Island Transit will hire an outside consultant to conduct a study on whether it makes sense to charge fares on buses.

When that study will happen and how it will be funded are still open questions, but members of the transit board made it clear at a special meeting Friday that the study will happen.

“I think the community deserves to have this study,” said Island County Commissioner Helen Price Johnson, a member of the transit board.

Price Johnson requested the special meeting in order to discuss the ongoing financial problems that forced the agency to take out loans, cut routes and lay off employees. She is going to be absent from the regular meeting next Friday.

Board members and Director Martha Rose briefly discussed the state audit. Rose explained that she and staff members have been scrambling to find all the necessary paperwork for state auditors, who are doing an accountability audit. Transit board Chairman Bob Clay said he authorized the state auditors to spend an extra 100 hours on the accountability audit to get to the bottom of the unforeseen financial problems; it will cost Island Transit an extra $8,400.

Thomas Shapley, spokesman for the state Auditor’s Office, said he expects the audit report to be completed in mid-October.

The board also decided to have monthly workshops, in additional to regular meetings, for the rest of the year. They created a new finance subcommittee and appointed Island County Commissioner Aubrey Vaughan and Langley City Councilman Jim Sundberg to serve on the new body.

Oak Harbor Mayor Scott Dudley addressed the board, saying Oak Harbor City Councilman Jim Campbell, the council representative appointed to Island Transit’s board, will be on vacation for six weeks. He asked if the city could have an alternate because the city wants representation on the board; the board said staff would research the legal issues and work with the mayor.

The board went into executive session at the end of the meeting to discuss potential litigation and the performance of a public employee. Director Martha Rose has come under fire for her role in the financial mismanagement.

Rose earns $118,000 a year and has been with Island Transit for 26 years.

The meeting became tense when the board discussed new financial statements that Rose presented. She said the budget numbers on one report weren’t accurate at this point, but she was presenting them just to show the board the format.

The board, nevertheless, was upset. They questioned why the budget would show a $1.2-million deficit and why the numbers weren’t accurate. Both Price Johnson and Coupeville Councilman Bob Clay, also a member of the board, said they didn’t approve a budget with a $1.2-million deficit.

Rose countered that they did, in fact. Price Johnson and Clay looked confused.

Rose said the budget that was passed called for the agency to spend its $1.2 million reserve account on the facility project. The problem, she said, was that another $1.2 million — which wasn’t there — were also being spent on operations, “unbeknownst” to her and board members.

Rose maintains the former finance manager wasn’t doing a monthly cash-flow analysis that she was supposed to be doing. She said she relied on the finance manager, who has since been fired, to come to her if there were cash-flow problems.

“My mistake was trusting the finance manager,” she said, earning groans from the audience.

Price Johnson said she appreciated that the financial statements now clearly separate capital costs and operation costs.

“It’s one of the issues that led to the problem,” she said. “The differences weren’t clearly defined between the two.”

In discussing operations, both Price Johnson and Vaughan stressed the toll the service cuts have had on families and paratransit riders, especially on South Whidbey.

Rose explained all the agency is doing to help individuals. She’s making sure, for example, that dialysis patients are getting the transportation they need because of the critical nature of their situations.

Rose said staff members are working on restructuring all the routes in order to fill as many gaps as possible. She said the changes must be vetted by the public, so she doesn’t expect anything new for three months.

Price Johnson urged her to make smaller or temporary changes as quickly as possible to help those in need.

As for the study, Rose suggested that the agency hire an outside consultant to review whether it makes financial sense to charge fares on buses. Island Transit has famously been fare free; in the past, Rose insisted that it didn’t make financial sense to collect money because of the cost of training and infrastructure, as well as the loss of ridership.

The issue, however, resurfaced in the community after the fiscal mess made headlines.

Rose said she plans to apply for a grant to fund the study, though it would require matching funds from the struggling agency. She estimated the cost at $75,000.

Price Johnson insisted that the study should be done, even if it means waiting until Island Transit’s books are in order. The agency will pay off its loan, which board members took out to cover operating costs, next June. At that point, Island Transit should be on stronger financial footing.

In fact, Rose said she hopes to bring back Saturday bus service next summer.