Island Transit Chief Martha Rose was aware of the transportation agency’s building fiscal crisis for years, and ignored repeated warnings, according to the department’s former finance manager.

Barbara Savary, the bookkeeper Rose has publicly blamed for the funding fiasco, fired back against the allegations with a formal letter to Island Transit’s Board of Directors last week. It tells a very different story of what happened, alleging that Savary warned Rose of the problem on multiple occasions over a period of years and that her concerns went unheeded until the situation became “critical” in 2012.

“I am saddened that Ms. Rose has opted to publish false statements … in what is apparently a desperate attempt to retain her own job,” Savary wrote. “I’m truly sorry it has come to this, but I cannot silently accept blame when it is not due.”

Savary’s letter is in response to statements Rose made in June that she fired Savary after it became clear the agency didn’t have enough money to pay its bills. Staffing and service cuts have followed.

Rose claimed in a previous interview with the South Whidbey Record that Savary did not properly communicate the agency’s money troubles and had been dipping into investment reserves secretly to cover expenses.

But according to Savary, who could not be reached for direct comment, that “is patently false.”

“Over the course of the last few years, I became increasingly uncomfortable with decisions made at Island Transit and the effect these decisions were having on the budget,” wrote Savary, in the letter to the board. “I repeatedly informed her that changes and cuts needed to be implemented to avoid the exact situation that now befalls Island Transit.”

As a result, Savary was already “looking for other opportunities” when the budget shortfall became public.

Rose also was aware the agency was using investment reserves to cover expenses, according to Savary.

Island Transit obtained an $18 million federal grant for the new facility that was completed this year, and needed to come up with $4.4 million in matching funds.

Savary claims that only about $1 million of the original $6.2 million was used to cover budgetary shortcomings, with another $5 million that she claims was used to finish the new transit facility and purchase new vehicles.

“These expenditures were published in the budget and approved by Ms. Rose,” Savary wrote. “I explained to Ms. Rose that without a change in practices, our reserves would be completely depleted by May 2013.”

Island Transit’s investments were at zero as of July and Island Transit had to obtain a $1.5 million bond to raise the necessary match plus $800,000 for operating costs.

In her letter, Savary said Rose initially asked her to take a demotion but Savary decided instead to give a two-week notice.

During her last two weeks, Savary claims that Rose asked her to stay on, but that she declined. Then before the completion of her final two weeks, Savary claims she was handed a termination letter by Rose and was denied accrued vacation pay.

Savary also countered Rose’s claim that she had left unpaid bills in her desk after her departure.

“There is no basis for making this statement,” Savary wrote. “I have never knowingly put invoices in my desk. Following my departure, I was contacted on several occasions by Island Transit staff for assistance on various issues. Never once was I asked about invoices found in my desk.”

Rose “created liability” for Island Transit when she made false statements, Savary wrote. For that reason, Savary said she has consulted with lawyers but did not indicate if she plans to sue the agency.

Lydia Ferguson, who drove a bus for Island Transit for 15 years until April, said she has a hard time believing that Rose wasn’t aware of the agency’s finances.

“There was nothing, not one penny, that Martha didn’t know about,” Ferguson said. “She was very much in control of everything and anything that happened at Island Transit.”

Ferguson, an Oak Harbor resident for 25 years, said she left Island Transit of her own choice, but experienced some health issues and was using her Family Medical Leave Act time prior to deciding not to return. Ferguson admits she wasn’t super close with most of the office staff, but she saw and heard what was going on.

“I simply don’t understand how she can say that she wasn’t aware,” Ferguson said. “It was Martha’s way or the highway.”

Ferguson added that she honestly believes Rose’s intentions were good and that she is committed to Island Transit, but that hubris may have gotten in her way.

“I think her heart’s in the right place,” Ferguson said. “She just wanted so much for it she forgot about what’s right and wrong.”

Island County Commissioner Helen Price Johnson, who also serves on the transit board, said she has been advised by legal counsel not to comment on the “possible litigation” in reference to Savary’s letter.

However, Price Johnson maintains that finding out what happened is important and looks forward to the results of the audit.

“My main focus is moving forward—correcting the structural deficiencies, restoring Island Transit’s fiscal health and preserving this vital service for our community,”  Price Johnson said via email.

Rose said Tuesday that she had not seen Savary’s letter and had no comment.

Island Transit, with a $12 million operating budget, is an independent agency overseen by a board of directors. It offers fare-free transit and is funded by a nine-tenths of 1 percent sales tax and grants.