The challenges facing Island Transit go beyond the financial mess that came to light last summer.

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

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

Nevertheless, he said the agency is getting back on track and he’s optimistic about the future. He said Island Transit has what it needs to succeed: a skilled and committed staff, a vigilant board, a fantastic facility and a community with a long history of supporting transit.

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

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

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

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

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

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

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

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

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

Graska said he’s working on addressing both inter-related problems. He said some of the buses and support vehicles in the lot of the aging fleet are so old that they are broken down, not needed or otherwise unusable.

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

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

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

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

Graska hypothesized that the fleet was allowed to age because the former management was focused on building the new facility on Highway 20. The federal dollars went towards the building instead of buses, he said.

“The operation grew too fast,” he said.

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

Graska said it’s a priority for the agency to continue the connector bus service into Skagit County from Whidbey Island, but he concedes that it’s likely to depend on the state. He said the agency may be able to eke out a “skeletal service” after state funding dries up, but he questions whether it would be useful to riders.

As it stands now, the route is scheduled to end this summer.

Graska said he’s waiting to hear back from the federal government as to whether the agency will have to pay back grant funds used to fund three gazebos at the new facility and to purchase a landscaping tractor. The state Auditor’s Office questioned whether it was an allowed use of federal grant dollars.

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

Still, Graska said the agency will need to hold public meetings, do community outreach and study the financial implications before any change should be made.

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

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

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