually on February I and August I of each year through the year2018

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 8 - LONG-TERM LIABILITIES(Continued)

The District's debt service requirements to maturity for each of the next 5 fiscal years and thereafter aresummarized as follows (in thousands):

Year Ended Principal Interest Total

20192020202120222023

Thereafter2024-20282029-20332034-2036

$ 2,220465485510535

$696660637611

584

$2.9161,1251,1221,1211,11 9

3,1554,235

13.685

2,4281,316

129

5,5835,551

20.74£Total

Unamortized premiumand discount

Total

Deb!.l:lml!: Board policy on debt limitation (as defined by Ordinance No. 3773) states that "total annual debtservice expenses shall not exceed ten percent of operating revenue (including subsidies) provided that inno event shall such indebtedness exceed twenty percent of the assessed value of all real and personalproperty within the District." The District's legal annual debt service limit as June 30, 201 8. is approximately$41 .4 million.

Alba!!aae: The Tax Reform Act of 1 986 instituted certain arbitrage restrictions with respect to the issuanceof tax-exempt bonds after August 31 , 1 986. Arbitrage regulations deal with the investment of all tax exemptbond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interestpaid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paidto the Internal Revenue Service (IRS) at least every five years.

NOTE 9 - PENSION PLAN

Plan Descriotion: The AC Transit Employees' Retirement Plan (Plan) is a noncontributory single-employerdefined benefit pension plan, which provides retirement benefits for all qualifying union and non-unionemployees. Administration of the Plan is performed by the Plan's management staff and overseen by thePlan's Retirement Board. The Plan issues stand-alone financial statements and copies of these statementscan be obtained from the District Controller. 1 600 Franklin Street, Oakland. CA 94621 .

The Plan's members are members of the Amalgamated Transit Union (ATU), the American Federation ofState, County and Municipal Employees (AFSCME). the International Brotherhood of Electrical Workers(IBEW) and unrepresented employees. Each union vesting period is based upon its individual collectivebargaining entity, which is 5 years for all employees other than ATU employees, who have an 8-year vestingrequirement.

IContinued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 9 - PENSION PLAN(Continued)

Benefits Provided: Benefit provisions are established in the Plan document. The Plan document cannot bechanged by the Retirement Board. Any change to the Plan document must be made by the District Boardand for represented employees no changes can be made without the consent of the applicable union.Retirement benefits vest after either 8 years of service or 5 years of service. depending on the employee'sclassification. Most District employees who retire at or after age 55 with vested benefits are entitled to anannual retirement benefit, payable monthly for life, at a rate based upon age, the higher of either the averageof the last 36 months of employment or the average of the highest 3 years of earnings and the completedyears of service with the District.

f?q(ticioants Covered by BenefiLTerms: As of December 31 , 201 7, employee membership in the Plan wasas follows:

Retirees and beneficiaries currently receiving benefitsTerminated employees entitled to benefits but not yet receiving them

2,066205

Current employeesVestedNon-vested

1,178

Contrlbut ons: The District makes contributions, based upon the Plan's actuarial calculation each fiscal year.As of January 1 , 2013 California law required all new participants in a public retirement system to makeemployee contributions that covered at least 50% of the normal cost of the retirement benefits accruedeach year. This contribution obligation does not apply to District employees hired prior to January 1 , 201 3.The District is in the process of implementing that obligation as to employees who are not represented byemployee organizations. The application of that obligation to employees who are in bargaining unitsrepresented by employee organizations and who were hired after that date remains under consideration.For the year ended June 30, 2018, the District's average contribution rate was 32.38% of annual coveredpayroll and the District's contributions to the Plan were $54.3 million. As of June 30. 2018, no employeecontributions have been received by the Plan.

Actuarial Methods and Assumotions: The actuary used the following assumptions and methods incalculating the annual required contributions and the funded status:

Valuation dateActuarial cost methodAmortization method

January 1, 2017Entry Age NormalLevel percentage of payroll(llyears remainingas of 1/1/201 7) with separate periods ofExtraordinary Actuarial Gains or Losses(22 years as ofl/1/2017)

5-year smoothed market, 80%/120% corridoraround market during the prior four years,phased in at 20% per year, but required to bewithin 20% of market value.

Asset valuation method

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 9 - PENSION PLAN(Continued)

Actuarial assumptions:Investment rate of returnAmortization growth ratePrice inflationSalaryincreases

7.25%3.00%3.00%3.00% plus merit component based on employee

classification and years of serviceSex distinct RP-2000 Combined Mortality (130% ofBlue Collar rates for ATU/IBEW, 1 20% of White Collarrates for AFSCME/Non-Union), with generationalimprovement using MP-2015

Mortality table for Disabled ParticipantsReceiving Social Security Benefits published bythe Pension Benefit: Guaranty Corporation(PBGC)

Health Mortality

Disability Mortality

Measurements as of the reporting date are based on the fair value of assets as of December 31 , 201 7, andthe total pension liability as of the valuation date, January 1 , 2017, rolled forward to December 31 , 2017.There were no significant events between the valuation date and the measurement date.

Mortality rates were based on the Sex distinct RP-2000 Combined Mortality tables with ages set forwardone year for ATU/IBEW members and no set-forward for AFSCME/Non-Union members.

The actuarial assumptions used in the January 1 , 201 7 valuation were based on the results of an actuarialexperience study for the period January 1, 2011- December 31, 2014.

The long-term expected rate of return on the pension plan investments was determined using a buildingblock method which estimates expected future rates of return (net of inflation) for each major asset class.

Best estimates of the arithmetic real rates of return for each major asset class included in the pension plan'starget asset allocation as of December 31, 2017(see the discussion of the pension plan's investment policy)are summarized in the following table:

Asset ClassTarget

AllocationLong Term ExpectedReal Rate of Return

Large Cap Domestic EquityDomestic Small Cap EquityInternational EquityInternational SmallCap EquityEmerging Market EquityFixed Income (Core)Fixed Income (Credit)Emerging Market DebtRealestatePrivate DebtCash

22%6%

14%3%6%

19%13%6%5%5%1%

6.1%6.9%6.9%7.3%9.7%1.2%2.3%3.8%4.5%5.5%o.o%

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 9 - PENSION PLAN(Continued)

Changes in Assumptions and Benefit Terms Since Prior Measurement Datethe prior year measurement date.

There were no changes since

Changes Since the Measurement DateDistrict's reporting date

There were no changes between the measurement date and the

DISggUn!.Bale: The discount rate used to measure the total pension liability was 7.25%. The projection ofcash flows used to determine the discount rate assumed that the District will continue to contribute to thePlan based on an actuarially determined contribution, reflecting a payment equal to annual normal cost, theexpected Administrative Expenses, and an amount necessary to amortize the remaining unfunded actuarialliability as a level percentage of payroll over an open (rolling) 1 2-year period, beginning in 201 6. Based onthose assumptions, the Plan's fiduciary net position was projected to be available to make all projectedfuture benefit payments of current Plan members.

Ne!.EenSle!!.l::labl111y: The components of the net pension liability of the District at the measurement dateof December 31. 2017 are as follows(in thousands):

Total pension liabilityLess: Plan fiduciary net position

$ 933,819(678,884

District's net pension liability

Funded ratio (Plan's fiduciary net position / total pension liability) 72.6%

The changes in the net pension liability for the Plan follows (in thousands)

Increase {Decrease)Total Pension Plan Fiduciary Net Pension

Liability Net Position Liability

Balance at December 31 , 201 6Changes for the year:

Service costInterestDifference between expected and actualexperience

Contributions - employerNet investment incomeBenefit paymentsAdministrative expense

$ 902.646 $

21,18664,249

594,698 $ 307,948

21.18664,249

36952,36987,481

(54.631)ll.Q©)

84,186

36952,36987,481

(54,631)

(53,013)Netchanges 31,173

Balance at December 31 , 201 7 £

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 9 - PENSION PLAN(Continued)

Sensitivity of the net pension Habjlitv to changes in the discount rate: in accordance with GASB 68 regardingthe disclosure of the sensitivity of the net pension liability to changes in the discount rate. the following tablepresents the net pension liability (in thousands) as of June 30, 2018, calculating using the discount rate of7.25%, as well as what the District's net pension liability would be if it were calculated using a discount rateofl-percent-point lower(6.25%) or l-percentage-point higher(8.25%) than the current rate.

(6.25%)1 % Decrease

(7.25o%o)Current Discount

(8.25o%a)1 % Increase

Net pension liability $ 353,025 $ 254,935 $ 171,154

PQr)piQn plq0 !i PQlqry rlQ! position: Detailed information about the pension plan's fiduciary net position isavailable in the separately issued AC Transit Employees' Retirement Plan audited financial statements andmay be obtained from the District Controller.

For the year ended June 30, 2018, the District recognized pension expense of $52.6 million. At June 30,201 8, the District reported deferred outflows of resources related to pensions from the following sources (inthousands):

Outflows of Inflows ofResources Resources

Employer contributions subsequent to measurement dateDifferences between expected and actual experienceChanges in assumptionsNet difference between projected and actual earnings onpension plan investments

$27,206 $

29521,033

7,835

19.618

Total 48.5

Deferred outflows of resources related to contributions subsequent to the measurement date of $27.2million will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Otheramounts reported as deferred outflows of resources and deferred inflows of resources related to pensionswill be recognized as pension expense as follows (in thousands)

Deferred Outflows/Inflows of Resources

June 30.2018June 30,2019June 30,2020June 30.2021

$ 9,1755,994

(12,471)

2

Pa : As disclosed in Note 5, the District reported a payable of $5.0 million for theoutstanding amount of contributions to the Plan for the year ended June 30, 201 8.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFtNANCIALSTATEMENTSJune 30,2018

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS

ATULocal192 BenefitTrust

ElalLDSgg1lp11gl!: The ATU Local 192 Benefits Trust (the Trust) administers a single-employer definedbenefit post-employment plan to assist eligible retirees with their medical costs. The Trust consists of threeprograms that provide other post-employment benefits: The ATU Retiree Health & Welfare Program, theAFSCME Retiree Medical Program and the IBEW Retiree Medical Program. The Trust provides medicalbenefits to all vested retirees at least 55 years old by paying a portion of the medical insurance premiumsor reimbursement of eligible medical expenses not to exceed the maximum negotiated rates. Rates arenegotiated between the District and the respective bargaining units. The Trust's board of trustees hashistorically adopted rates based on the premiums offered by participating providers. The Trust issuesstand-alone financial statements and copies of these statements can be obtained from the DistrictController, 1600 Franklin Street, Oakland, CA 94621 .

Benefits PTov ded: Individuals are eligible for retiree benefits with the following subsidies at age 55 with 8years of service for ATU and at age 55 with 1 0 years of service for AFSCME/IBEW. The Trust subsidizesa portion of medical insurance premiums or reimburses eligible medical expenses in an amount not toexceed the following negotiated monthly amounts:

ATU Local192AFSCMEIBEW

Pre-Age 65: $691Pre-Age 65: $601Pre-Age 65: $691

Post-Age 65: $335Post-Age 65: $282Post-Age 65: $335

No subsidy is provided for spouse coverage for IBEW and AFSCME. After the death of an ATU retiree, asubsidy of$1 50 per month is available for the life of the surviving spouse. No dental, vision, or life insurancebenefits are included.

l?qrtiQippr)tp QQygrQd by BQr)Quit Tarps: As of July 1, 2017. employee membership in the Trust was asfollows :

Inactive plan members or beneficiaries currently receiving benefitsActive plan members

1,011

Contrbutions: The District is required to make contributions to the Trust based on the number of hoursworked by active union employees. The establishment and modification of the memorandums ofunderstanding between the District and the respective bargaining units creates the authority under whichthe District is obligated to make its contributions. For fiscal year 201 8, the required contribution rates wereas follows:

ATU Local192 $1.40 per hour per employee(will increase to$1.50 per hourIf the Trust's funds falls below $2 million in assets.)

$0.91 per hour per employee$1 .04 per hour per employee

AFSCMEIBEW

For the year ended June 30. 201 8, the District's contributions to the Trust were $4.7 million. As of June 30201 8. no employee contributions have been received by the Trust.

(Continued)

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NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS(Continued)

AQIUqripl MQ11)Qd$ qlld Assumptions: The actuary used the following assumptions and methods incalculating the annual required contributions and the funded status:

Valuation dateMeasurement dateActuarial cost methodAmortization methodAsset valuation method

July 1, 2017June 30.2018Entry Age NormalLevel percentage ofpayrollMarket value

Actuarial assumptions:Investment rate of returnHealth care trend rate

1.00%Pre-65: 8.0% for FY2019, decreasing 0.5% per year toan ultimate rate of 5.0% for FY2025 and laterPost-65: 6.0% for FY2019, decreasing 0.25% per yearto an ultimate rate of 5.0% for FY2023 and later3.00% of benefits3.50%RP-2014 headcount weighted Blue Collar MortalityTable (backed off to 2006 using MP-2014) withapplication of the M P-2017 improvement scale on a fullygenerational basis.

Administrative expensesSalaryincreasesHealth Mortality

Measurements as of the reporting date are based on the fair value of assets as of June 30, 2018 and thetotal OPEB liability as of the valuation date, July 1 , 2017, rolled forward to June 30. 201 8. There were nosignificant events between the valuation date and the measurement date.

The actuarial assumptions used in the July 1, 2017 valuation were based on the results of an actuarialexperience study performed in 201 5.

Best estimates of the arithmetic real rates of return for each major asset class included in the Trust's targetasset allocation as of June 30, 201 8 are summarized in the following table:

Asset ClassTarget

AllocationLong Term ExpectedReal Rate of Return

Short term investments 100% 1.0%

Changes in Assumptions and Benefit Terms Since Prior Measurement Date - The d\scour\ Tale decreasedfrom 3.13% to 2.98% and the mortality improvement scale was updated from MP-2016 on a fullygenerational basis to MP-201 7 on a fully generational basis.

DISQgUnLBale: The discount rate used to measure the total OPEB liability was 2.98%. The projection ofcash flows used to determine the discount rate assumed that the District will continue to contribute to theTrust based on the negotiated required contribution for each bargaining unit. Based on those assumptions,the Trust's fiduciary net position was never projected to be greater than the benefits to be made in all years.The plan fiduciary net position will not be sufficient to make all benefit payments due for current participantsin the coming year, and will not be sufficient to make any benefit payments thereafter. As a result. thediscount rate was determined using the June 30, 201 8 municipal bond rate.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTEIO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued)

Net OPEB Liabilitv: The components of the net OPEB liability of the District at the measurement date ofJune 30. 2018 are as follows(in thousands):

Total OPEB liabilityLess: Trust fiduciary net position

$ 101,746

District's net OPEB liability i77

Funded ratio (Trust's fiduciary net position / total OPEB liability) 3.6%

The changes in the net OPEB liability for the Trust follows (in thousands)

Increase (Decrease)Total OPEB Trust Fiduciary NetOPEB

Liability Net Position Liability

Balance atJune 30,2017Changes for the year:

Service costInterestDifference between expected and actualexperience

Changes of assumptionsContributions - employerNet investment incomeBenefit paymentsAdministrative expense

$ 145,022 $

3,4754,713

3,115 $ 141,907

3.4754,713

(48,101)857

(48,101)857

4,739177

4,739177

(4,220)

554

(4,220)

(43,276) (43,830)Netchanges

Balance atJune 30,2018

$Qrl$iliyity Qf thQ r)Qt Ql?EB liqbi ily tQ QhqrlgQP iO !he discounL[BtQ: The following table presents the netOPEB liability (in thousands) as of June 30. 2018. calculating using the discount rate of 2.98%, as well aswhat the District's net OPEB liability would be if it were calculated using a discount rate of I -percent-pointlower(1.98%) or l-percentage-point higher(3.98%) than the current rate.

(1 .98o%o)1 % Decrease

(2.98a%o)Current Discount

(3.98a%o)1 % Increase

Net OPEB liability $ 110,566 $ 98,077 $ 87,636

$Q $iliy !y Qf tl)Q r)Qt QF?EB I qbilily tQ QrlqrlqQ$ it) tl)Q health;parQtrQDd[319: The Trust Plan only providesfor a fixed subsidy to retirees. therefore the total liability is not affected by changes in the health care trendrate. Sensitivity analysis is not applicable.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS(Continued)

OPEB plan fiduciarv net po$itiQrt: For the year ended June 30, 201 8, the District recognized OPEB expenseof $O.I million. At June 30, 201 8, the District reported deferred outflows of resources related to OPEB fromthe following sources (in thousands):

Outflows of Inflows ofResources Resources

Differences between expected and actual experienceChanges in assumptionsNet difference between projected and actual earnings onOPEB plan investments

$$

750

33

45,4904,225

Total

Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB willbe recognized as OPEB expense as follows (in thousands):

Deferred Outflows/Inflows of Resources

June 30.2019June 30.2020June 30.2021June 30.2022June 30.2023June 30,2024June 30.2025

$ l8,085)(8,085)(8,085)l6,998)(5,913)(5,913)

Retiree Benefits Non- Trust Plan

Plan..DeS££l211e!): The District administers a single-employer defined benefit post-employment plan calledthe Retiree Benefits Non-Trust Plan (the OPEB Plan) to assist eligible retirees with their medical costs. TheOPEB Plan provides medical, dental, vision and life insurance benefits to all vested retirees and theirspouses at least 55 years old by paying the current participating providers' insurance premiums. Themedical insurance benefit is also available for a retiree's dependent, if applicable. The OPEB Plan differsfrom the Trust in that it provides Trust plan members supplementalhealthcare benefits in addition to medicalbenefits, as well as providing medical benefits to District employees who are unrepresented. Insurancepremium rates are negotiated between the District and the respective bargaining units. The District hashistorically adopted rates based on the premiums offered by participating providers.

During fiscal year 2018, the District joined the California Employer's Retirement Benefit Trust Program(CERB'D to pre-fund OPEB liabilities. The CERBT is an agent multiple employer plan consisting of anaggregation of single-employer plans, with pooled administrative and investment functions that areadministered by CalPERS. A copy of the aggregate CERBT annual financial report may be obtained atwww.calpers.ca.gov. CERBT serves as an irrevocable trust, ensure that funds contributed into the Trustare dedicated to service the needs of member districts, and their employees and retirees. The OPEB Plandoes not issue stand-alone financial statements.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFtNANCIALSTATEMENTSJune 30,2018

\

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued)

Benefits Prov ded: Individuals are eligible for retiree benefits with the following subsidies at age 55 with 8years of service for ATU and at age 55 with 1 0 years of service for AFSCME/IBEW.

Medical benefits before age 65 (HMO) The District does not subsidize directly

Medical benefits after age 65 (HMO) - The District subsidizes a fixed $40.00 per month for singlecoverage and $80.00 per month for dual coverage directly from the District assets. This amount is inaddition to subsidy provided under the Trust Plan.

Dental benefits - The District subsidizes a fixed $20.00 per month for any level of dental coverage. Ifretiree waives dental coverage. the retiree is given $20.00 as additional earnings in pension. If theretiree dies and surviving spouse was enrolled in the dental plan, the spouse also receives $20.00subsidy. If the surviving spouse waives dental coverage, the spouse receives $20.00 as additionalearnings

Vision benefits - The District subsidizes the fullcost(currently$14.90 per month) for single coverageonly. If the spouse was enrolled in vision plan at the time of retiree's death. the spouse is eligible toelectvision at no cost.

Life insurance benefits The District subsidizes$14.18 per month for retiree only

Non-represented participants are eligible for retiree benefits with the following subsidies at age 50 with 5years of service.

Medical benefits before age 65 (HMO) - The District subsidizes a percentage of the lowest offeredpremium(currently$1,022.07 per month). The spouse is also eligible for the lowest offered premium,but the spouse must contribute $1 00.00 per month.

Medical benefits after age 65 (HMO) - The District subsidizes a percentage of the lowest offeredpremium (currently $371 .74 per month) for the retiree. The District also gives the retiree and the spouse$40.00 each if they are enrolled in Medicare Parts A and B. The spouse is also eligible for lowest offeredpremium, but the spouse must contribute $100.00 per. Subsidized spouse medical benefit coveragecontinues after the death of the retiree if the spouse continues to make the requisite $1 00 per monthcontribution. The spouse of an employee who dies in active service is not eligible for subsidizedcoverageV

Dental benefits - The District subsidizes $76.58 per month for single coverage. No additional subsidyis assumed for dependent coverage.

Vision benefits - The District Subsidizes $14.75 per month for single coverage. No subsidy isassumed for dependent coverage.

Life insurance benefits - The District subsidizes $14.1 8 per month for single coverage. No subsidyis assumed for dependent coverage.

Particioants Covered;brBene it Terms: As of July 1 , 2017, employee membership in the OPEB Plan wasas follows:

Inactive plan members or beneficiaries currently receiving benefitsActive plan members

1,5592.224

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued)

Contributions: The District has historically funded the OPEB Plan on a pay-as-you-go basis. There iscurrently no requirement for either the District or the OPEB Plan members to make contributions to theOPEB Plan. For the year ended June 30. 2018. the District's contributions to the OPEB Plan were $3.5million($2.5 million in benefit payments and$1.0 million to the CERBT). As of June 30, 2018. no employeecontributions have been received by the OPEB Plan.

AQ[Uqriq[ MQlhpdp ql] AssumDliQrl$: The actuary used the following assumptions and methods incalculating the annual required contributions and the funded status:

Valuation dateMeasurement dateActuarial cost methodAmortization methodAsset valuation method

July 1, 2017June 30,2018Entry Age NormalLevel percentage of payrollMarket value

Actuarial assumptions:Investment rate of returnHealth caretrend rate

7.28%Pre-65: 8.0% for FY201 9, decreasing 0.5% per year to an ultimaterate of 5.0% for FY2025 and laterPost-65: 6.0% for FY2019, decreasing 0.25% per year to anultimate rate of 5.0% for FY2023 and later3.50%RP-201 4 headcount weighted Blue Collar Mortality Table (backedoff to 2006 using MP-2014) with application of the MP-2017improvement scale on a fully generational basis for Unionemployees and retirees.

SalaryincreasesHealth Mortality

RP-2014 headcount weighted White Collar Mortality Table(backed off to 2006 using MP-2014) with application of the MP2017 improvement scale on a fully generational basis used fornon-represented employees and retirees.

Measurements as of the reporting date are based on the fair value of assets as of June 30. 201 8 and thetotal OPEB liability as of the valuation date, July 1 , 2017, rolled forward to June 30, 201 8. There were nosignificant events between the valuation date and the measurement date.

The actuarial assumptions used in the July 1, 2017 valuation were based on the results of an actuarialexperience study performed in 2015.

Best estimates of the arithmetic real rates of return for each major asset class included in the OPEB Plan'starget asset allocation as of June 30, 201 8 are summarized in the following table:

Target Long Term Expected Long Term ExpectedReal Rate of Return Real Rate of Return

Allocation Yearsl-10 Yearsl1-60Asset Class

Global equityFixed incomeReal Estate Investment TrustsTreasury Inflation-Protected SecuritiesCommodities

(Continued)

34

57% 5.25% 5.71%27% 1.79% 2.40%

8% 3.25% 7.88%5% 1.00% 2.25%3% 0.34% 4.95%

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS(Continued)

Changes in Assumptions and Benefit Terms Since Prior Measurement Date -'The d\scour\ Tale decreasedfrom 4.00% to 2.98%. the mortality improvement scale was updated from MP-201 6 on a fully generationalbasis to MP-201 7 on a fully generational basis, and the actuarial cost method was changed to Entry AgeNormal, which is required by GASB Statement No. 75.

Discount Rate: The discount rate used to measure the total OPEB liability was 2.98%. The projection ofcash flows used to determine the discount rate assumed that the District will continue to contribute to theOPEB Plan based on the negotiated required contribution for each bargaining unit. Based on thoseassumptions, the OPEB Plan's fiduciary net position was never projected to be greater than the benefits tobe made in all years. The plan fiduciary net position will not be sufficient to make all benefit payments duefor current participants in the coming year, and will not be sufficient to make any benefit paymentsthereafter. As a result, the discount rate was determined using the June 30, 201 8 municipal bond rate.

Ne!.QEEB..l::iab1111y: The components of the net OPEB liability of the District at the measurement date ofJune 30, 201 8 are as follows (in thousands):

Total OPEB liabilityLess: OPEB Plan fiduciary net position

$ 55,247(I,OOQ)

District's net OPEB liability i4,247

1.8%Funded ratio (OPEB Plan's fiduciary net position / total OPEB liability)

The changes in the net OPEB liability for the OPEB Plan follows (in thousands)

Increase (Decrease)Total OPEB Fiduciary Net OPEB

Liability Net Position Liability

Balance atJune 30,2017Changes for the year:

Service costInterestDifference between expected and actualexperience

Changes of assumptionsContributions - employerBenefit payments

$51.998 $ $ 51,998

2,1361,655

2.1361,655

7391,2233,504

7391,223

3,504e.504)

I.oooNetchanges 3.251

i4.24ZBalance atJune 30,2018 £

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE IO POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS(Continued)

Sensitivitv of the net OPEB liabilitv to changes in the discount rate: The following table presents the netOPEB liability (in thousands) as of June 30, 2018. calculating using the discount rate of 2.98%, as well aswhat the District's net OPEB liability would be if it were calculated using a discount rate of l-percent-pointlower (1 .98%) or I -percentage-point higher (3.98%) than the current rate.

(1 .98a%o)1 % Decrease

(2.98a%o)Current Discount

(3.98o%o)1 % Increase

Net OPEB liability $ 63,251 $ 54.247 $ 46,491

Sensitivity of the net OPEB liability to changes in the health care trend rate: The following table presentsthe net OPEB liability (in thousands) as of June 30. 2018, calculating using the health care trend rate of8.00% (pre-65) and 6.00% (post-65), as well as what the District's net OPEB liability would be if it werecalculated using a health care trend rate of I -percent-point lower (7.00% and 5.00%) or I -percentage-pointhigher (9.00% and 7.00%) than the current rate.

(7.00% pre-65)(5.00% pre-65)1 % Decrease

(8.00% pre-65) (9.00% pre-65)(6.00% pre-65) (8.00% pre-65)

Current Discount 1 % Increase

Net OPEB liability $ 47,757 $ 54,247 $ 61,861

OPEB olan fiduciarv net oosition: For the year ended June 30. 201 8, the District recognized OPEB expenseof $4.1 million. At June 30, 201 8, the District reported deferred outflows of resources related to OPEB fromthe following sources (in thousands):

Outflows of Inflows ofResources Resources

Differences between expected and actual experienceChanges in assumptions

$ 632 $

Total

Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB willbe recognized as OPEB expense as follows (in thousands):

Deferred Outflows/Inflows of Resources

June 30,2019June 30,2020June 30,2021June 30,2022June 30,2023June 30.2024

$284284284284284258

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 1 1 - COMMITMENTS

PTMISEA Grants: The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006,approved by the voters as Proposition I B on November 7, 2006. includes a program of funding in theamount of $4 billion to be deposited in the Public Transportation Modernization, Improvement, and ServiceEnhancement Account (PTMISEA). Of this amount. $3.6 billion in the PTMISEA is available to projectsponsors in California for allocation to eligible public transportation projects.

During fiscal year 2010. the District submitted a Corrective Action Plangrant funding on top of its fiscal year 2009 allocation to purchase buses.

requesting additional PTMISEA

The California Department of Transportation (CaITrans) determined that the District was eligible to receivean additional allocation totaling $8.8 million (2009 allocation). The funds were sent to the District prior to itspurchase of the buses but are committed to funding future bus purchases. The funds must be encumberedwithin three years and expended within three years of being encumbered.

The District also acts a pass-through agency for the Transbay Joint Powers Authority(the TJPA) for varioustransportation projects such as the Transbay Transit Center.

In fiscal year 201 8, the District did not receive any additional funding, and $7.4 million of cost was incurredfor the purchase of buses and Transit Access Improvement projects.

The following table shows the changes in activity related to the PTMISEA grant funds during the fiscal yearas wellas the remaining commitment as of June 30, 2018(in thousands):

TotalAllocations

as ofJune 30.2018

LessAllocations

Passed-throughto TJ PA as ofJune 30.2018

TotalAllocationsReceivedin

FY 2018

CumulativeExpensesIncurred

throughJune 30.2018

Interest Commitment atIncome June 30. 201 8

$ 358 $ 17,394$ 112,515 $ 23.089 $$ 72.390

NOTE12-CONTINGENCIES

Claims and Potential Litigation: There are claims and litigation pending. which are considered normal to theDistrict's operation of the transit system. The District maintains insurance coverage for such incidents, assummarized in Note 13, and provisions have been made in the financial statements for estimated lossesunder the self-insurance retention limits of insurance policies.

PQ!!utlenBel11Sdla11gn: The District has an estimated $1 .O million in liabilities for the monitoring and potentialclean-up costs for pollution remediation obligations. The District has several locations where soil andgroundwater have been contaminated.

The Alameda County Health Care Services Agency (ACHCS) and the Alameda County Water DistrictIACWD) issued directives to the District to perform groundwater monitoring and require conceptual modelsand feasibility studies to address possible mitigation measures. The estimated liabilities were measured atcurrent value using the expected cash flow technique for each obligating event based on current andestimated costs. Changes to estimated liabilities will be made when new information, such as changes inremediation plans, technology and legal or regulatory requirements, becomes available.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRACT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 12 - CONTINGENCIES(Continued)

Lease and Use Agreement for the : in September 2008, the Districtapproved a Lease and Use Agreement for the Temporary Terminal and the new Transit Center with theTJPA. The agreement sets forth the parties' rights and obligations up to the year 2050 with respect to (a)the District's bus operations in the Temporary Terminal and the new Transit Centers (b) the District'scontribution to offset annual operating costs for the Temporary Terminal and Transit Centers and (c) theDistrict's capital contributions to build the Transit Center in the sum of $57 million (in 201 I dollars). TheDistrict's $57 million contribution will be funded through a combination of payments from various grantfunded sources and a proposed passenger facilities charge.

Projected contributions are scheduled as follows (in thousands)

Pavments

20192020202120222023

2024 - 20282029 - 20332034 - 2037

$ 2,6991,5071,5321,8171.846

11.09614.43214,506

NOTE13-RISKMANAGEMENT

As of June 30. 201 8 the District has the following coverages

Tvpe of Coverage Deductible Cover39e Limit

General LiabilityAuto LiabilityWorkers' CompensationProperty, Boiler and Machinery

Auto Physical Damage

$l,ooo,ooo$2,000,000$l.ooo,ooo

$2,000.000 per occurrence with excess up to $53.000,000$2,000,000 per occurrence with excess up to $53.000,000Statutory Limit

$100.000 $100,000,000

The District accrues a liability for claims and litigation (including a reserve for claims incurred but notreported) based on an actuarial study. The liability includes allocated and unallocated claims adjustmentexpanses and incremental claim expense. In addition, the District is partially self-insured for health anddental exposure. Management has evaluated the potential liability and recorded an accrual. which includesan amount for incurred but not reported claims.

(Continued)

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DRAFTALAMEDA-CONTF3A COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE 13 - RISK MANAGEMENT(Continued)

Changes in the reported liability resulted from the following (in thousands)

Workers'Compensation

LiabilitPublic

LiabilityDentalLiability Total

Balance atJune 30,2016 $52,452 $ 25,134 $

(4,675)2,Z©)

373 $

(31)

156

77,959

9,440'14.601

72,798

Claims and changes in estimatesClaim payments

14,146.11.672)

54,926Balance atJune 30,2017 17,716

Claims and changes in estimatesClaim payments

15,442

59.417

788 5,618[5.SW)

21,848(21,947)

Balance atJune 30,2018 £

Settled claims have not exceeded the commercial coverage in any of the past three fiscal years. Therehave been no significant reductions in insurance coverage from the previous year.

The classification of the current and long-term portion of the self-insurance liabilities for the year endedJune 30, 2018 are summarized as follows (in thousands):

Current Lona-term Total

Workers' compensation liabilityPublic liabilityDentalliability

$ 14,3179,674

255

$ 45,1003,353

$ 59,41713,027

255

£S2 $ 72:699

NOTE 14 JOINT POWERS AUTHORITY (JPA) AND CONSORTIUM

In 1994, the District and BART executed a joint powers authority (JPA) agreement establishing the EastBay Paratransit Consortium. The District supports the project primarily through its own operating funds,with some financial assistance from Alameda County Measure B funds. The purpose of the Consortium isto provide Americans with Disabilities complementary paratransit services in Alameda and western ContraCosta counties. The area served encompasses the AC Transit/BART coordinated service area. Revenuesand expenses for the Consortium are split 69/31 between the District and BART, respectively, and theDistrict's financial statements reflect its portion of revenues and expenses as operating activities. TheDistrict has no equity interest in the Consortium.

Effective October 1 , 2003, the Consortium discontinued the practice of rotating lead agency responsibilitieson an annual basis. Key administrative support functions are now permanently assigned to eachparticipating agency. Also effective October 1, 2003, a Service Review Advisory Committee (SRAC) wasestablished to serve in an advisory capacity to the Service Review Committee. The primary mission of theSRAC will be to advise on planning, policy and other matters related to the Consortiums advocate for highquality. safe, reliable and courteous paratransit servicesl and to provide a forum for public input andparticipation in the review, assessment and evaluation of the ADA paratransit service.

(Continued)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTESTOFINANCIALSTATEMENTSJune 30,2018

NOTE14 JOINT POWERS AUTHORITY(JPA) AND CONSORTIUM(Continued)

Since July 1 , 1 993, under a cooperative agreement, the District has also been serving as the lead agencyin a consortium that also includes BART, The City of Union City. San Mateo County Transit District(SamTrans) and the Santa Clara Valley Transportation Authority (VTA) to provide Dumbarton Express BusService which runs from the Union City Bart Station across the Dumbarton Bridge into Santa Clara and SanMateo counties, including a connection with CaITrain. Over this timespan this service has been periodicallyput out to bid. and typically it has been run by a third party purchased transportation provider. While theDistrict is the lead agency, funding from other agencies is directed to the District in order to support thisconsortium service.

In fiscal year 2018, the District recognized$28.4 million of revenue and subsidy and incurred$30.2 millionof expenses related to the JPA and the Consortium. Neither the JPA nor the Consortium issue separatefinancial statements.

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DRAFT

REQUIRED SUPPLEMENTARY INFORMATION

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

PENSION PLAN - SCHEDULE OF CHANGES IN THE EMPLOYER'SNET PENSION LIABILITY AND RELATED RATIOS - LAST 10 FISCAL YEARS

Year Ended June 30. 201 8(in Thousands)

Total pension liability:Service costInterestDifferences between expected and actual experienceChanges of assumptionsBenefit payments, including refunds of member contributions

2018 2017 2016 2015

$21.18664.249

369

$ 18,74062.964(11,563)

52,560:

$16.61457.571

(2,243)52.583:49.875)

$ 16,69855,840

l54.631)

31,173 25,127

785.289

Net changes in total pension liability 17,581

885.065

74,649

Total pension liability. beginning 902.646 810.416

Total pension liability, ending

Plan fiduciary net position:Contributions - employerNet investment income (loss)Benefit payments, including refunds of member contributionsAdministrative expense

$52.36987,481

(54.631)

84,186

$48.47946.601(52.560)

:!.Q©=

$42.274(1.458)

(49.875)

$40.38423.507(47,410)

Net change in plan fiduciary net position 41,513

553.185

(9.922)

563.107

15,614

547.493Plan fiduciary net position, beginning 594.698

Plan fiduciary net position. ending

Net pension liability. ending

Plan fiduciary net position as a percentage of thetotal pension liability 72.70%

167,786

1 51 .94%

65.88%

150,234

204.98%

62.50%

133,012

249.51 %

69.48%

129.310

1 91 .25%

Covered payroll $ $$

$

Net pension liability as a percentage of covered payroll

Notes to Schedule:BenefitchangesChanges in assumptions

There were no changes in benefits in FY201 8, FY2017. or FY201 6.There were no changes in assumptions in FY2018 0r FY2017. In FY2016. there were changes inthe demographic assumptions. which among other things included the adoption of generationamortality assumptions. Additionally there were minor changes in the mortality tables.

This is a 10 year schedule. The information in this schedule is not required to be presented retroactively. Years will be added to thisschedule in future fiscal years until 1 0 years of information is available.

The amounts presented for each fiscal year were determined as of the December 31 year-end that occurred within the fiscal year

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DRAFTPENSION PLAN

ALAMEDA-CONTRA COSTA TRANSIT DISTRICTSCHEDULE OF EMPLOYER'S CONTRIBUTIONS - LAST 10 FISCAL YEARS

Year Ended June 30. 201 8(in Thousands)

ContributionsIn Relation

To theActuariallyDeterminedContribution

as aPercentage of

CoveredPavroll

Contributions

Year EndedJune 30

ActuariallyDetermined

Contributions

ContributionsDeficiency

ExcesslCoveredPavroll+

2015201620172018

$ 40,384 $42.27448.47952,369

40.38442.27448,47952,369

$ $ 129.310133,012150.234167.786

31 .23%31 .78%32.27%31.21%

* Payroll is based on total actual calendar year covered payroll, provided by the Plan

Notes to Schedule:Valuation dateActuarial cost methodAmortization method

January 1. 2017Entry Age NormalLevel percentage of payroll (I I years remaining as of1/1/2017) with separate periods of ExtraordinaryActuarial Gains or Losses (22 years as of 1/1/2017)

5-year smoothed market, 80% / 120% corridor around marketAsset valuation method

Actuarial assumptions:Discount rateAmortization growth ratePrice inflationSalaryincreases

7.25%3.00%3.00%3.00% plus merit component based on employee classification and years ofsewice

Sex distinct RP-2000 Combined Mortality (1 30% of Blue Collar rates forATU/IBEW, 1 20% of White Collar rates for AFSCME/Non-Union), withgenerational improvement using MP-201 5

Mortality

This is a 10 year schedule. The information in this schedule is not required to be presented retroactivelyadded to this schedule in future fiscal years until 1 0 years of information is available.

Years will be

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

OPEB PLAN TRUST)- SCHEDULE OF CHANGES IN THE EMPLOYER'SNET OPEB LIABILITY AND RELATED RATIOS - LAST 1 0 FISCAL YEARS

Year Ended June 30, 2018(in Thousands)

Total OPEB liability:Service costInterest

Differences between expected and actual experienceChanges of assumptionsBenefit payments

2018

$ 3,4754,713

(48.101)857

:4.220

Net changes in total OPEB liability (43,276)

145.022Total OPEB liability. beginning

Total OPEB liability. ending

Plan fiduciary net position:Contributions - employerNet investment income (loss)Benefit paymentsAdministrative expense

$ 4,739177

(4.220)

554Net change in plan fiduciary net position

Plan fiduciary net position. beginning 3.115

Plan fiduciary net position, ending

Net OPEB liability. ending

Plan fiduciary net position as a percentage of thetotal OPEB liability 3.61%

215,200

45.57%

Covered employee payroll $

Net OPEB liability as a percentage of covered employee payroll

Notes to Schedule:Benefit changesChanges in assumptions

There were no changes in benefits in FY201 8.In FY201 8 The discount rate decreased from 3.13% to 2.98% and the mortalityimprovement scale was updated from MP-2016 On a fully generational basis toMP-201 7 On a fully generational basis.

This is a 1 0 year schedule. The information in this schedule is not required to be presented retroactivelyadded to this schedule in future fiscal years until 10 years of information is available.

Years will be

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

OPEB PLAN CRUST) - SCHEDULE OF EMPLOYER'S CONTRIBUTIONSLAST 1 0 FISCAL YEARS

Year Ended June 30, 201 8(in Thousands)

ContributionsIn Relation

TitheActuariallyDeterminedContribution

Contributionsas a

Percentage ofCovered Employee

PavrollYear Ended

June 30

ActuariallyDetermined

Contributions

ContributionsDeficiency.Excessl

CoveredEmployeePavroll*

2018$ 5,212 $ 4.739 $ 473 $ 215.200 2.2%

* Payroll is based on total actual calendar year covered employee payroll, provided by the Plan

N otes to Schedule:Valuation dateActuarial cost methodAmortization methodAsset valuation method

July 1, 2017Entry Age NormalLevelpercentage ofpayrollMarket value

Actuarial assumptionsDiscount rateSalaryincreasesMortality

2.98%

RP-201 4 headcount weighted Blue Collar Mortality Table (backed off to 2006using MP-2014) with application of the MP-2017 improvement scale on a fullygenerational basis for Union employees and retirees.

3.50%

RP-201 4 headcount weighted White Collar Mortality Table (backed off to 2006using MP-2014) with application of the MP-2017 improvement scale on a fullygenerational basis used for non-represented employees and retirees.

Health caretrend rate Pre-65: 8.0% for FY201 9. decreasing 0.5% per year to an ultimate rate of 5.0%for FY2025 and laterPost-65: 6.0% for FY201 9. decreasing 0.25% per year to an ultimate rate of 5.0%for FY2023 and later

This is a 10 year schedule. The information in this schedule is not required to be presented retroactively. Years will beadded to this schedule in future fiscal years until 1 0 years of information is available.

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

OPEB PLAN(NON-TRUSS- SCHEDULE OF CHANGES IN THE EMPLOYER'SNET OPEB LIABILITY AND RELATED RATIOS - LAST 1 0 FISCAL YEARS

Year Ended June 30. 201 8(in Thousands)

Total OPEB liability:Service costInterestDifferences between expected and actual experienceChanges of assumptionsBenefit payments

2018

$ 2.1361.655

7391,223

3.249Net changes in total OPEB liability

Total OPEB liability. beginning 51.998

Total OPEB liability, ending

Plan fiduciary net position:Contributions - employerBenefit payments

$ 3.505

I.oooNet change in plan fiduciary net position

Plan fiduciary net position, beginning

Plan fiduciary net position, ending

Net OPEB liability. ending

Plan fiduciary net position as a percentage of thetotal OPEB liability 1.81%

229,600

23.63%

Covered employee payroll $

Net OPEB liability as a percentage of covered employee payroll

Notesto Schedule:Benefit changesChanges in assumptions

There were no changes in benefits in FY201 8.In FY2018 The discount rate decreased from 3.13% to 2.98% and the mortalityimprovement scale was updated from MP-2016 On a fully generational basis toMP-2017 On a fully generational basis, and the actuarial cost method was changedto Entry Age Normal, which is required by GASB Statement No. 75.

This is a 1 0 year schedule. The information in this schedule is not required to be presented retroactivelyadded to this schedule in future fiscal years until 1 0 years of information is available.

Years will be

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

OPEB PLAN(NON-TRUSS - SCHEDULE OF EMPLOYER'S CONTRIBUTIONSLAST 1 0 FISCAL YEARS

Year Ended June 30. 201 8(in Thousands)

ContributionsIn Relation

TitheActuariallyDeterminedContribution

Contributionsas a

Percentage ofCovered Employee

PavrollYear Ended

June 30

ActuariallyDetermined

Cantrlbutions

ContributionsDeficiency'Excessl

CoveredEmployeeP y gll:

2018 $ 3.781 $ 3,505 $276

$ 229,600 1.5%

* Payroll is based on total actual calendar year covered employee payroll, provided by the Plan

Notesto Schedule:Valuation dateActuarial cost methodAmortization methodAsset valuation method

July 1. 2017Entry Age NormalLevelpercentage of payrollMarket value

Actuarial assumptionsDiscount rateSalaryincreasesMortality

2.98%

RP-2014 headcount weighted Blue Collar Mortality Table (backed off to 2006using MP-2014) with application of the MP-2017 improvement scale on a fullygenerational basis for Union employees and retirees.

RP-201 4 headcount weighted White Collar Mortality Table (backed off to 2006using MP-2014) with application af the MP-2017 improvement scale on a fullygenerational basis used for non-represented employees and retirees.

Health care trend rate Pre-65: 8.0% for FY201 9, decreasing 0.5% per year to an ultimate rate of 5.0% forFY2025 and laterPost-65: 6.0% for FY201 9, decreasing 0.25% per year to an ultimate rate of 5.0%for FY2023 and later

This is a 10 year schedule. The information in this schedule is not required to be presented retroactivelyadded to this schedule in future fiscal years until 10 years of information is available.

Years will be

46

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DRAFT

SUPPLEMENTARY INFORMATION

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF FUND NET POSITIONJune 30.2018 and 2017

(in Thousands)

2018 2017

ASSETSCurrent assets

Cash and cash equivalentsRestricted cash and cash equivalentsInvestmentsReceivables:

Federaland localgrantsCapitalPlanning,operating and other

PropertytaxLocalsales taxOther trade receivables

$59.375 $22,76937,531

92,23726,89931,583

18,46112.98713.03011.63511.344

15.6489,828

13,1275,726

49.518Total receivables, net 67.457

Due from Pension Trust FundInventoryPrepaid expenses

9,67011,2097,56Z

215.578

4,455l0,798

221,269Total current assets

Noncurrent assetsRestricted for cash and cash equivalents:

Restricted for certificates of partici pationCapital assets

NondepreciableDepreciable, net

1,138 2,488

96,778303.328

54.550294.175

Total capital assets. net 400.106

401,244

616.822

348,725

351.213

572.482

Total noncurrent assets

Total assets

DEFERRED OUTFLOWS OF RESOURCESPension relatedOPEB related

48,534 83,009

Total deferred outflows of resources 50,994

667,816

83.009

665.491Total assets and deferred outflows of resources

(Continued)

47

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF FUND NET POSITIONJune 30.2018 and 2017

(in Thousands)

2018 2017

LIABILITIESCurrent liabilities

Accounts payable and accrued expensesAccrued salaries and wages

$l

l

7,8813,7497,2574.9598,4142,141

3758.947

67

$ 18.2333.900

16,3105.6744,661

14,009384

21,26767

Current portion of accrued vacation and sick leaveDue to Pension Trust FundUnearned revenue

l

l

Other accrued liabilitiesAccrued interest payableCurrent portion of claims liabilitiesCurrent portion of remediation obligationsCurrent portion of certificates of participation

Total current liabilities 86,010 88,259

NoncurrentliabilitiesAccrued vacation and sick leaveClaims liabilitiesRemediation obligationsCertificates of participationNetpensionliabilityOPEB obligation

8,96353,752

95211,169

254.935151.324

9.69951,531

95213,389

307,94822.426

Total noncurrent liabilities 481.095

567.105

405,945

494.204Total liabilities

DEFERRED INFLOWS OF RESOURCESPension relatedOPEB related

27,45349,71S

77,168

644.273

l0,596

Total deferred inflows of resources l0.596

504.800Total liabilities and deferred inflows of resources

NET POSITION

Net investment in capital assetsRestricted for capital purchasesRestricted for debt serviceUnrestricted

386,71422,769

763'386,703:

331,58126,8992,104

:209.893)

Total net position i4

48

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRACT

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF REVENUESEXPENSES. AND CHANGES IN FUND NET POSITION

For the years Ended June 30, 2018 and 2017(in Thousands)

2018 2017

Operating RevenuesPassengerfaresContract servicesOperating revenues of JPA and consortiumOther

$ 52,24511,5792,477

70.562

$ 50,15712.1792.410

69.072Total operating revenues

Operating expensesOperator wagesOther wagesFringe benefitsDepreciationFuel and oilOther material and suppliesServicesInsurance

Expenses of JPA and consortiumOther

85,73364.353

172.33540.23012,73413.95140.8587,425

30,1778,243

78.96362,865

173,03735,502l0,83111,97336,530

1,38029,00311.816

Totaloperating expenses 476.039 451,900

r382.828Operating loss r405.477'

Nonoperating revenues (expense)Operating assistance:PropertytaxesLocalsales taxLocalfundsFederalStateNon-operating revenues of JPA and consortiumLoss on sale of capitalassetsInterest incomeInterest expense

134.69499.98291.55513.6815,598

25,878(1 )

575

124,543100,38678,327

5.22412.69914.912

(14)315

Netnonoperating revenues 370.616

(34,861)

74.470

335.292

Loss before capital contributions (47,536)

45.155Capital contributions

Change in net position 39.609

150.691

(2,381)

153.072Net position at beginning of year, as previously stated

Cumulative effect of adoption of GASB 75 166.757

.16.066)Net position at beginning of year, as restated

Netposition atend ofyear

49

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF CASH FLOWSFor the years Ended June 30, 2018 and 2017

(in Thousands)

2018 2017

Cash flows from operating activities:Cash received from customersCash payments to suppliers for goods and servicesCash payments to employees for servicesOther operating receipts

$63.899 $

(117,906)(320,576)

64,539(96.732)

(296,739)

Net cash used in operating activities (370.322)

Cash flows from noncapital financing activitiesOperating assistance received 362,417

362.417

342.283

342.283Net cash provided by noncapital financial activities

Cash flows from capital and related financing activitiesAcquisition and construction of capital assetsCapital contributions receivedProceeds from sale of capital assetsPrincipal paid on certificates of participationInterest paid on certificates of participation

(91.612)71,657

(3,754)H .355)

l67.131)3.266

50,519(3,790)

Net cash used in capital and relatedfinancial activities (25.064) 18.256)

Cash flows from investing activitiesProceeds from investmentsPurchase of investmentsInvestment income

62,117(68,065)

575

37.266(34,548)

315

Net cash provided by (used in) investing activities

(38,342)

121.624

2,454

119.170

Change in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Summary of cash and cash equivalents reported onon the Statement of Net Position:

Unrestricted cash and cash equivalentsRestricted cash and cash equivalentsRestricted for certificates of participation

$ 59,375 $22,769

1,138

92,23726,899

Total cash and cash equivalents reported on theStatement of Net Position 121.624

(Continued)

50

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ENTERPRISE FUND - COMPARATIVE SCHEDULES OF CASH FLOWSFor the years Ended June 30, 2018 and 2017

(in Thousands)

2018 2017

Reconciliation of operating loss to net cash usedin operating activities:

Operating lossAdjustments to reconcile operating loss to

(405,477) $ (382,828)

net cash used in operating activities:Depreciation and amortizationEffect of changes in assets and liabilities:

Other trade receivablesInventoriesDue to/from Pension Trust FundPrepaid expenses

40,230 35,502

(6.155)(411)

(5.930)(1,788)

(352)(151)211

3,753(1,868)

(99)(1,681)9.396

(1,830)(32)

1,846(174)

5,8451800)

1,9951,6234,323

(5,161)l0.8144,280

Accounts payable and accrued expensesAccrued salaries and wagesAccrued vacation and sick leaveUnearned revenueOther accrued liabilitiesClaims liabilitiesNet pension liability and deferred outflows/inflows from pensionOPEB obligation

Net cash used in operating activities 124

51

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

BUDGETARY BASIS - ENTERPRISE FUND - TRANSIT ONLYCOMPARATIVE SCHEDULES OF REVENUES, EXPENSES, AND

CHANGESIN FUND NET PO SITIONFor the years Ended June 30, 2018 and 2017

(in Thousands)

Operating revenues:PassengerfaresBarttransfersContract servicesAdvertisingInterest incomeOther

2018 2017

$54,7224,2637.3161.365

575

$ 52,5673.9148,2651,554

314

Total operating revenues 71,136 69,386

SubsidiesPropertytaxesProperty taxes - Measure VVLocal sales tax - Measure BLocal sales tax - Measure BBLocal sales tax - Measure JLocaloperating assistanceState - AB 1 1 07State - AB2972 Home to SchoolState - TDAState - STAState operating assistance otherFederaloperating assistance

105.02329.67130.82733,9904.878

26,95843,009(1,150)

71,61815,940

95,03429.50928,56331.421

4,70517,75441,2142,225

67,3608,6343,127

l0.624

371.388Totalsubsidies 336.090

Totalrevenue and subsidies 442.524 405.476

Expenses:Operator wagesOther wagesFringe benefitsPension expenseServicesFueland lubricantsOffice/printing suppliesOther materials and suppliesUtilitiesInsuranceExpenses of JPA and consortiumOther expensesInterest expense

85,73364,353

121,41150,92340,85812,734

74314.8493,3107,425

30,1773,605

78,96362,865

110,41362,62336,530l0,830

82913,6793,0741,380

29,0036,222

931

Total expenses

Netrevenues

437,450 417.342

5.074 (11.866)

45,155g$,$Q?.

Capital contributionsDepreciation

74.470:4Q:23Q:

Excess ofrevenues overexpenses

52

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DRAFTALAMEDA-CONTF:W COSTA TRANSIT DISTRICT

BUDGETARY BASIS- ENTERPRISE FUND - TRANSIT ONLYSCHEDULE OF REVENUES. SUBSIDIES AND EXPENSES, BUDGET VERSUS ACTUAL

For the year Ended June 30, 201 8(in Thousands)

VarianceFavorable

(Unfavorable)Revenues:

PassengerfaresBarttransfersContract servicesAdvertisingInterest incomeOther

Actual

$

FinalBudget

Totaloperating revenues 71,136 73,973 (2.837)

SubsidiesPropertytaxesProperty taxes - Measure VVLocal sales tax - Measure BLocal sales tax - Measure BBLocal sales tax - Measure JLocaloperating assistanceState - ABI 1 07State - AB2972 Home to SchoolState - TDAState - STAFederaloperating assistance

Totalsubsldies 371.388

442.524

346.432

420.405

24.956

22.119Total revenue & subsidies

Expenses:Operator wagesOther wagesFringe benefitsPension expenseServicesFueland lubricantsOffice/printing suppliesOther materials and suppliesUtilitiesInsuranceExpenses of JPA and consortiumOther expensesInterestexpense

Total operating expenses 437.450 419,91S (17,sa5)

Excess ofrevenues overexpenses

(40,230)

74.470

Depreciation and amortization

Capital contributions

Change in net position

53

54.722 $ 55.788 $ (1,066)4,263   3,572   691

7,316   l0,085   (2,769)1,365   1,200   165

575   330   2452.895   2.998   103

105.023 92.456 12,56729,671 29.500 17130.827 28.993 1,83433.990 32.156 1,8344,878 4,868 10

26.958 27,644 (686)43.009 42,420 589(1,150) 500 (1.650)71,618 66.840 4,77815,940 14.689 1,251l0.624 6.366 4.258

85.733 83,089 (2,644)64.353 63,274 ll,0791

121,411 109.868 (11.543)50.923 51.931 1,00840.858 27.313 (13,545)12.734 12.473  

743 570 (173)14.849 16.689 1,8403,310 3,435 1257,425 14,015 6,590

30.177 30.364 1873.605 6,124 2,5191.329 770 559

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

BUDGETARY BASIS - ENTERPRISE FUND - TRANSIT ONLYSCHEDULE OF REVENUES AND EXPENSES BY SERVICE AREA

For the year Ended June 30, 2018

SpecialTransit

District I

SpecialTransit

District 2

STSD2as a % of

TotalRevenues

PassengerfaresBART transfersContract servicesAdvertisingInterest incomeOther income

Total

$ 52,520,8314,091,0727.316,0501,219,112

502.5702.585.998

$ 2,201,415 $171,478

54.722,2464,262,5507,316,0501.365,113

574,8512.895.648

4.02%4.02%o.oo%

l0.70%1 2.57%l0.69%

146.00172.281

309.650

Totalrevenue 68.235,633 2.900.825 71.136.458 4.08%

SubsidiesPropertytaxesProperty taxes - Measure VVLocal sales tax - Measure BLocal sales tax - Measure BBLocal sales tax - Measure JLocaloperating assistanceState - ABI 1 07State - AB2972 Home to SchoolState - TDAState - STAFederaloperating assistance

..99g,eel.$W ...£g,642.2Z .

...glg.64g.2®Totalsubsidies 318.646,206

386.881.839

52.741,412

55.642.237

371.387.618

442.524.076

14.20%

19.24%Total revenue and subsidies

ExpensesOperator wagesOther wagesFringe benefitsPension expensesServicesFuel & lubricantsOffice and printing suppliesBus parts and maintenance suppliesUtilitiesInsuranceOther expensesExpenses of JPA and consortiumInterestexpenseDepreciation

10101010101010

1010

1010

191 1

10

11%70%36%36%70%70%70%70%70%70%70%40%03%70%

Totalexpenses 425.040,160

(38,158,321)71.944.115

52,64QD32

3.002.2052.526.278

477.680,192

(35,156,116)74,470.393

11.03%

Income (loss) bef ore capital contributionsCapital contributions - federal and local 3.39%

Change in net position

54

84,219,568 20.802.687 105.022.255 19.81%29,671,365   29,671,365 o.oo%28,510,823 2.315,965 30.826.788 7.51%30.354,804 3,635,293 33.990.097 l0.70%4.878,282   4,878,282 o.oo%

22.209.545 4.748.093 26,957.638 17.61%

37,989.984 5,019,168 43.009.152 11.67%

l1,150,000)   (1,150,000) o.oo%58,448.666 13,169,568 71,618,234 18.39%14.059.153 1,881,033 15,940,186 11.80%9.454.016 1.169.605 l0.623.621 11.01%

77.065.636 8,667,634 85.733.27057.470.584 6,882,680 64.353.264

108.833.156 12,578,218 121,411,37445,647,606 5,275,649 50.923.25536.488.244 4.369,834 40.858.07811,372,452 1.361,966 12.734.418

663.434 79,453 742,88713.260,526 1,588,081 14.848,6072.955.709 353.976 3.309,6856.630,749 794.099 7,424,8483,218.953 385.502 3.604,455

24.323,617 5,853,873 30,177,49C1.182.128 146,508 1,328,63e

35.927.273 4.302.652 40.229.925

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICTNOTES TO SUPPLEMENTARY INFORMATION

Forthe year Ended June 30.2018(in Thousands)

NOTE 1- BUDGETARY BASIS OF ACCOUNTING

The District's fiscal policies establish the framework for the management and control of the District'sresources to ensure that the District remains fiscally sound. The District's goals and policies. which areapproved by the Board of Directors, determine where and how District resources should be dedicated. Forthis reason, District goals, objectives, short and long-range planning and performance analyses areIncorporated into the budget development process.

It is the policy of the District that the Board of Directors approves an annual budget prior to the beginningof each fiscal year. The budget is developed generally using the accrual basis of accounting. See thefollowing section for a reconciliation of budget versus generally accepted accounting principles.

NOTE 2 - BUDGETARY BASIS DIFFERENCES

As discussed in Note 2, the accompanying basic financial statements have been prepared on the accrualbasis of accounting in conformity with accounting principles generally accepted in the United States ofAmerica (GAAP). The following is a summary of the differences between GAAP and budgetary basis:

Perspective differences resulting from the Corporation and the Paratransit operations not budgeted.Capital outlay presented represents capital outlay funded by the District's operations and this isreported as an outflow of budgetary resources but is not considered an expense for financial reportingniirnnqnq

Depreciation on capital assets funded by District operations is not budgeted, as it is not an outflow ofbudgetaryresources.

The effect of these differences between budgetary and GAAP accounting on the June 30financial statements of the District's budgeted fund is as follows (in thousands):

2018 basic

Change in net position on GAAP basisPerspective differences

$ 39,609

Change in net position on the budgetary basis

NOTE 3 SCHEDULE OF REVENUES AND EXPENSE BY SERVICE AREA

As discussed in note I to the financial statements, the District's basic financial statements include thefinancial activities of the District's Special Transit Service Districts No. I and No. 2. The amounts recordedin this schedule do not reflect paratransit activity and activity of the AC Transit Financing Corporation. TheDistrict's revenues between these Special Transit Service Districts are allocated based predominantly eitheron estimated actual revenues. farebox revenue allocations or on a ratio that uses service hours and servicemiles in Special Transit Service Districts No. I and No. 2. The District's expenses between these SpecialTransit Districts are allocated based predominantly either on operator wages or on a ratio that uses servicehours and service miles in both Special Transit Service Districts No. I and No. 2

55

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DRAFTAttachment 2Dn io-£oa

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BFUNDSJune 30.2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE B FUNDSJune 30,2018

TABLEOFCONTENTS

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR MEASURE B FUNDSAND REPORT ON INTERNAL CONTROL OVER COMPLIANCE

COMBINING BALANCE SHEET............................

COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE

SCHEDULE OF REVENUES AND EXPENSES............

l

3

4

5

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DRAFT

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR MEASURE B FUNDSAND REPORT ON INTERNAL CONTROL OVER COMPLIANCE

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

Report on Compliance for Measure B Funds

We have audited Alameda-Contra Costa Transit District's (the "District") compliance with the types ofcompliance requirements described in Measure B 2000 Expenditure Plan, issued by the Alameda CountyTransportation Commission, that could have a direct and material effect on the District's compliance withthe Measure B Program for the year ended June 30, 201 8.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, and the terms andconditions of its funds applicable to the Measure B 2000 Expenditure Plan issued by the Alameda CountyTransportation Commission.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for the Measure B funds based on our audit ofthe types of compliance requirements referred to above. We conducted our audit of compliance inaccordance with auditing standards generally accepted in the United States of American the standardsapplicable to financial audits contained in Government ,Audit/r7g Standards. issued by the ComptrollerGeneral of the United Statesl and requirements specified in the Measure B 2000 Expenditure Plan issuedby the Alameda County Transportation Commission. Those standards and requirements require that weplan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on Measure B Fundsoccurred. An audit includes examining, on a test basis, evidence about the District's compliance with thoserequirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the Measure BProgram. However, our audit does not provide a legal determination of the District's compliance.

Opinion on Measure B Funds

In our opinion, the District complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on the Measure B Program for the year endedJune 30, 2018.

(Continued)

l

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DRAFTReport on Internal Control over Compliance

Management is responsible for establishing and maintaining effective internal control over compliance withthe types of compliance requirements referred to above. In planning and performing our audit ofcompliance. we considered the District's internal control over compliance with the types of requirementsthat could have a direct and material effect on the Measure B Program to determine the auditing proceduresthat are appropriate in the circumstances for the purpose of expressing an opinion on compliance for theMeasure B Program and to test and report on internal control over compliance with the requirementsreferred to above, but not for the purpose of expressing an opinion on the effectiveness of internal controlover compliance. Accordingly. we do not express an opinion on the effectiveness of the District's internalcontrol over compliance.

A de#c/enc/ it? hferr?a/ confro/ over comp/lance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions. to prevent, or detect and correct, noncompliance with a type of compliance requirement of theMeasure B Program on a timely basis. A maferla/ weakness fn inferrla/ confro/ over comp/lance is adeficiency, or combination of deficiencies, in internal control over compliance. such that there is areasonable possibility that material noncompliance with a type of compliance requirement of the MeasureB Program will not be prevented, or detected and corrected, on a timely basis. A sign/flcanf deacfency ir7it?fema/ confro/ over comp/;ance is a deficiency. or a combination of deficiencies, in internal control overcompliance with a type of compliance requirement of the Measure B Program that is less severe than amaterial weakness in internal control over compliance, yet important enough to merit attention by thosecharged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control over compliancethat might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internalcontrol over compliance that we consider to be material weaknesses. However, material weaknesses mayexist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testingof internal control over compliance and the results of that testing based on the requirements, specified inthe Measure B 2000 Expenditure Plan issued by the Alameda County Transportation Commission.Accordingly, this report is not suitable for any other purpose.

Report on Combining Balance Sheet, Combining Schedule of Revenues,Changes in Fund Balances and Schedule of Revenues and Expenses

Expenditures, and

We have audited the financial statements of the business-type activities and fiduciary activities of the Districtas of and for the year ended June 30, 2018, and the related notes to the financial statements, whichcollectively comprise the District's basic financial statements. We issued our report thereon dated <>, 201 8.which contained unmodified opinions on those financial statements. Our audit was conducted for thepurpose of forming opinions on the financial statements that collectively comprise the basic financialstatements. The accompanying combining balance sheet, combining schedule of revenues, expenditures.and changes in fund balance, and schedule of revenues and expenses are presented for purposes ofadditional analysis and are not a required part of the basic financial statements. Such information is theresponsibility of management and was derived from and relates directly to the underlying accounting andother records used to prepare the basic financial statements. The information has been subjected toauditing procedures applied in the audit of the basic financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the basic financial statements or to the basic financial statements themselves, andother additional procedures in accordance with auditing standards generally accepted in the United Statesof America. In our opinion, the combining balance sheet, combining schedule of revenues. expenditures.and changes in fund balance, and schedule of revenue and expenses are fairly stated in all materialrespects in relation to the basic financial statements as a whole.

Crowe LLP

San Francisco, California<>,2018

2

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BFUNDSALAMEDA COUNTY TRANSPORTATION COMMISSION

COMBINING BALANCE SHEETJune 30,2018

ASSETSMeasure B direct local program distributionreceivable

Paratransit Mass Transit Total

£ 939.794 $ 3.924.889

$ 3.924.889

$ 4.864,683

Total assets

3

FUND BALANCESRestricted for:

Paratransit programsMeasure B projects & programs

$ 939,794 $

3,924,889$ 939,794

3.924.889

Total fund balances 939

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE B FUNDSALAMEDA COUNTY TRANSPORTATION COMMISSION

COMBINING SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCE

Forthe yearended June 30,2018

Paratransit Mass Transit Total

REVENUES

Measure B direct local program distributionrevenue $ 5,955.338

5.955.338

$ 24.871.450

24.871.450

$ 30,826,788

30.826.788Total revenues

EXPENDITURESParatransitTransportation and operations

5,866,90524,502,123

24.502.123

369.327

5,866.90524.502.123

Total expenditures 5.866,905

88,433

30.369.028

457.760Revenues over/under expenditures

FUND BALANCESBeginning fund balance 851.361

939.794

3.555.562

3.924.889

4.406.923

4.864.683Endingfund balance

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRACT

MEASURE BFUNDSSCHEDULEOFREVENUESAND EXPENSES

Forthe year ended June 30,2018

Revenues:Paratransit - AC Transit - NorthParatransit - AC Transit - Central

$ 4,862,0881.093.250

Subtotal 5.955.338

AC Transit: NorthAC Transit: CentralAC Transit: SouthACID: Welfare to WorkACI D: Welfare to Work

13,636,8626,818,4312,315,9651,783,725

316.467NorthCentral

Subtotal 24,871,450

30.826.788Total revenues

Operating expenses:Paratransit - AC Transit - NorthParatransit - AC Transit - Central

$ 4,789,8891.077.016

Subtotal 5.866.905

AC Transit: NorthAC Transit: CentralAC Transit: SouthACID: Welfare to WorkACID: Welfare to Work

13,434,3636,717,1812,281,5741,757,237

311.768North

Central

Subtotal 24,502,123

30369.Q28Total operating expenses

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DRAFTSR 1 8-285Attachment 3

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BBFUNDSJune 30.2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BBFUNDSJune 30, 2018

CONTENT

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR MEASURE BB FUNDSAND REPORT ON INTERNAL CONTROL OVER COMPLIANCE ............

COMBINING BALANCE SHEET............................

COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE

SCHEDULE OF REVENUES AND EXPENSES..

l

3

4

5

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DRAFT

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR MEASURE BB FUNDSAND REPORT ON INTERNAL CONTROL OVER COMPLIANCE

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

Report on Compliance for Measure BB Funds

We have audited Alameda-Contra Costa Transit District's (the "District") compliance with the types ofcompliance requirements described in Measure BB 201 4 Expenditure Plan, issued by the Alameda CountyTransportation Commission, that could have a direct and material effect on the District's compliance withthe Measure BB Program for the year ended June 30, 201 8.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations. and the terms andconditions of its funds applicable to the Measure BB 201 4 Expenditure Plan issued by the Alameda CountyTransportation Commission.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for the Measure BB funds based on our audit ofthe types of compliance requirements referred to above. We conducted our audit of compliance inaccordance with auditing standards generally accepted in the United States of American the standardsapplicable to financial audits contained in Goverr7menf 4ud/fir7g Sfanda/ds. issued by the ComptrollerGeneral of the United Statesl and requirements specified in the Measure BB 201 4 Expenditure Plan issuedby the Alameda County Transportation Commission. Those standards and requirements require that weplan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on Measure BBFunds occurred. An audit includes examining, on a test basis, evidence about the District's compliancewith those requirements and performing such other procedures as we considered necessary in thecircumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the Measure BBProgram. However, our audit does not provide a legal determination of the District's compliance.

Opinion on Measure BB Funds

In our opinion, the District complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on the Measure BB Program for the yearended June 30,2018.

(Continued)

l

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DRAFTReport on Internal Control over Compliance

Management is responsible for establishing and maintaining effective internal control over compliance withthe types of compliance requirements referred to above. In planning and perf arming our .audit ofcompliance, we considered the District's internal control over compliance with the types of requirementsthat could have a direct and material effect on the Measure BB Program to determine the auditingprocedures that are appropriate in the circumstances for the purpose of expressing an opinion oncompliance for the Measure BB Program and to test and report on internal control over compliance with therequirements referred to above, bui not for the purpose of expressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of theDistrict's internal control over compliance.

A de#c/fancy h hferna/ confro/ over comp//ance exists when the design or operation of a control overcompliance does not allow management or employees. in the normal course of performing their assignedfunctions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of theMeasure BB Program on a timely basis. A mater;a/ weakness in it?fema/ confro/ over comp/lance is adeficiency, or combination of deficiencies, in internal control over compliance, such that there is areasonable possibility that material noncompliance with a type of compliance requirement of the MeasureBB Program will not be prevented, or detected and corrected, on a timely basis. A s/gn/#car7f de#ciency ininferno/'confro/ over comp/lance is a deficiency, or a combination of deficiencies, in internal control overcompliance with a type of compliance requirement of the Measure BB Program that is less severe than amaterial weakness in internal control over compliance, yet important enough to merit attention by thosecharged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify alldeficiencies in internal control over compliancethat might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internalcontrol over compliance that we consider to be material weaknesses. However, material weaknesses mayexist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testingof internal control over compliance and the results of that testing based on the requirements, specified inthe Measure BB 2014 Expenditure Plan issued by the Alameda County Transportation Commission.Accordingly, this report is not suitable for any other purpose.

Report on Combining Balance Sheet, Combining Schedule of Revenues,Changes in Fund Balances and Schedule of Revenues and Expenses

Expenditures, and

We have audited the financial statements of the business-type activities and fiduciary activities of the Districtas of and for the year ended June 30, 2018. and the related notes to the financial statements, whichcollectively comprise the District's basic financial statements. We issued our report thereon dated <>, 201 8,which contained unmodified opinions on those financial statements. Our audit was conducted for thepurpose of forming opinions on the financial statements that collectively comprise the basic financialstatements. The accompanying combining balance sheet, combining schedule of revenues, expenditures!and changes in fund balance and schedule of revenues and expenses are presented for purposes ofadditional'analysis and are not a required part of the basic financial statements. Such information is theresponsibility ot management and was derived from and relates directly to the underlying accounting andother records used to prepare the basic financial statements. The information has been subjected toauditing procedures applied in the audit of the basic financial statements and certain additional procedures.including comparing and reconciling such information directly to the underlying accounting and otherrecords 'used to prepare the basic financial statements or to the basic financial statements themselves. andother additional procedures in accordance with auditing standards generally accepted in the United Statesof America. In our opinion, the combining balance sheet, combining schedule of revenues, expenditures.and changes in fund balance, and schedule of revenue and expenses are fairly stated in all materialrespects in relation to the basic financial statements as a whole.

Crowe LLP

San Francisco. California<>, 2018

2

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BB FUNDSALAMEDA COUN'TY TRANSPORTATION COMISSION

COMBINING BALANCE SHEETJune 30,2018

ASSETSMeasure BB direct local program distributionreceivable

Paratransit Mass Transit Total

$ 1,042.908

$ 1.042.908

$ 4,357.035 $ 5,399.943

$ 5.399,943Total assets

FUND BALANCESRestricted for:

Paratransit programsMeasure BB projects & programs

$ 1,042,908 $

4,357,035$ 1,042,908

4.357.035

Total fund balances 1,042

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BBFUNDSALAMEDA COUNTY TRANSPORTATION COMMISSION

COMBINING SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCE

Forthe year ended June 30,2018

REVENUESMeasure BB direct local program distributionrevenue

Paratransit Mass Transit Total

$ 6,564.611

6.564.611

$ 27.425.486

27.425.486

$ 33,390,097

33.990.097Total revenues

EXPENDITURESParatransitTransportation and operations

6,460,21726.989.353

6.460.21726.989.353

Total expenditures S.460,217

104.394

26.989,353

436.133

33.449,570

540.527Revenues over/under expenditures

FUND BALANCESBeginning fund balance 938,514 3,920.902 4,859.416

Ending fund balance

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE BB FUNDSSCHEDULEOFREVENUESANDEXPENSES

Forthe year ended June 30,2018

Revenues:Paratransit - AC TransitAC Transit Services

$ 6,564,61127.425.486

Totalrevenues

Operating expenses:Paratransit - AC TransitAC Transit Services

$ 6,460,21726.989.353

Total operating expenses :49,5Z

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DRAFTAttachment 4DH la-ZUD

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASUREJFUNDSJune 30,2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASUREJFUNDSJune 30,2018

TABLEOFCONTENTS

INDEPENDENTACCOUNTANT'SREPORT

SCHEDULE OF REVENUES AND EXPENSES

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DRAFT

NDEPENDENT ACCOUNTANT'S REPORT

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

We have examined the Alameda-Contra Costa Transit District's (the District) compliance with therequirements described in the Measure J Cooperative Agreement (the Agreement) between the District andthe Contra Costa Transportation Authority (CCTA) applicable to the Measure J Funds that were allocatedto the District for the year ended June 30, 2018. Measure J sales tax revenues and related expenses forthe year ended June 30, 2018 are included in the accompanying Schedule of Revenues and Expenses-Management of the District is responsible for the District's compliance with the specified requirements. Ourresponsibility is to express an opinion on the District's compliance with the specified requirements basedon our examination.

Our examination was conducted in accordance with attestation standards established by the AmericanInstitute of Certified Public Accountants. Those standards require that we plan and perform the examinationto obtain reasonable assurance about whether the District complied. in all material respects. with thespecified requirements referenced above. An examination involves performing procedures to obtainevidence about whether the District complied with the specified requirements. The nature. timing, andextent of the procedures selected depend on our judgment, including an assessment of the risks of materialnoncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient andappropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the District's compliance with specifiedrequirements.

In our opinion, the District complied, in all material respects, with the af orementioned requirements that areapplicable to the Measure J Funds as specified in the Agreement for the year ended June 30, 201 8.

This report is intended solely for the information and use of management and the District's Board ofDirectors and the CCTA and is not intended to be, and should not be. used by anyone other than thespecified parties.

Crowe LLP

San Francisco, California<>, 2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASUREJFUNDSSCHEDULE OF REVENUES AND EXPENSES

Year ended June 30, 201 8

REVENUEMeasure J

2.

OPERATING EXPENSESMeasure J

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DRAFT Attachment 5SR 18-285

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE W AGREED UPON PROCEDURESJune 30.2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

MEASURE W AGREED UPON PROCEDURESJune 30,2018

TABLEOFCONTENTS

INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES l

SCHEDULE OF SERVICE HOURS AND SERVICE MILES BY COUNTY AND SPECIALTRANSITSERVICEDISTRICT 5

SCHEDULE OF OPERATIONS AND MAINTENANCE EXPENSES FUNDED BY MEASUREW TAXES BY COUNTY AND SPECIAL TFHNSIT SERVICE DISTRICT 6

SCHEDULE OF MAINTENANCE COSTS FUNDED BY MEASURE W TAXES BY COUNTYAND SPECIAL TRANSIT SERVICE DISTRICT 7

NOTES TO THE SCHEDULE OF SERVICE HOURS AND SERVICE MILES BY COUNTY ANDSPECIAL TRANSIT SERVICE DISTRICT AND THE SCHEDULE OF OPERATIONS ANDMAINTENANCE EXPENSES FUNDED BY MEASURE W TAXES BY COUNTY AND SPECIALTRANSITSERVICE DISTRICT 8

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DRAFT

INDEPENDENT ACCOUNTANTS' REPORTON APPLYING AGREED-UPON PROCEDURES

Management and the Board of DirectorsAlameda-Contra Costa Transit DistrictOakland. California

We have performed the procedures enumerated below, which were agreed to by management and theBoard of Directors of the Alameda-Contra Costa Transit District (the District), solely to assist you inevaluating service hours, service miles, and the allocation of operations and maintenance expenses bycounty and Special Transit Service District (STSD) set forth in the accompanying schedules for the yearended June 30, 2018. The District's management is responsible for the accompanying schedules. Thesufficiency of these procedures is solely the responsibility of the parties specified in this report.Consequently, we make no representation regarding the sufficiency of the procedures enumerated beloweither for the purpose for which this report has been requested or for any other purpose.

Our procedures and findings are as follows

General

a) We read the Measure VV voter approved ballot measure noting that the ten-year parcel tax is leviedfor the purposes of providing essential transportation services, including the operation and maintenanceof bus services within District I .

Step performed without exception

b) We traced Measure VV funds received for the year ended June 30, 201 8 to the District's general ledgerand to the independent confirmations received from the County of Alameda and the County of ContraCostaS

Step performed without exception

Schedule of Service Hours and Service Miles By County and Special Transit Service District

a) We tested the schedule for clerical accuracy

Step performed without exception.

b) We compared service hours for the year ended June 30, 2018 to the worksheets prepared by theDistrictS C

Step performed without exception.

(Continued)

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DRAFTc) We compared STSD No. I service hours for the year ended June 30, 201 8 to the worksheets prepared

by the District

Step performed without exception.

d) We recomputed the net changes in service hours during the year ended June 30. 201 8 by county and

Step performed without exception. Additionally, we noted that total service hours Increased 62.940, or

e) We compared STSD No. I miles by county for the year ended June 30. 2018 to the worksheetsprepared by the District.

Step performed without exception.

f) We recomputed the net changes in service miles during the year ended June 30, 201 8 by county andSTSD, and noted no errors.

Step performed without exception. Additionally. we noted that total service miles increased 58,591, or28%.

Schedule of Operations and Maintenance Expenses Funded by Measure VV Taxed by County andSpecial Transit Service District

a) We tested the schedule for mathematical accuracy.

Step performed without exception.

b) We compared total expenses to the District's unaudited Statement of Revenues. Expenses, andChanges in Fund Net Position for the Transit Fund for the year ended June 30, 201 8.

Step performed without exception.

c) We recomputed the total expenses before allocation by county and STSD.

Step performed without exception.

d) We compared service hours and service miles by county and STSD to the Schedule of Service Hoursand Service Miles by county and STSD.

Step performed without exception.

e) We recomputed the service hours and service miles allocation percentages.

Step performed without exception.

STSD

3.3%

(Continued)

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DRAFTD We traced expenses, allocated by county and STSD, to a worksheet prepared by the District. We noted

that the District computed the allocated expenses for Contra Costa County, STSD No. I as follows:

Total Expenses before allocationBy County and STSD

X Service Hours allocation % (aJ + ServiceMiles allocation % rb)

2

(aJ Service Hours allocation %Contra Costa CountyPTSD I Service Hours

Total STSD I Service Hours

(bJ Service Miles Allocation %Contra Costa CountySTSD I Service Miles

Total STSD I Service Miles

g) We recomputed expenses allocated to Contra Costa County, STSD No. I using the above calculationand compared to the amounts calculated by the District.

Step performed without exception.

h) We compared the method used to allocate operations and maintenance expenses to Alameda STSDNo. 2 to the District's stated allocation methodology.

Step performed without exception.

i) We noted that the District computed the allocated expenses for Alameda County STSD No. I as follows

Total expenses beforeallocation

by county and STSD

Expenses allocatedto Contra Costa County

STSD No.1

Expenses allocatedto Alameda County

Expenses allocatedtoAlameda County

Expenses allocatedto Alameda County

STSD No.2

Expenses allocatedto Alameda County

STSD No.1

j) We noted that the District allocated total operations and maintenance expenses to STSD No. I byadding the sum of expenses allocated to Contra Costa County STSD No. I plus expenses allocated toAlameda County STSD No. 1 .

Step performed without exception

k) We recomputed the total allocation of operations and maintenance expenses to Alameda County andContra Costa County STSD No. 1 .

Step performed without exception

1) We verified that the Measure VV proceeds received by the District did not exceed the operations andmaintenance expenses allocated to STSD No. 1.

Step performed without exception

(Continued)

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DRAFTm) We noted that total District operations and maintenance expenses allocated to STSD No. I exceeded

Measure VV funding of$29.671.365 by$390,402,224 for the year ended June 30, 2018.

n) We recalculated the total revenues and capital contributions and expenses for STSD No. 2

Step performed without exception

0) Calculate the cost coverage ratio for STSD No. 2 as defined by total operating revenues plus capitalcontributions for STSD No. 2 divided by total operating expenses for STSD No 2

Step performed without exception. We noted that total operating revenues plus capital contributions forSTSD No. 2 totaled $58, 1 68,5 15 and total operating expenses totaled $52.062,378 for a cost coverageratio of 1 1 1. 7%.

Schedule of Maintenance Costs Funded By Measure VV Taxes By County and Special TransitService District

a) We obtained the Schedule of Maintenance Costs Funded by Measure VV Taxes (Schedule) from theDistrict

b) We agreed Total Modal Expenses reported on the Schedule for function code 041 Vehicle Maintenanceand 042 Non-vehicle Maintenance to the District's National Transit Database Report, OperatingExpenses (F-30) form.

c) We recalculated the percentage used to allocate costs reported on the Schedule by using expenseallocations reported in the Special Transit Service Districts No. I and No. 2 Schedule with IndependentAccountant's Report.

Step performed without exception

d) We agreed Measure VV Taxes to the Special Transit Service Districts No. I and No. 2 Schedule withIndependent Accountant's Report.

This agreed-upon procedures engagement was conducted in accordance with attestation standardsestablished by the American Institute of Certified Public Accountants. We were not engaged to, and did not.conduct an examination or review, the objective of which would be the expression of an opinion orconclusion, respectively, on the accompanying schedule. Accordingly. we do not express such an opinionor conclusion. Had we performed additional procedures, other matters might have come to our attentionthat would have been reported to you.

This report is intended solely for the information and use of management and the Board of Directors of theDistrict and the Measure VV parcel tax oversight committee and is not intended to be, and should not be.used by anyone other than the specified parties.

Crowe LLP

San Francisco, California<>.2018

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DRAFTALAMEDA-CONTF3A COSTA TRANSIT DISTRICT

SCHEDULE OF SERVICE HOURS AND SERVICE MILESBY COUNTY AND SPECIAL TRANSIT SERVICE DISTRICT

June 30,2018

FortheYear Ended

June 30. 2017

NetIncrease/Decrease '

FortheYear Ended

June 30.2018

l

SERVICE HOURS

Contra Costa - STSD No. 1

Alameda - STSD No. 1Alameda - STSD No. 2

Total Alameda service hours

Total STSD No. I service hours

Total service hours

221,237

1,664,961201jB!

1,866,092

1 ,886J98

18,434

44.506:1,3B:

43,128

62.940

239,671

1,709,467199.753

1,909,220

1,949.138

2.148.891

SERVICE MILES

Contra Costa - STSD No. 1

Alameda-STSD No.1Alameda - STSD No. 2

Total Alameda service miles

Total STSD No. I service miles

Total service miles

2,670,782

18,007,7312.867.335

20,875,066

20,678.513

23.545.848

139,202

(80,611)'14.163]

(94,774)

58,591

2,809,984

17,927,1202,853,172

20,780,292

20.737,104

See accompanying notes to the schedule

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SCHEDULE OF OPERATIONS AND MAINTENANCE EXPENSES FUNDED BYMEASURE W TAXES BY COUNTY AND SPECIAL TRANSIT SERVICE DISTRICT

June 30,2018

Bef ore Allocation Contra CostaBy County County STSD #l STSD#l

Alameda CountySTSD #2 Total

TotalSTSD#l

EXPENSES

Operator wagesOther wagesFringe benefitsPension expensesServicesFueland lubricantsOffice/printing suppliesBus parts/maintenance suppliesUtil it iesInsuranceOther expensesADA paratransit joint ventureInterest expenseDepreciation

$8564

121

504012

143

7

3

30l

40

733353411923858734742848309424604177328229

270264374255078418887607685848455490636925

$ 97

1454l

l

959427064899715469

85713381856415143152643

489145927216516706738709978917998435783020

$ 67509439319

1 1

252

21l

31

106043768748772902577546573

802180029284

147439229390728746696817731832955182438253

$8

6

125

4

l

l

667,634882.680578.218275.649369,834361.96679.453

588,081353,976794,099385.502853,873146.415302.652

$7556

10745361 1

13263

27l

35

773926346024142264657134927567188034175586

781119447039562712149898707931457055853905

$ 77.065,63657.470,584

108,833,15645.647.60636.488.24411,372.452

663,43413,260,5262,955,7096,630.7493,218,953

24,323.6171.182,221

35.927.273

3

4

5

4

Total expenses

Measure VV revenues 5.082.667 24.588.698 24.588,698 29.671.365

Net deficit

Service HoursAllocation Percentage

239.67111.15%

1,709.46779.55%

199.7539.30%

1,949.138I oo.oo%

Service MilesAllocation Percentage

2,809,98411.91%

11.53%

17,927.12075.99%

2,853,17212.09%

l0.70%

20,737,104I oo.oo%

I oo.oo%Average

See accompanying notes to the schedule

6

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SCHEDULE OF MAINTENANCE COSTS FUNDED BY MEASURE W TAXESBY COUNTY AND SPECIAL TFIANSIT SERVICE DISTRICT

June 30,2018

Maintenance Costs and FundingSTSD #l

Amount PercentaaeSTSD#2

Amount Percentaae Total

Total model expenses041 Vehicle maintenance $042 Non-vehicle maintenance

55.899,587l0.059.523

88.98% $88.98%

6.923,0071.245.844

B.168.851

1 1 .02% $ 62,822.5941 1 .02% 1 1 .305.367

Total maintenance costs 65.959.110

29.671.365

74.j27.96j

29.671.365Measure VV taxes I oo.oo% o.oo%

Netcostsfunded byotherresources

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

PROCEDURES PERFORMED AND CONCLUSIONSNOTES TO THE SCHEDULE OF SERVICE HOURS AND

SERVICE MILES BY COUN'TY AND SPECIAL TRANSIT SERVICE DISTRICT ANDTHE SCHEDULE OF OPERATIONS AND MAINTENANCE EXPENSES FUNDED BYMEASURE W TAXES BY COUN'TY AND SPECIAL TRANSIT SERVICE DISTRICT

Year Ended June 30, 2018

NOTED-GENERAL

On November 30, 2004, the voters approved Measure BB, which superseded the Measure AA parcel taxauthorizing Alameda and Contra Costa Counties (the Counties) to levy and collect a parcel tax for thepurposes of "preserving affordable local public transportation services that allow seniors and people withdisabilities to remain independent, take students to and from school, help East Bay residents commute towork and reduce traffic and air pollution by reducing the number of cars on the road." The tax becameeffective on July 1, 2005 and was to terminate on June 30, 2016. However, on November 4, 2008. thevoters approved Measure VV, which supersedes the Measure BB parcel tax. Measure VV became effectiveJuly 1, 2009 and increased the annual parcel tax to $96 per parcel. Measure VV is effective throughJune 30, 2019. Proceeds from this special tax can only be used to fund the operation and maintenance ofbus service within Special Transit Service District (STSD) No. 1 . The District received approximately $29.7million in Measure VV taxes during the year ended June 30, 201 8.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SCHEDULE PRESENTATION

These schedules are prepared under the guidelines of the agreement between the Contra CostaTransportation Authority and the Alameda-Contra Costa Transit District that essentially allocates expensesbetween STSD No. I and STSD No. 2. Consequently, they do not present the financial position, changesin financial position, or cash flows of the Alameda-Contra Costa Transit District.

NOTE3-BASIS OFACCOUNTING

The Schedule of Operations and Maintenance Expenses by County and Special Transit Service Districthas been prepared in accordance with the accrual basis of accounting.

NOTE 4 - BASIS OF EXPENSE ALLOCATION

The expenses on the Schedule of Operations and Maintenance Expenses by County and Special TransitService District are prorated to the Counties and the Special Transit Service Districts. It is based on anequal weighing of the relationship of hours and miles of service between the Counties and the SpecialTransit Service Districts within the Counties.

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DRAFTSR 18-285Attachment 6

ALAMEDA-CONTRA COSTA TRANSIT DISTRICTPROPOSITION I I I

June 30.2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

PROPOSITION lllJune 30,2018

TABLEOFCONTENTS

iNDEPENDENTACCOUNTANT'S REPORT

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DRAFT

INDEPENDENTACCOUNTANTS'REPORTON APPLYING AGREED-UPON PROCEDURES

Management and the Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

We have performed the procedures enumerated below, which were suggested by the League ofCalifornia Cities and presented in their Article XllIB Appropriations Limitation Uniform Guidelines, andwhich were agreed to by the Alameda-Contra Costa Transit District (the "District"), solely to assist thespecified parties in the evaluation of the District's compliance with the requirements of Section 1.5 ofArticle XllIB of the California Constitution in relation to the Appropriations Limit Worksheet for the yearended June 30, 2018. The District's management and the Board of Directors are responsible forcompliance with those requirements. The sufficiency of these procedures is solely the responsibility of theparties specified in this report. Consequently, we make no representation regarding the sufficiency of theprocedures enumerated below either for the purpose for which this report has been requested or for anyother purpose.

The procedures you requested us to perform and our findings were as follows

a. We obtained the Appropriations Limitation Worksheet (the Worksheet) and determined that the 2017-2018 limits of $483,182,819 and annual adjustment factors were adopted by resolution of theDistrict's Board of Directors by tracing a resolution to the Board meeting minutes. We also determinedthat the population and the Per Capita Personal Income options were selected by a recorded vote ofthe Board of Directors.

b For the Worksheet, we recomputed the 2017-201 8 Current Appropriations201 6-201 7 Prior Year Appropriations Limit by the Total Growth Factor.

Limit by multiplying the

c. For the Worksheet, we agreed the Per Capita Income and Population Factors to California StateDepartment of Finance Worksheets.

This agreed-upon procedures engagement was conducted in accordance with attestation standardsestablished by the American Institute of Certified Public Accountants. We were not engaged to and didnot conduct an examination or review, the objective of which would be the expression of an opinion orconclusion, respectively. on compliance with specified requirements above. Accordingly, we do notexpress such an opinion or conclusion. Had we performed additional procedures. other matters mighthave come to our attention that would have been reported to you.

This report is intended solely for the information and use of management and the Board of Directors ofthe District and is not intended to be. and should not be, used by anyone other than the specified parties.

Crowe LLP

San Francisco, California<>, 2018

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DRAFTSR18-285Attachment 7

ALAM EDA-CONTRA COSTA TRANSIT DISTRICT

AGREED UPON PROCEDURES REPORTEvaluation of Board of Directors' Expenses

for Compliance with the District'sPolicies and Guidelines

Forthe yearended June 30,2018

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DRAFT

INDEPENDENTACCOUNTANTS'REPORTON APPLYING AGREED-UPON PROCEDURES

Management and the Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

We have performed the procedures enumerated below, which were agreed to by the management andthe Board of Directors of the Alameda-Contra Costa Transit District (the District), solely to assist thespecified parties in the evaluation of the Board of Directors' expenses for compliance with the policies andguidelines established by the District's Board Policy Number 155, Travel, Meeting and MiscellaneousExpense Reimbursements for Directors and Officers, issued in October 1989, as amended (hereinafterreferred to as the District's policies and guidelines), for the year ended June 30, 2018. The District'smanagement is responsible for compliance with those requirements. The sufficiency of these proceduresis solely the responsibility of those parties specified in this report. Consequently, we make norepresentations regarding the sufficiency of the procedures enumerated below either for the purpose forwhich this report has been requested or for any other purpose.

The procedures performed and our observations and findings are summarized as follows

Procedures for Evaluation of the Board of Directors' Compliance with the District's Policies andGuidelines

We obtained the District's policies and guidelines from management. To gain a better understanding ofthe District's policies and guidelines. we conducted inquiries with the District's Controller.

Based on this understanding, we performed the following procedures

l We obtained from management the details of the Board of Directors' expenses for the year endedJune 30, 201 8 (the "Analysis"), as prepared by the District's accounting department. The Analysis hasbeen summarized in the attached Schedule of Travel and Business Expenses. We tested all items inthe Analysis for compliance with the District's policies and guidelines by examining the correspondingexpense reports and the attached supporting receipts and vouchers.

Step performed without exception. No findings were noted as a result of our procedures

2. We reconciled the Analysis to the general ledger balance of Directors' expenses-

Step performed without exception. No findings were noted as a result of our procedures

(Continued)

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This agreed-upon procedures engagement was conducted in accordance with attestation standardsestablished by the American Institute of Certified Public Accountants. We were not engaged to, and didnot conduct an examination or review, the objective of which would be the expression of an opinion orconclusion. respectively, on compliance with the District's Board Policy Number 1 55, Travel, Meeting andMiscellaneous Expense Reimbursements for Directors and Officers. Accordingly, we do not express suchan opinion or conclusion. Had we performed additional procedures. other matters might have come to ourattention that would have been reported to you.

This report is intended solely for the information and use of management and the Board of Directors ofthe District and is not intended to be, and should not be, used by anyone other than the specified parties.

Crowe LLP

San Francisco, California<>, 2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SCHEDULE OF TRAVEL AND BUSINESS EXPENSESForthe year ended June 30. 2018

TravelandBusinessExoensesBoard of Directors

Jeffery DavisGreg HarperElsa OrtizH. E. Christian PeeplesJoe WallaceMark WilliamsJoel Young

$808

6,0376,2959.0006,5743,9739.000

Total Board Travel and Business Expenses

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DRAFTSR 18-285Attachment 8

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SPECIALTRANSIT SERVICESCHEDULES FOR DISTRICTS NO. I AND NO. 2

June 30.2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SPECIALTRANSIT SERVICESCHEDULES FOR DISTRICTS NO. I AND NO. 2

June 30,2018

CONTENT

INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES

SCHEDULE OF REVENUES AND EXPENSES BY SERVICE AREA..........................................

NOTES TO THE SCHEDULES OF REVENUES AND EXPENSES BY SERVICE AREA............

ALLOCATION METHODOLOGY

l

3

4

5

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DRAFT

INDEPENDENTACCOUNTANT'S REPORTON APPLYING AGREED-UPON PROCEDURES

Management and Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

We have perf ormed the procedures enumerated below, which were agreed to by management and theBoard of Directors of the Alameda-Contra Costa Transit District ("the District ') solely to assist the specifiedparties in evaluating the Schedule of Revenues and Expenses by Service Area for the year ended June 30.2018. The District's management is responsible for the accompanying schedule and allocationmethodology. The sufficiency of these procedures is solely the responsibility of the parties specified in thisreport. Consequently. we make no representation regarding the sufficiency of the procedures enumeratedbelow either for the purpose for which this report has been requested or for any other purpose.

General

A. We have read the Special Transit Service Districts (STSD) No. I and No. 2 allocation methodology farconsistency with the prior year, and inquired of District Controller for any changes.

Step performed without exception

Schedule of Revenues and Expenses by Service Area

B We have compared the Schedule to the audited financial statements

Step performed without exception

C We compared service hours by STSD and by Alameda and Contra Costa Counties for the year endedJune 30, 201 8 that are used for allocation to the supporting spreadsheets prepared by the District.

Step performed without exception

D We compared the net changes in service hours from the prior year to the year ended June 30. 201 8 byAlameda and Contra Costa counties and STSD.

Step performed without exception. District I sewice hours were 1,949, 138 (90.70%) in FY18 and1,886, 198 (90.36%) in FY17. District 2 service hours were 199,753 in FY18 (9.30%) and 201, 131(9. 64%) in FY17.

E We compared service miles by STSD and by Alameda and Contra Costa Counties for the year endedJune 30. 201 8 that are used for allocation to the supporting spreadsheets prepared by the District.

Step performed without exception

(Continued)

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DRAFT

F. We compared the net changes in service miles from the prior year to the year ended June 30, 201 8 byAlameda and Contra Costa counties and STSD.

Step performed without exception. District I service miles were 20,737, 104 (87.91oHa) in FY18 and20,678,513(87.82%) in FYI 7. Distrlct2 service miles were 2,853, 1 72 (12.09oya) in FY18 and 2.867,335(12. 18%) in FYI 7.

G. We recalculated the allocation of each financial statement caption in the Schedule by applying theDistrict's allocation methodology for each caption to the District's total revenue or expense line itemamount and compared this to the Schedule provided by the District.

Step performed without exception

This agreed-upon procedures engagement was conducted in accordance with attestation standardsestablished by the American Institute of Certified Public Accountants. We were not engaged to and did notconduct an examination or review, the objective of which would be the expression of an opinion orconclusion on the schedule and allocation methodology. Accordingly, we do not express such an opinionor conclusion. Had we performed additional procedures. other matters might have come to our attentionthat would have been reported to you.

This report is intended solely for the information and use of management and the Board of Directors of theDistrict and is not intended to be. and should not be, used by anyone other than the specified parties.

Crowe LLP

San Francisco, California<>, 2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SCHEDULE OF REVENUES AND EXPENSES BY SERVICE AREAFor the Year Ended June 30, 201 8

STSD#2as a %ofTotal

AllocationMethod-

STSD#l STSD#2 Total

Totalrevenue 68.235.633 2.900.825 71.136.458 4.08%

SUBSIDIESPropertytaxesProperty taxes - Measure VVLocal sales tax - Measure BLocal sales tax - Measure BBLocal sales tax - Measure JLocal operating assistanceState - ABI 1 07State - AB2972 Home to SchoolState - TDAState - STAFederaloperating assistance

Total subsidies 318,646.206

386.881.839

52.741.412

55.642.237

371.387.618

442.524.076

14.20%

19.24%Total revenue and subsidies

EXPENSES

Operator wagesOther wagesFringe benefitsPension expensesServicesFuel &lubricantsOffice and printing suppliesBus parts and maintenance suppliesUtilitiesInsurance

Other expensesPurchasedtransportationInterestexpenseDepreciation

Totalexpenses 425.040.160 S2.640.032

3.002.2052.526.278

477.680.192 11.03%

Income (loss) before capital contributionsCapital contributions - federal and local

(38,158,321)71.944.115

(35,156,116)74.470.393 3.39%

Change in net position

See accompanying notes to the schedule

3

REVENUES                Passengerfares $ 52.520.831 $ 2.201.415 $ 54.722.246 4.02% (I IBART transfers   4,091.072  171.478  4,262.550 4.02% (31Contract services   7,316,050      7,316.050 o.oo%  Advertising   1,219,112  146.001   1,365,113 l0.70% (21Interest income   502.570   72.281   574.851 12.57% (6jOther income   2.585.998  309.650   2.895.648 lO .69%  

84.219.568 20.802.687 105.022.255 19.81% (7)29.671.365   29.671.365 o.oo% (10)28,510.823 2.315.965 30.826.788 7.51%  30.354.804 3.635.293 33.990.097 l0.70% (2)4.878.282   4,878.282 o.oo% (10)

22.209.545 4.748.093 26.957.638 17.61% (14)37.989.984 5.019.168 43.009.152 11.67% (1 5)ll.lso.ooo)   (1,150.000) o.oo% 110)

58.448.666 13.169,568 71.618.234 18.39% (14)14,059,153 1.881.033 15.940.186 11.80% (5)9.454.016 1.169.605 l0.623.621 11.01% 12)

77.065.636 B.667.634 B5.733.270 10.11% (4)57,470,584 6.882.680 64.353.264 l0.70% (2)

108.833.156 12.578.218 121,411,374 l0.36% (13145,647.606 5.275.649 50.923,255 l0.36% (13136.488,244 4.369.834 40.858.078 l0.70% (2)11,372,452 1,361.966 12.734.418 l0.70% (2)

663.434 79.453 742.887 l0.70% l2)13,260,526 1,588,081 14.848,607 l0.70%  2.955.709 353.976 3,309,685 l0.70% l2)6.630.749 794.099 7,424.848 l0.70% l2)3.218.953 385.502 3,604.455 l0.70% (2)

24,323,617 5,853,873 30,177.490 19.40% (8)1.182.221 146.415 1,328,636 11.03% (9)

35.927.273 4.302.652 40.229.925 l0.70% (2)

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTES TO THE SCHEDULE OF REVENUES AND EXPENSES BY SERVICE AREAJune 30, 2018

NOTEl-GENERAL

Special Transit Service District (STSD) No. I was the designation used from the creation of the Alameda-Contra Costa Transit District (District) for its original territory, consisting of the cities and surroundingunincorporated area from Richmond and San Pablo through Hayward. STSD No. I extends from San PabloBay to Hayward, including the cities of Richmond, San Pablo, EI Cerrito, Albany, Berkeley, Emeryville,Oakland, Piedmont, Alameda, San Leandro, Hayward. and the unincorporated areas of Ashland, CastroValley. Cherryland, EI Sobrante, Kensington, and San Lorenzo. STSD No. 2 was created through anannexation agreement and includes the City of Fremont and the City of Newark in southwestern AlamedaCounty where the District operates a network of local routes. Local service within Union City is operated bya separate agency, Union City Transit. Service to Palo Alto across the Dumbarton Bridge on the DB line isprovided by the District under contract with a consortium of operators, led by the District.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SCHEDULE PRESENTATION

The accompanying Schedule was prepared in accordance with accounting principles generally accepted inthe United States of America and the allocation methodology guidelines listed below. This Schedule doesnot present the financial position, changes in financial position, or cash flows of the District.

NOTE3-BASIS OFACCOUNTING

The Schedule has been prepared in accordance with the accrual basis of accounting

NOTE4-BASIS 0FALLOCATION

The revenues and expenses on the Schedule are prorated between STSD No. I and No. 2 based on anallocation methodology that is specific to each financial statement caption. The primary allocation basis isan equal weighting of the relationship of hours and miles of service between the counties and the SpecialTransit Service District within the counties. The complete listing of allocation methodology is reported onpage 4g

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

ALLOCATION METHODOLOGYFor the Year Ended June 30, 2018

(1 ) Fare box revenues are allocated on the basis of estimated revenues for each route operated by aDistrict as record by the GFI system. Estimated revenues consist of cash collected on a route, plusthe impact of estimated revenues related to passes and tickets used on that same route.

(2) This revenue/expense line item is allocated to the District in which such services are provided, andthen on the basis of the District's pro-rata share of service hours and service miles. Each District'sallocation percentage is calculated using the following formula:

(District svc. HoursrTotal svc. Hours) + (District svc. Miles/Total svc. Miles)2

(3)

(4)

(5)

BART transfer revenue is allocated on the basis of each District's pro-rata share of fare box revenuesas calculated under(1) above.

Actual operator pay per the general ledger is allocated to each District based on its prorate share ofscheduled operator pay as recorded by the OTS 370 report.

State transit assistance revenues are allocated to each District based on its pro-rata share of"qualifying revenues", which are defined by the District to include the following: property taxes.Measure VV revenues, Measure B revenues, Measure BB revenues, Measure J revenues, fare boxrevenues, contract services, and Dumbarton reimbursement Revenues.

(6) Interest income is allocated to each District based on its pro-rata share of total revenues andsubsidies, excluding interest income.

(7) Property taxes are allocated to each District on the basis of actual revenue as reported to the Districtby Alameda and Contra Costa County.

l8) ADA paratran$it subsidies are expenses that are allocated to each District based on its prorate shareof ridership as reported to the District by its paratransit contractor.

(9) Interest expense is allocated to each District based on its pro-rata share of total expenses, excludinginterest expense.

(lO) Allocation of this revenue or expenses line item is not necessary as it is associated solely with asingle District.

(1 1) Measure B revenues were allocated between the Districts using two different methodologies. For theformer Measure B, revenues are allocated using the formula in (2) above. Subsequent to May 31 .2002. Measure B revenues are based on the revised legislation, which allocates a specific portion ofthe total revenues received from each District.

(12) TDA revenues are allocated to each District on the basis of actual revenues as reported to the Districtby the Metropolitan Transportation Commission.

(13) Fringe benefits and pension expenses are allocated using the sum of each District's pro-rata shareof operator's wages and other wages divided by the sum of total operator wages and other wages.

(14) This revenue or expense line item is allocated to the District in which such services are provided, orif District wide, using methodology (2) above.

(15) Allocation of this revenue line item is based upon the allocation percentage approved by the District'sBoard of Directors.

5

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DRAFTSR18-285Attachment 9

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SINGLEAUDIT REPORTJune 30,2018

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SINGLEAUDIT REPORTJune 30,2018

TABLEOFCONTENTS

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATrERSBASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWKH GOVERNMENTAUDiTING STANDARDS l

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACHMAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVERCOMPLIANCE: AND REPORT ON THE SCHEDULE OF EXPENDITURESOF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE 3

5

6

7

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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DRAFT

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLOVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOvERNMENTAUD/T/NG STANDARDS

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

We have audited, in accordance with the auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government 4ud/r/ng Standardsissued by the Comptroller General of the United States, the financial statements of the business-typeactivities and fiduciary activities of Alameda-Contra Costa Transit District (the District), as of and for theyear ended June 30, 201 8, and the related notes to the financial statements, which collectively comprisethe District's basic financial statements, and have issued our report thereon dated <>, 2018. Our reportincludes a reference to other auditors who audited the financial statements of the AC Transit Pension TrustFund, as described in our report on the District's financial statements. The financial statements of the ACTransit Pension Trust Fund were not audited in accordance with Government .4ud/ling Standards.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements. we considered the District's internal controlover financial reporting (internal control) to determine the audit procedures that are appropriate in thecircumstances for the purpose of expressing our opinions on the financial statements, but not for thepurpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we donot express an opinion on the effectiveness of the District's internal control.

A de/lcier?cy in interns/ confro/ exists when the design or operation of a control does not allow managementor employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A mater;a/ weakness is a deficiency, or a combination of deficiencies, ininternal control. such that there is a reasonable possibility that a material misstatement of the entity'sfinancial statements will not be prevented, or detected and corrected on a timely basis. A sign/ffcanfde#c/fancy is a deficiency, or a combination of deficiencies, in internal control that is less severe than amaterial weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of thissection and was not designed to identify all deficiencies in internal control that might be materialweaknesses or significant deficiencies. Given these limitations, during our audit we did not identify anydeficiencies in internal control that we consider to be material weaknesses. However, material weaknessesmay exist that have not been identified.

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DRAFTCompliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts. and grant agreements, noncompliance with which could have a direct and material effect on thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly. we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required to bereported under Government .4ud/f;ng Standards .

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing. and not to provide an opinion on the effectivenessof the entity's internal control or on compliance. This report is an integral part of an audit performed inaccordance with Govern?ment .4ud/f;ng Standards in considering the entity's internal control andcompliance. Accordingly, this communication is not suitable for any other purpose.

Crowe LLP

San Francisco. California<$. 2018

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DRAFT

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERALPROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE;AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL

AWARDS REQUIRED BY THE UNIFORM GUIDANCE

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

Report on Compliance for Each Major Federal Program

We have audited Alameda-Contra Costa Transit District's (the District's) compliance with the types ofcompliance requirements described in the O/14B Comp/;ance Sapp/emenf that could have a direct andmaterial effect on each of the District's major federal programs for the year ended June 30. 2018. TheDistrict's major federal programs are identified in the summary of auditor's results section of theaccompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditionsof its federal awards applicable to its federal programs.

Auditor'sResponsibility

Our responsibility is to express an opinion on compliance for each of the District's major federal programsbased on our audit of the types of compliance requirements referred to above. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States of America; thestandards applicable to financial audits contained in Government .4ud/f;r?g Standards, issued by theComptroller General of the United Statest and the audit requirements of Title 2 U.S. Code of Fbdera/Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements forFedora/,Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan andperform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major federalprogram occurred. An audit includes examining. on a test basis. evidence about the District's compliancewith those requirements and performing such other procedures as we considered necessary in thecircumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federalprogram. However, our audit does not provide a legal determination of the District's compliance.

Opinion on Each Major Federal Program

In our opinion, the District complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on each of its major federal programs for theyearended June 30,2018.

3

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DRAFTReport on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and perf orming ouraudit of compliance, we considered the District's internal control over compliance with the types ofrequirements that could have a direct and material effect on each major federal program to determine theauditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion oncompliance for each major federal program and to test and report on internal control over compliance inaccordance with the Uniform Guidance, but not for the purpose of expressing an opinion on theeffectiveness of internal control over compliance. Accordingly, we do not express an opinion on theeffectiveness of the District's internal control over compliance.

A de#c/eDGy h hferna/ confro/ over comp/lance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions. to prevent, or detect and correct, noncompliance with a type of compliance requirement of afederal program on a timely basis. A malaria/ weakness in inferno/ confro/ over comp/lance is a deficiency.or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibilitythat material noncompliance with a type of compliance requirement of a federal program will not beprevented, or detected and corrected, on a timely basis. A sfgnf#canf demo/fancy ir7 ;r7ferna/ confro/ overcomp/lance is a deficiency, or a combination of deficiencies, in internal control over compliance with a typeof compliance requirement of a federal program that is less severe than a material weakness in internalcontrol over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control over compliancethat might be material weaknesses or significant deficiencies. We dld not identify any deficiencies in internalcontrol over compliance that we consider to be material weaknesses. However, material weaknesses mayexist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testingof internal control over compliance and the results of that testing based on the requirements of the UniformGuidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of the business-type activities and the fiduciary activities ofAlameda-Contra Costa Transit District as of and for the year ended June 30, 201 8, and the related notesto the financial statements. which collectively comprise the District's basic financial statements. We issuedour report thereon dated <>. 201 8, which contained unmodified opinions on those financial statements. Ouraudit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the basic financial statements. The accompanying schedule of expenditures of federal awards ispresented for purposes of additional analysis as required by the Uniform Guidance and is not a requiredpart of the basic financialstatements. Such information is the responsibility of management and was derivedfrom and relates directly to the underlying accounting and other records used to prepare the basic financialstatements. The information has been subjected to the auditing procedures applied in the audit of thefinancial statements and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare the basic financialstatements or to the basic financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In our opinion. the schedule ofexpenditures of federal awards is fairly stated in all material respects in relation to the basic financialstatements as a whole.

San Francisco, California<>, 2018

Crowe LLP

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor The Year Ended June 30, 201 8

jln Thousands)

FederalCFDA

NumberGrant

Number

Total PassedProgram Federal Through toAward Expenditures SubrecipientsProgram DescriptiQD

U .S. Department of TransportationFederal Transit Cluster:

General capital assistanceFederal transit capital improvement grants

Capital improvement 20.500Capital improvement 20.500Capital improvement 20.500Capital improvement 20.500

Subtotal

CA-03-X798CA-04-01 89CA-04-0263CA-04-0264

40.12512.0997.500

25.00084,724

5.623628

591.6507.960

\

Federal transit formula grants(urbanizedarea formula program)

Subtota 91.300 3Q.ISO

General operating assistanceOperating(Federal passthrough)Operating(Federal passthrough)Operating(Federal passthrough)Operating (ADA set aside)Operating(Paratransit lease)Operating (ADA set aside)

2,128864

1.607

999

Subtotal 32.794

208.818

240

l0.624

48.734

48

Total Federal Transit Cluster

New Freedom Program 20.521 CA-57-XI I I

Capital Assistance Program for ReducingEnergy Consumption and GreenhouseGas Emissions 20.523 CA-88-XOOI 6.000 88

Total Federal Awards

See accompanying notes to the schedule of expenditures of federal awards

5

Capital assistance   20.507 OA-26-0064 1.552 84

Capital assistance   20.507 CA-90-Y41 0 1.974 558

Capital assistance   20.507 CA-90-Z058 l0,727 1.527Capital assistance   20.507 CA-90-ZI 53 49.824 22.406Capital assistance   20.507 CA-90-Z248 B.568 1,226Capital assistance   20.507 CA-90-9005 8.471 2.076

Capitalassistance   20.507 CA-95-X253 1,803 180

Capitalassistance   20.507 CA-95-X335 3,381 2,081

Capitalassistance   20.507 CA-95-ZOI O 5.000 12

20.500 CA-03-0798 9.875 2.12820.500 CA-04-0264 6.527 86420.507 CA-95-X335 l0.387 1.60720.507 CA-201 7-04 1.169 1.16920.507 CA-201 7-04 3,857 3,85720.507 CA-90-9005 979 999

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor The Year Ended June 30, 2018

NOTE 1 - REPORTING ENTITY

The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awardsfor the Alameda-Contra Costa Transit District (the District) and its component units as disclosed in the notesto the basic financial statements for the year ended June 30. 2018. The information in this Schedule ispresented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200.Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the District.It is not intended to and does not present the financial position, changes in net position. or cash flows of theDistrictS C

NOTE 2 - BASIS OF ACCOUNTING

Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accountsand reported in the financial statements, regardless of the measurement focus applied. All proprietary fundsare accounted for using the accrual basis of accounting. Expenditures of Federal Awards reported on theSchedule are recognized when incurred.

The District has elected not to use the 1 0-percent de minimis indirect cost rate as allowed under the UniformGuidance.

Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87.Cost Proc/p/es for Slate, Local and /nd/an Ir;6a/ Govern?ments or the cost principles contained in Title 2U.S. Code of Federal Regulations Part 200. Uniform ,4dmir7;sfraf/ve f?equiemenfs. Cost Prince/es, and,4ud/f Requirements for Fbdera/ .Awards. wherein certain types of expenditures are not allowable or arelimited as to reimbursement.

NOTE 3 DIRECT AND INDIRECT(PASS-THROUGH) FEDERAL AWARDS

Federal awards may be granted directly to the District by a federal granting agency or may be granted toother government agencies which pass-through federal awards to the District. The Schedule includes bothof these types of Federal award programs when they occur.

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DRAFTALAMEDA-CONTRA COSTA TRANSIT DISTRICT

SCHEDULE OF FINDINGS AND QUESTIONED COSTSFor The Year Ended June 30, 201 8

SECTION 1- SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issued on whether thefinancial statements audited were preparedin accordance with GAAP:

Internal control over financial reporting:Material weakness(es) identified?

Significant deficiency(ies) identified?

Noncompliance material to financial statements noted?

Federal A wards

Internal control over major programs:Material weakness(es) identified?

Significant deficiency(ies) identifi ed?

Type of auditors' report issued on compliance formajor programs:

Any audit findings disclosed that are required to beReported in accordance with 2 CFR 200.516(a)?

Identification of major programs:

CFDA Number

20.500/20.507

Dollar threshold used to distinguish between type Aand type B programs:

Auditee qualified as low-risk auditee?

Unmodified

Yes

Yes

Yes

X No

.X. reported

X No

Yes

Yes

X No

X None reported

Unmodified

Yes X No

Name of Federal Program of Cluster

Federal Transit Cluster

$ 1.466.125

X Yes No

SECTION ll - FINANCIAL STATEMENT FINDINGS

None noted.

SECTION 111- FEDERAL AW ARD FINDINGS AND QUESTIONED COSTS

None noted.

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SR18-285Attachment 1 0

DRAFT

NDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE STATE OF CALIFORNIATRANSPORTATION DEVELOPMENT ACT QOA) AND RULES AND

REGULATIONS OF THE PUBLIC TRANSPORTATION MODERNIZATIONIMPROVEMENT AND SERVICE ENHANCEMENT ACCOUNT(PTMISEA) AND

REPORT ON INTERNAL CONTROL OVER COMPLIANCE

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

Report on Compliance with State of California Transportation Development Act and PublicTransportation Modernization, Improvement and Service Enhancement Account Guidelines

We have audited Alameda-Contra Costa Transit District's(District) compliance with the types of compliancerequirements described in the Transportation Development Act (TDAI Conformance Auditing Guide andthe Public Transportation Modernization, Improvement, and Service Enhancement Account (PTMISEA)Guidelines adopted by the California Department of Transportation, that could have a direct and materialeffect on the District's compliance with the TDA Guide and PTMISEA Guidelines for the year ended June30 2018

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulationsconditions of its awards applicable to the TDA Guide and PTMISEA Guidelines.

and the terms and

A uditor's Responsibility

Our responsibility is to express an opinion on compliance for the District's TDA and PTMISEA programbased on our audit of the types of compliance requirements referred to above. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States of American thestandards applicable to financial audits contained in Government Aud/flag Standards, issued by theComptroller General of the United Statesl the TDA Guided and the PTMISEA Guidelines. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether noncompliancewith the types of compliance requirements referred to above that could have a direct and material effect onthe TDA and PTMISEA programs occurred. An audit includes examining. on a test basis, evidence aboutthe District's compliance with those requirements and performing such other procedures as we considerednecessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the TDA andPTMISEA programs. However. our audit does not provide a legal determination of the District's compliance.

Opinion on the TDA and PTMISEA Compliance

In our opinion, the District complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on the TDA and PTMISEA programs for theyear ended June 30,2018.

(Continued)

l

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DRAFTReport on Internal Control over Compliance

Management of the District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing ouraudit of compliance, we considered the District's internal control over compliance with the types ofrequirements that could have a direct and material effect on the TDA and PTMISEA programs to determinethe auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinionon compliance on the TDA and PTMISEA programs and to test and report on internal control overcompliance in accordance with the TDA and PTMISEA programs, but not for the purpose of expressing anopinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinionon the effectiveness of the District's internal control over compliance.

A deNG;ence h ir7ferna/ confro/ over comp/lance exists when the design or operation of a control overcompliance does not allow management or employees. in the normal course of performing their assignedfunctions, to prevent, or detect and correct. noncompliance with a type of compliance requirement of a TDAor PTMISEA program on a timely basis. A materia/ weakr7ess h fnferna/ confro/ over comp/lance is adeficiency. or combination of deficiencies, in internal control over compliance. such that there is areasonable possibility that material noncompliance with a type of compliance requirement of the TDA andPTMISEA programs will not be prevented. or detected and corrected. on a timely basis. A s©n/#canfde#c/er7cy in lnferna/ confro/ over comp//ance is a deficiency, or a combination of deficiencies. in internalcontrol over compliance with a type of compliance requirement of the TDA and PTMISEA programs that isless severe than a material weakness in internal control over compliance. yet important enough to meritattention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify alldeficiencies in internal controlover compliancethat might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internalcontrol over compliance that we consider to be material weaknesses. However, material weaknesses mayexist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testingof internal control over compliance and the results of that testing based on the requirements of the TDAGuide and PTMISEA Guidelines. Accordingly, this report is not suitable for any other purpose.

Crowe LLP

San Francisco. California<>. 2018

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SR18-285Attachment I I

DRAFT

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

In planning and performing our audit of the financial statements of Alameda-Contra Costa Transit District("the District ') as of and for the year ended June 30. 201 8. in accordance with auditing standards generallyaccepted in the United States of America and GovernmentAud/fAg Standards, we considered the District'sinternal control over financial reporting ('internal control ') as a basis for designing our auditing proceduresfor the purpose of expressing our opinion on the financial statements, but not for the purpose of expressingan opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinionon the effectiveness of the District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow managementor employees, in the normal course of performing their assigned functions, to prevent. or detect and correctmisstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, ininternal control. such that there is a reasonable possibility that a material misstatement of the entity'sfinancial statements will not be prevented. or detected and corrected on a timely basis.

Our consideration of internal control was for the limited purpose described in the first paragraph and wasnot designed to identify all deficiencies in internal control that might be significant deficiencies or materialweaknesses and therefore. there can be no assurance that all deficiencies, significant deficiencies, ormaterial weaknesses have been identified. We did not identify any deficiencies in internal control that weconsider to be material weaknesses, as defined above.

The purpose of this letter is solely to describe the scope of our testing of internal control over financialreporting. and the results of that testing. and not to provide an opinion on the effectiveness of the District'sinternal control over financial reporting. This letter is an integral part of an audit performed in accordancewith Goverr7menf 4ud/ring Standards in considering the District's internal control over financial reporting.Accordingly, this letter is not suitable for any other purpose.

Crowe LLP

San Francisco. California<S. 2018

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SR 18-285Attachment 1 2

DRAFT

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH RULES ANDREGULATIONS OF THE LOW CARBON TRANSIT OPERATIONS PROGRAM (LCTOP) AND

REPORT ON INTERNAL CONTROL OVER COMPLIANCE

Board of DirectorsAlameda-Contra Costa Transit DistrictOakland, California

Report on Compliance with Low Carbon Transit Operations Program Guidelines

We have audited Alameda-Contra Costa Transit District's(District) compliance with the types of compliancerequirements described in the Low Carbon Transit Operations Program (LCTOP) Guidelines adopted bythe California Department of Transportation, that could have a direct and material effect on the District'scompliance with the LCTOP Guidelines for the year ended June 30, 201 8.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, and the terms andconditions of its awards applicable to the LCTOP Guidelines.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for the District's LCTOP program based on ouraudit of the types of compliance requirements referred to above. We conducted our audit of compliance inaccordance with auditing standards generally accepted in the United States of American the standardsapplicable to financial audits contained in Government 4udithg Sfar7dards, issued by the ComptrollerGeneral of the United Statesl and the LCTOP Guidelines. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on the LCTOPprogram occurred. An audit includes examining, on a test basis, evidence about the District's compliancewith those requirements and performing such other procedures as we considered necessary in thecircumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the LCTOPprogram. However, our audit does not provide a legal determination of the District's compliance

Opinion on the LCTOP Guidelines

In our opinion. the District complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on the LCTOP program for the year endedJune 30.2018.

(Continued)

l

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DRAFTReport on Internal Control over Compliance

Management of the District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing ouraudit of compliance. we considered the District's internal control over compliance with the types ofrequirements that could have a direct and material effect on the LCTOP program to determine the auditingprocedures that are appropriate in the circumstances for the purpose of expressing an opinion oncompliance on the LCTOP program and to test and report on internal control over compliance in accordancewith the LCTOP program, but not for the purpose of expressing an opinion on the effectiveness of internalcontrol over compliance. Accordingly, we do not express an opinion on the effectiveness of the District'sinternal control over compliance.

A de#c/fancy in fnferna/ confro/ over comp/lance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of aLCTOP program on a timely basis. A mater/a/ weakness h hferna/ conrro/ over comp/lance is a deficiency,or combination of deficiencies. in internal control over compliance. such that there is a reasonable possibilitythat material noncompliance with a type of compliance requirement of the LCTOP program will not beprevented. or detected and corrected, on a timely basis. A s©nncanf de#c;envy in hferr7a/ confro/ overcomp/;ance is a deficiency. or a combination of deficiencies, in internal control over compliance with a typeof compliance requirement of the LCTOP program that is less severe than a material weakness in internalcontrol over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify alldeficiencies in internal control over compliancethat might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internalcontrol over compliance that we consider to be material weaknesses. However. material weaknesses mayexist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testingof internal control over compliance and the results of that testing based on the requirements of the LCTOPGuidelines. Accordingly. this report is not suitable for any other purpose.

Crowe LLP

San Francisco. California<>, 2018

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