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United States Government Accountability Office:
GAO: 

Report to the Committee on Banking, Housing, and Urban Affairs, U.S. 
Senate: 

November 2010: 

Federal Transit Programs: 

Federal Transit Administration Has Opportunities to Improve 
Performance Accountability: 

GAO-11-54: 

GAO Highlights: 

Highlights of GAO-11-54, a report to the Committee on Banking, 
Housing, and Urban Affairs, U.S. Senate. 

Why GAO Did This Study: 

Public demand and federal funding for transit have grown in recent 
years, yet most of this funding is not tied to performance. As 
Congress prepares for reauthorization of the federal surface 
transportation programs, GAO was asked to report on (1) the extent to 
which federal transit programs use performance information in making 
decisions about funding distribution and in evaluating the programs’ 
effectiveness; (2) mechanisms for making these programs more 
performance based, and strategies for supporting their successful 
implementation; and (3) how selected U.S. and foreign transit agencies 
have used performance measurement in their planning and decisions, and 
their views on the federal role in transit. To do so, GAO analyzed 
legislation, federal documents, and literature; interviewed federal 
officials and transit experts; and conducted semistructured interviews 
with selected transit agencies using criteria that, for U.S. agencies, 
covered a variety of regions and population sizes and, for foreign 
agencies, multiple transit modes and English language capability. 

What GAO Found: 

Some federal transit programs distribute funds based partly on 
performance, but opportunities to improve grant recipients’ 
performance accountability remain. Of the eight transit programs GAO 
reviewed-—which represent 97 percent of total federal transit grants 
in fiscal year 2010 (excluding funds provided under the American 
Recovery and Reinvestment Act)—-two are generally funded by 
congressional direction, while the remaining six are funded through 
legislatively defined grant formulas. Federal funding for the two 
nonformula programs GAO reviewed—the New Starts Program and the Bus 
and Bus Related Equipment and Facilities Program—is awarded in part 
according to performance. A small percentage of federal transit 
funding for the six formula programs is apportioned based on 
performance—according to GAO’s analysis, about 5 percent, on average, 
of fiscal year 2010 funding. FTA does not, in general, analyze fully 
or use the performance data it collects from transit agencies to 
evaluate the effectiveness of its transit grant programs; thus, FTA is 
missing a valuable opportunity to evaluate the end results of its 
program activities and programs’ funding formulas. 

GAO identified three performance accountability mechanisms for making 
federal transit programs more performance based, including providing 
financial rewards or penalties/sanctions, increasing or decreasing 
program flexibility as a performance incentive, and recognizing 
entities that achieve certain performance goals. These mechanisms have 
both potential advantages—most notably, they can encourage improved 
performance and help agencies make sound decisions when allocating 
limited funds—and potential disadvantages that can produce inequitable 
results or burden transit agencies with requirements to gather, 
maintain, and analyze data. GAO also identified several key strategies 
that can support the use of these mechanisms and mitigate their 
disadvantages, such as ensuring that mechanisms are of sufficient 
value and that appropriate measures are selected, among others. 
However, without FTA analysis of the appropriateness, feasibility, and 
potential impact of using various transit performance mechanisms, 
Congress may lack information to determine whether and how these 
mechanisms could be used to make transit funding more performance 
based as it prepares for the upcoming surface transportation 
reauthorization. 

Transit agencies that GAO interviewed use performance measurement to 
varying degrees, but they face challenges in linking performance with 
planning and decision making. All of these agencies measure 
performance in certain categories, such as ridership and on-time 
performance, but the extent to which they measure it in others—such as 
environmental impact, energy usage, and economic development—varies 
widely. Transit agency officials reported that measuring performance 
presents challenges, in part because it can be difficult to obtain 
relevant data and develop a sound methodology. They also said that 
linking performance to planning and decision making is challenging 
because of either limited funding or political priorities. These 
transit agencies and other experts suggested a variety of changes to 
the federal role in transit, including increasing investment in 
existing transit infrastructure; developing federal transit program 
goals that generally address broader issues, such as encouraging a 
shift from automobiles to public transit; and promoting livable 
communities around transit systems. 

What GAO Recommends: 

The Federal Transit Administration (FTA) should (1) report to Congress 
on options for adding performance accountability mechanisms to transit 
programs to ensure efficient and effective federal transit programs 
and (2) further analyze and use transit agency data, when applicable, 
for evaluating federal transit program performance. DOT reviewed a 
draft of this report, provided technical clarifications, and said it 
would consider our recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-11-54] or key 
components. For more information, contact David J. Wise at (202) 512-
2384 or wised@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Some Federal Transit Programs Distribute Funds Based Partly on 
Performance, but Opportunities to Improve Grant Recipients' 
Performance Accountability Remain: 

Performance Accountability Mechanisms Can Improve Performance of 
Transit Agencies, and although They Potentially Present Disadvantages, 
Most of These Can Be Mitigated by Following Key Strategies: 

Selected Transit Agencies Use Performance Measurement to Varying 
Degrees and See a Role for the Federal Government in Transit but Cited 
Challenges in Linking Performance with Planning and Decision Making: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Fiscal Year 2010 Apportionment Factors and Average Percentage 
of Funding Based on Performance for FTA Formula Transit Programs: 

Table 2: Types and Descriptions of Financial Mechanisms, Their 
Potential Advantages, and Examples of Use: 

Table 3: Type and Description of Nonfinancial Mechanisms, Their 
Potential Advantages, and Examples of Use: 

Table 4: Disadvantages of Performance Accountability Mechanisms and 
How Key Strategies Can Help Overcome Them: 

Table 5: Categories Where Performance Is Measured or Studied--Transit 
Agency Responses: 

Table 6: Transit Agencies Interviewed for GAO's Analysis: 

Abbreviations: 

APTA: American Public Transportation Association: 

FTA: Federal Transit Administration: 

DOT: Department of Transportation: 

GPRA: Government Performance and Results Act of 1993: 

HSIP: Highway Safety Improvement Plan: 

JARC: Job Access and Reverse Commute: 

MPO: metropolitan planning organization: 

NHTSA: National Highway Traffic Safety Administration: 

NTD: National Transit Database: 

OVAE: Office of Vocational and Adult Education: 

POP: Program of Projects: 

SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users: 

STIC: Small Transit Intensive Cities: 

TRB: Transportation Review Board: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

November 17, 2010: 

The Honorable Christopher J. Dodd:
Chairman:
The Honorable Richard C. Shelby:
Ranking Member:
Committee on Banking, Housing, and Urban Affairs:
United States Senate: 

Public transit systems provide an important source of mobility for 
many Americans while also helping to alleviate traffic congestion and 
provide environmental benefits. From 1999 to 2009, ridership on 
transit systems in the United States grew nearly 16 percent to reach 
about 10.25 billion, and despite the recent economic recession, demand 
for public transit has remained near record levels, reaching a peak of 
10.4 billion passenger trips in 2008. Recent economic pressures have, 
however, contributed to flat or reduced funding for many transit 
agencies, as well as service cuts and higher fares.[Footnote 1] With 
demand for transit service near record levels, the federal investment 
in transit needs to be accompanied by strong performance 
accountability to ensure that funds are being used efficiently and 
effectively. We have previously raised concerns about the lack of 
performance accountability in federal transportation programs, 
including transit, and have called for steps to enhance the 
accountability of federal investments in transportation 
infrastructure.[Footnote 2] 

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: 
A Legacy for Users (SAFETEA-LU), enacted in August 2005, authorized 
over $286 billion for federal surface transportation programs from 
fiscal years 2005 through 2009, including more than $52 billion for 
federal transit programs, a 46 percent increase over the previous 
funding authorization for transit programs.[Footnote 3] The Surface 
Transportation Extension Act of 2010 extended the funding 
authorization for SAFETEA-LU programs through December 31, 2010. 
[Footnote 4] Congress and the administration are currently debating 
reauthorization of the entire surface transportation program, 
including transit programs. In preparation for this reauthorization, 
the Department of Transportation (DOT) recently conducted a series of 
"listening sessions" with key stakeholders and interested citizens to 
obtain their views. DOT plans to issue a detailed proposal for a 
surface transportation reauthorization bill in February 2011. 

While federal funding for transit has increased significantly in 
recent years, most of this spending is not explicitly linked to 
performance. In light of this, you asked us to examine ways to make 
federal transit programs more performance based. Accordingly, this 
report addresses the following questions: (1) To what extent do 
federal transit programs use performance information in making 
decisions about distributing funds and in evaluating the effectiveness 
of transit programs? (2) What mechanisms exist for making federal 
transit programs more performance based, including their potential 
advantages and disadvantages, and what strategies exist for supporting 
their successful implementation? (3) How have selected U.S. and 
foreign transit agencies incorporated performance measurement into 
their planning and decision making, and what are these agencies' views 
on the federal role in transit? 

To address the first objective, we reviewed 8 of the 18 federal 
transit programs. These 8 programs account for nearly 97 percent of 
all Federal Transit Administration (FTA) grant funds, excluding funds 
provided under the American Recovery and Reinvestment Act.[Footnote 5] 
We analyzed pertinent federal legislation and reports, including 
SAFETEA-LU, the Government Performance and Results Act of 1993 (GPRA), 
[Footnote 6] and FTA documents on grants programs that distribute 
transit funds. We interviewed FTA officials to determine the extent to 
which performance measurement/outcomes are factors in funding formulas 
and decisions. We also compared FTA's practices with performance 
system criteria found in GPRA, Transportation Research Board (TRB) 
reports, and other sources. To simulate incentive tier apportionments 
for formula programs, we analyzed FTA apportionment documents and 
National Transit Database (NTD) data. To address the second objective, 
we reviewed and synthesized literature--including GAO, FTA, TRB, and 
other transportation reports--and interviewed transit agency officials 
and industry experts to describe what mechanisms exist for making 
federal transit programs more performance based, the advantages and 
disadvantages of those mechanisms, and the strategies that exist for 
overcoming disadvantages. Finally, to describe how selected U.S. and 
foreign transit agencies incorporate performance measurement into 
their planning and decision making and their views on the federal role 
in transit, we conducted semistructured interviews with 10 U.S. 
transit agencies, selected to ensure geographic distribution and 
variation in the size of the population served, as well as 2 foreign 
transit agencies, selected, in part, based on the number of 
transportation modes offered by their system. The information we 
gathered from these agencies, however, cannot be generalized across 
all U.S. or foreign transit agencies. We also conducted interviews 
with industry experts to obtain their views on how transit agencies 
incorporate performance measurement into funding and strategic 
decisions. 

We conducted this performance audit from November 2009 through 
November 2010 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. See appendix I for more information about our scope and 
methodology. 

Background: 

Federal Transit Programs: 

Federal transit funds are distributed to recipients by formula, 
through specific designations within the legislation, or on a 
discretionary basis through individual grant programs. FTA administers 
its programs according to the programmatic framework for the nation's 
transportation infrastructure specified in SAFETEA-LU. FTA works in 
partnership with the states and other grant recipients to administer 
federal transit programs, providing financial assistance, policy 
direction, technical expertise, and some oversight. State and local 
governments are ultimately responsible for executing most federal 
transit programs by matching and distributing federal funds and by 
planning, selecting, and supervising infrastructure projects and 
safety programs--all in accordance with federal requirements. The 
eight federal transit programs we reviewed, which represent 97 percent 
of FTA's total fiscal year 2010 grant funds (excluding funds provided 
under the American Recovery and Reinvestment Act) and their respective 
goals are as follows: 

* The Urbanized Area Formula Grant Program makes funding available to 
urbanized areas and to states for public transportation capital 
projects and operating assistance for equipment and facilities in 
urbanized areas and for transportation-related planning.[Footnote 7] 
Funds are allocated based on a multitiered formula, which separates 
urban areas with populations under 200,000 from those with populations 
of 200,000 or more. Funds are first apportioned based on a formula 
provided in law to designated recipients (typically metropolitan 
planning organizations [MPO] or a state or regional authority that is 
responsible for capital projects and for financing and directly 
providing public transportation).[Footnote 8] Designated recipients 
allocate the apportionment among eligible transit service providers in 
the urbanized area, and then transit providers may submit grant 
applications to FTA.[Footnote 9] 

* The Nonurbanized Area Formula Grant Program provides funding to 
states and Indian tribes for the purpose of supporting public 
transportation capital projects and operating costs for equipment and 
facilities in rural areas with populations of less than 50,000. Funds 
are first apportioned to states and Indian tribes based on a formula 
provided in law, then states and Indian tribes may submit applications 
to FTA.[Footnote 10] Grant recipients may allocate funds to state or 
local governmental authorities, or an operator of public 
transportation or intercity bus service. 

* The Fixed-Guideway Modernization Program makes federal resources 
available for the purposes of modernizing or improving existing fixed- 
guideway systems.[Footnote 11] Funds are first apportioned to 
urbanized areas according to a seven-tier formula. Public transit 
entities (transit authorities and other state and local governmental 
authorities) in those urbanized areas to which the funds are 
apportioned may submit applications to FTA.[Footnote 12] 

* The Bus and Bus Related Equipment and Facilities Program provides 
capital assistance for new and replacement buses, related equipment, 
and facilities for expansion and maintenance purposes. The projects 
funded by this program are generally determined by Congress. Funds may 
be provided only to state and local governmental authorities. The Bus 
Testing Facility Program--which has a single facility for testing new 
bus models for maintainability, reliability, safety, performance, and 
other factors--is also administered under this program.[Footnote 13] 

* The New Starts Program provides funds for construction of new fixed- 
guideway systems or extensions to existing fixed-guideway systems. 
These grants are awarded for specific projects by congressional 
directive based on FTA recommendations. Funds may be provided only to 
state and local governmental authorities.[Footnote 14] 

* The New Freedom Program provides funding for capital and operating 
expenses for new public transportation services and alternatives 
beyond those required by the Americans with Disabilities Act of 1990 
that are designed to assist individuals with disabilities.[Footnote 
15] Funds are first apportioned to designated recipients and states 
based on a formula provided in law. Designated recipients and states 
to which funds have been apportioned may submit grant applications to 
FTA.[Footnote 16] The recipients of these grants, in cooperation with 
the MPO, are responsible for conducting an areawide competitive 
solicitation for grant applications from subrecipients (i.e.: state 
and local governmental authorities, private nonprofit organizations, 
or transit service operators).[Footnote 17] 

* The Job Access and Reverse Commute (JARC) Program provides funding 
for capital, planning, and operating expenses for projects that 
transport low-income individuals to and from jobs and activities 
related to employment and for reverse commute projects. Funds are 
first apportioned to designated recipients and states based on a 
formula provided in law. Designated recipients and states to which the 
funds have been apportioned may submit grant applications to FTA. 
[Footnote 18] The recipients of these grants, in cooperation with the 
MPO, are responsible for conducting an areawide competitive 
solicitation for grant applications from subrecipients (i.e.: state 
and local governmental authorities, private nonprofit organizations, 
or transit service operators).[Footnote 19] 

* The Special Needs of Elderly Individuals and Individuals with 
Disabilities Program provides funding to states for the purpose of 
assisting private nonprofit groups in meeting the transportation needs 
of elderly individuals and individuals with disabilities when current 
transportation services are unavailable, insufficient, or 
inappropriate for meeting these needs. Funds are first apportioned to 
states based on a formula administered by the Secretary of 
Transportation that considers the number of elderly individuals and 
individuals with disabilities in each state. States forward an annual 
Program of Projects (POP) and grant applications to FTA.[Footnote 20] 
States may allocate apportioned funds to a private nonprofit 
organization[Footnote 21] or a governmental authority.[Footnote 22] 

While most people in the United States travel by motor vehicle, demand 
for public transit continues to grow. According to the U.S. Census 
Bureau, the number of people who commute to work using public transit 
grew by about 1 million from 2005 to 2008 to reach approximately 7.21 
million persons. Annual federal, state, and local investment in 
transit grew nearly 77 percent between 1997 and 2006 to total almost 
$31 billion. During the recent economic recession, however, investment 
in transit did not keep pace with demand, according to the American 
Public Transportation Association (APTA), a leading industry 
organization. Moreover, according to a March 2010 survey conducted by 
APTA, because of the economic downturn, more than half of the 
country's largest transit agencies have recently cut service and/or 
raised fares and many are also facing budget shortfalls in 2011. 
[Footnote 23] 

Transit organizations vary widely in size from large systems with 
multiple modes of transportation, such as the New York City 
Metropolitan Transit Authority, to smaller organizations, including 
single-vehicle paratransit services.[Footnote 24] The governance 
structure for these organizations varies and includes, among others, 
entities that are units or departments of (1) city, county, or local 
governments; (2) state governments; (3) private for-profit 
corporations; and (4) university or college systems. 

Performance Accountability: 

Accountability for performance varies from grant program to grant 
program. For the purposes of this report, performance accountability 
is defined as the mechanisms by which individuals or organizations are 
held accountable for meeting specified performance-related 
expectations, such as goals. Performance measurement is the ongoing 
monitoring and reporting of program accomplishments, particularly 
progress toward established goals. In this report, we have focused on 
specific mechanisms that are meant to encourage performance--such as 
rewards given or penalties imposed. GPRA requires agencies 
governmentwide to establish agency and program goals and performance 
measures, and to report on their results in achieving those goals for 
all their program activities, including grant programs. Performance 
measures may address the type or level of program activities conducted 
(process-oriented measures), the direct products and services 
delivered by a program (output-oriented measures), and/or the results 
of those products and services (outcome-oriented measures). 
Performance information, for the purposes of this report, refers to 
data on performance resulting from performance measurement. To improve 
both grant performance and grantee performance accountability, 
Congress, granting agencies, and grantees can use performance 
accountability mechanisms, which are provisions or specific actions 
that can be taken at different points in the grant life cycle. 
[Footnote 25] 

Some Federal Transit Programs Distribute Funds Based Partly on 
Performance, but Opportunities to Improve Grant Recipients' 
Performance Accountability Remain: 

Of the eight SAFETEA-LU transit programs we reviewed, two are 
generally funded by congressional direction, while the remaining six 
are funded through legislatively defined grant formulas. 

Funding for Nonformula Programs under SAFETEA-LU, Including New 
Starts, Is Based Partly on Performance: 

Funding for the New Starts Program and the Bus and Bus Related 
Equipment and Facilities Program--the two non-formula-based SAFETEA-LU 
programs we reviewed--is based partly on performance. 

* New Starts is often cited as a model for other federal 
transportation programs because its grant evaluation process is used 
to distinguish among proposed investments, though GAO and others have 
also identified challenges related to the complexity and cost of this 
process.[Footnote 26] New Starts funding is allocated by Congress to 
specific projects according to FTA's recommendations to Congress. 
FTA's recommendations are based on statutorily identified criteria 
such as projected performance on land use, cost effectiveness, and 
other criteria. By necessity, the New Starts proposed projects are 
evaluated based on projected performance on the selected criteria, 
rather than actual performance, because the projects have not yet 
started. 

* For the Bus and Bus Related Equipment and Facilities Program, 
funding is generally directed by Congress, except most recently in 
fiscal year 2007, when, according to agency officials, FTA allocated 
funding in part based on transit agency performance on ridership and 
bus load (i.e., actual ridership as compared with total capacity). 

Only a Small Percentage of Federal Transit Funding for Formula 
Programs under SAFETEA-LU Is Awarded Based on Performance 
Considerations: 

According to our analysis, the SAFETEA-LU formulas require that about 
5 percent, on average, of fiscal year 2010 funding be awarded based on 
transit agency performance for the six formula programs we reviewed 
(see table 1). The remaining grant funding distribution is based on 
infrastructure-related factors, such as total route miles and revenue 
vehicle miles, or demographic factors, as shown in table 1. 
Performance measures include measures of costs per passenger mile or 
vehicle revenue miles per capita because they measure agencies' 
activities against capacity, demand, or costs. To illustrate this, 
using the example of costs per passenger mile, an agency with low 
costs that is also providing a low level of service (i.e., a low 
number of passenger miles) is not performing as well as an agency with 
comparable population and population density that is able to provide a 
high number of passenger miles while keeping costs per passenger mile 
low. 

Table 1: Fiscal Year 2010 Apportionment Factors and Average Percentage 
of Funding Based on Performance for FTA Formula Transit Programs: 

Program: Urbanized Area Formula; 
Performance-related factors: 
Apportionment factors: Areas under 200,000 in population; 
* Passenger miles traveled per vehicle revenue mile; 
* Passenger miles traveled per vehicle revenue hour; 
* Vehicle revenue miles per capita; 
* Vehicle revenue hours per capita; 
* Passenger miles traveled per capita; 
* Passenger trips per capita; 
Apportionment factors: Areas with population of 200,000 or greater; 
* Fixed-guideway passenger miles times fixed-guideway passenger 
miles/operating cost; 
* Bus passenger miles times bus passenger miles/operating cost; 
Average percentage of funding based on performance[A]: 7.82%. 

Program: Urbanized Area Formula; 
Non-performance-related factors: 
Apportionment factors: Areas under 200,000 in population; 
* Population; 
* Actual population multiplied by population density (measure of 
actual population and population per mile); 
Apportionment factors: Areas with population of 200,000 or greater; 
* Population; 
* Actual population multiplied by population density (measure of 
actual population and population per mile); 
* Revenue vehicle miles; 
* Route miles. 

Program: Fixed-Guideway Modernization; 
Apportionment factors: 
* Route miles; 
* Revenue vehicle miles; 
Average percentage of funding based on performance[A]: 0. 

Program: New Freedom; 
Apportionment factors: 
* Ratio of population of individuals with disabilities in each 
eligible area to the populations of individuals with disabilities in 
all eligible areas; 
Average percentage of funding based on performance[A]: 0. 

Program: Job Access and Reverse Commute; 
Apportionment factors: 
* Ratio of low-income individuals and welfare recipients in each 
eligible area to number of low-income individuals and welfare 
recipients in all eligible areas; 
Average percentage of funding based on performance[A]: 0. 

Program: Nonurbanized Area Formula; 
Apportionment factors: 
* Ratio of nonurbanized population in each state to the nonurbanized 
population of all of the states; 
* Ratio of nonurbanized land area in each state to the nonurbanized 
land area of all of the states; 
Average percentage of funding based on performance[A]: 0. 

Program: Special Needs of Elderly Individuals and Individuals with 
Disabilities; 
Apportionment factors: 
* Population of elderly individuals and individuals with disabilities; 
Average percentage of funding based on performance[A]: 0. 

Total formula funding based on performance: 
Average percentage of funding based on performance[A]: 4.87%. 

Source: GAO analysis of fiscal year 2010 FTA appropriations and FTA 
grant formula documents. 

Note: Because the New Starts and Bus and Bus Related Equipment and 
Facilities program grants are either awarded on a discretionary basis 
or directed by Congress, they have been excluded from this analysis. 
While these grant programs are based in part on performance, we were 
not able to quantify the extent to which performance was considered 
for these grant programs. 

[A] Percentages are the average for all agencies. The actual 
percentage of funding based on performance will vary by agency 
depending on individual data. 

[End of table] 

One of the six formula grant programs we reviewed--the Urbanized Area 
Formula Grant--bases funding, in part, on performance, per statutory 
requirements,[Footnote 27] while the other five formula programs we 
reviewed are funded entirely based on demographic and infrastructure- 
related factors as shown in table 1. Under the Urbanized Area Formula 
Grant Program, approximately 8 percent of the funding, on average, is 
apportioned based on transit agency performance, although the actual 
percentage of an individual transit agency's funding based on 
performance varies. This program apportions funds to two groups of 
agencies, as follows: 

* For transit agencies in urbanized areas with populations under 
200,000, (small cities), funding is apportioned based mostly on 
demographic data. However, urbanized areas may be eligible for 
additional incentive funding, which is apportioned in the following 
way: For each of six performance measures for which the urbanized area 
performs above the average performance of larger urbanized areas, 
small city urbanized areas may receive additional funding in the 
apportionment.[Footnote 28] In the end, only 1 percent of total 
funding for this grant program is apportioned in this way. 

* For urbanized areas with populations of 200,000 or greater, funding 
is apportioned in part based on infrastructure-related measures and in 
part through an incentive tier measuring passenger miles per dollar of 
operating costs.[Footnote 29] The remaining 7 percent of performance- 
based funding for this program is apportioned in this way. However, 
the incentive for an agency to change its behavior to increase its 
grant apportionment is small compared with its operating costs. GAO's 
simulations of the incentive tier apportionment show that a 10 percent 
increase in an urbanized area's passenger miles (while holding the 
area's operating costs and data for all other urbanized areas 
constant) typically results in additional funding of less than 0.5 
percent of operating costs for the area. Several aspects of the design 
of the transit formula incentive tier contribute to the relatively 
small size of the incentive available to a transit agency. First, the 
overall level of funding apportioned under the incentive tier is 
relatively small, both as a fraction of total federal aid for the 
Urbanized Area Formula Grant Program and also as a fraction of current 
operating expenses. Second, because all the transit agencies within an 
urbanized area are included in the passenger miles and operating costs 
of the urbanized area, the incentive apportionment to a single transit 
agency may be affected by changes in the behavior of other agencies 
within the urbanized area. Additionally, even if a transit agency's 
increased performance results in an increased apportionment amount for 
the urbanized area, there is no guarantee that that transit agency 
will benefit from the increased apportionment, as the designated 
recipient is responsible for allocating the apportioned funds among 
area agencies.[Footnote 30] As we discuss later in this report, when 
an incentive is not of sufficient value, the expected return does not 
outweigh the expected risk or costs, and recipients are not motivated 
to pursue the performance improvement. 

Once Grants Are Awarded, FTA Collects Performance Information on the 
Programs as Required, but Generally Does Not Use Performance Data to 
Evaluate the Effectiveness of FTA's Grant Programs: 

FTA has developed some performance measures and targets related to 
DOT's strategic goals. Some of these strategic goals and performance 
measures are related to internal DOT and FTA performance (e.g., 
organizational excellence); others relate to how well DOT and FTA 
programs are performing. FTA tracks performance against a set target. 
For example, in DOT's Performance and Accountability Report and FTA's 
budget documents, FTA provides information on the following goals and 
measures:[Footnote 31] 

* Related to DOT's safety goal, FTA measures transit fatalities and 
injuries per 100 million passenger-miles traveled. 

* Related to DOT's reduced congestion goal, FTA measures the average 
percentage change in ridership for the 150 largest transit agencies, 
as well as the percentage of bus fleets and rail stations compliant 
with the Americans with Disability Act of 1990.[Footnote 32] 

* Also related to DOT's reduced congestion goal, FTA measures the 
number of jobs made accessible by the JARC program. 

In addition to measuring and reporting performance in these areas, FTA 
has implemented several initiatives aimed at improving grantee 
performance. For instance, FTA's Transit State of Good Repair program, 
which focuses on ensuring that local transit systems are maintained in 
a state of good repair, initiated a national discussion about the 
condition of the nation's infrastructure as an issue posing pressing 
challenges for most of the nation's transit systems. The goals of this 
initiative are to raise awareness of state of good repair issues 
throughout the industry, bring stakeholders together to assess and 
measure the scope of maintenance problems, and explore creative 
approaches to financing necessary repairs and upgrades for aging 
transportation assets. Additionally, FTA recognizes high-performing 
transit agencies with nonfinancial awards through various programs. 
For example, through 2008, FTA recognized transit agencies that 
experienced significant increases in public transportation ridership. 
The program was suspended in 2009 in response to the overall trend of 
decreasing ridership. 

FTA also collects performance data from about 2,000 transit agencies 
through the National Transit Database (NTD)[Footnote 33] and other 
reporting requirements.[Footnote 34] The reporting requirements vary 
somewhat by program, as follows: 

* Recipients of Urbanized Area Formula Grants and Nonurbanized Area 
Formula Grants are required to submit information on performance and 
other information to the National Transit Database. This includes 
information on ridership, vehicle revenue miles, vehicle information 
(such as the age and type of the vehicle), and financial information, 
among other categories. 

* Recipients of several other transit grants are required to report 
performance information specific to the goals of the program to help 
FTA fulfill its obligations under GPRA.[Footnote 35] For example, 
recipients of the Special Needs of Elderly Individuals and Individuals 
with Disabilities grants are required to report data on gaps in 
service filled and rides provided for elderly individuals or 
individuals with disabilities as a result of the grant.[Footnote 36] 
JARC recipients are required to report information on the number of 
jobs made accessible and the number of rides provided as a result of 
JARC funding.[Footnote 37] Recipients of the New Freedom grant program 
are required to report on services and rides provided to individuals 
with disabilities and changes made to infrastructure, technology, or 
vehicles that affect the availability of transportation services as a 
result of the New Freedom projects implemented in the current 
reporting year.[Footnote 38] 

FTA has set targets for some broad goals and has some initiatives 
aimed at increasing grantee performance, but does not, in general, use 
the performance data it collects to evaluate the effectiveness of its 
grant programs. FTA officials stated that FTA's strategic goals and 
objectives are generally determined based on their relationship to 
DOT's strategic goals as well as the priorities of senior FTA 
officials. We have previously reported that agencies can use 
performance information to, among other things, identify problems or 
weaknesses in programs, to try to identify factors causing the 
problems, and to modify a service or process to try to address 
problems.[Footnote 39] FTA officials use collected performance data to 
track overall program trends and performance on a national level, but 
not to determine the link between specific FTA program activities and 
changes in performance. For example, FTA reports performance 
statistics to Congress through its biennial report, Status of the 
Nation's Highways, Bridges, and Transit: Conditions and 
Performance.[Footnote 40] This report includes the change over time 
for statistics such as average operating speed, vehicle use 
statistics, frequency and reliability of services, condition of 
transit assets and infrastructure, and safety, among others. However, 
FTA does not explore the potential reasons for a change in performance 
over time. Similarly, FTA officials stated that FTA does not conduct 
analysis of changes in transit agency performance or set targets for 
the measures that are incentivized in grant formulas to determine what 
effect incentives have on transit agency performance (i.e., the extent 
to which the incentive funding is having the desired outcome). As a 
result, FTA is missing a valuable opportunity to evaluate the end 
results of its program activities and SAFETEA-LU funding formulas. 
Information on the effectiveness of formula incentive programs, in 
particular, is necessary for determining how and when to make changes 
to funding mechanisms in the future. 

Performance Accountability Mechanisms Can Improve Performance of 
Transit Agencies, and although They Potentially Present Disadvantages, 
Most of These Can Be Mitigated by Following Key Strategies: 

Potential Advantages of Using Performance Accountability Mechanisms 
Are Encouraging Good Performance, Deterring Poor Performance, and 
Helping Agencies Allocate Limited Funds: 

Through our literature review, we identified major financial and 
nonfinancial mechanisms for making federal transit programs more 
performance based. Tables 2 and 3 describe the three types of 
mechanisms we found and their potential advantages and provide 
examples of how various federal and state agencies or programs use 
them. 

Table 2: Types and Descriptions of Financial Mechanisms, Their 
Potential Advantages, and Examples of Use: 

Type and description of financial mechanisms: Financial rewards or 
penalties/sanctions; 
These types of mechanisms involve an increase or decrease in funding: 
* Entire amount can be tied to performance, or a portion of funding 
above an established baseline (i.e., an incentive portion); 
* A onetime cash bonus payment or a onetime reduction in payment 
penalty; 
* Longer-term increases or decreases in the funding term, per unit 
reimbursement rate, or overall funding levels; 
* Financial sanctions may also be imposed in one area to influence 
actions in another area (crossover sanctions); 
Ideally, under these financial mechanisms, program funds are allocated 
based on the achievement of performance goals by: 
* establishing a performance-based formula; 
* providing bonus funding including the use of performance incentives, 
or; 
* imposing additional eligibility requirements for funding (e.g., 
requiring grant recipients to develop performance plans). 

Potential advantages: 
* Provides positive financial motivation for organizations to change 
their behavior and encourages them to accomplish goals to obtain 
additional funding; 
* Creates clear links between performance and funding and helps hold 
grant recipients accountable for achieving desired results and 
outcomes; 
* Financial penalties or sanctions penalize organizations financially 
for not meeting requirements and are intended to help agencies make 
sound decisions when allocating limited funds. 

Examples: 
Department of Education's grants for vocational education[A]: 
These grants provide financial rewards and impose financial penalties 
based on performance.[B] States are eligible to receive incentive 
funds if they exceed performance goals for these grants. States not 
meeting their performance levels for 2 years are subject to financial 
sanctions, although no state has failed to meet its overall goals for 
2 consecutive years. 
Highway Safety Improvement Program (HSIP): 
In implementing HSIP, SAFETEA-LU required state transportation 
departments to prepare strategic highway safety plans.[C] The plans 
were to address several key elements, including evaluating and 
measuring states' performance toward the overall goal of reducing 
traffic fatalities.d The states were required to submit their plans to 
avoid incurring a financial penalty to their HSIP funds.[E] 

State Safety Oversight Program[F]: 
Under this program, FTA requires states to designate an agency to 
oversee the safety and security of rail transit systems that receive 
federal funding. State oversight agencies are responsible for 
developing program standards that transit agencies must meet and 
reviewing the performance of the transit agencies against those 
standards. For example, the state oversight agency must establish a 
safety program plan that outlines oversight and transit agency 
responsibilities, review transit agencies' safety and security plans, 
conduct safety and security audits, and investigate accidents. If a 
state has not met the requirements of the State Safety Oversight 
Program, FTA may withhold up to 5 percent of the state's appropriated 
funds for the Urbanized Area Formula Grant Program.[G] 

Virginia Department of Transportation Highway Maintenance[H]: 
Budgets are tied to performance targets established for maintaining 
each of the assets. Performance targets are expressed as a percentage 
of assets meeting or exceeding the desired condition level. Funding is 
allocated based on the desired system (asset) condition. 

Source: GAO. 

[A] The Office of Vocational and Adult Education (OVAE) administers 
the federal vocational education grants that are authorized by the 
Carl D. Perkins Vocational and Technical Education Act of 1998 
(Perkins III). Perkins III defines major roles for OVAE and states in 
establishing performance accountability systems for vocational and 
technical education. 

[B] States are responsible for developing performance goals and 
measures and data collection systems related to four required core 
performance indicators: academic and technical skill attainment, 
course completion, job placement and retention, and nontraditional 
participation and completion. 

[C] 23 U.S.C. § 148. 

[D] The plans were to address four key elements: (1) eight types of 
stakeholders must participate in preparing the plan, (2) the plan must 
define areas of safety emphasis through an analysis of state fatality 
and serious injury data, (3) the plan must identify strategies and 
projects that cover all aspects of highway safety (infrastructure, 
behavioral, and emergency medical services), and (4) the plan must 
provide for evaluating and measuring states' performance toward the 
overall goal of reducing traffic fatalities. 

[E] SAFETEA-LU added a requirement that states without a strategic 
plan in place by October 2007 would still receive funds for highway 
safety improvement, but the amount would be capped at the fiscal year 
2007 level. 

[F] 49 U.S.C. § 5330: 49 C.F.R. Part 659. 

[G] FTA may agree to restore withheld formula funds if compliance is 
achieved within two years. See, 49 C.F.R. § 659.7. 

[H] Virginia's transportation system, the third largest in the nation, 
is composed of 124,000 lane miles, over 12,000 bridges, four 
underwater crossings, two mountain tunnels, four ferries, and a 
portfolio of parking lots and rest areas. Responding to increasing 
pressures to understand the condition, remaining useful life, funding 
needed for replacement/repair, and performance targets for its assets, 
the department developed an asset management system that it uses to 
track and measure maintenance performance. 

[End of table] 

Table 3: Type and Description of Nonfinancial Mechanisms, Their 
Potential Advantages, and Examples of Use: 

Type and description of nonfinancial mechanisms: Increase or decrease 
program flexibility as a performance incentive; Increase or decrease 
in grantee's flexibility by issuing administrative, programmatic, or 
financial waivers from requirements and restrictions or by adding 
award conditions; 
Potential advantages: Encourages good performance and may enhance 
grantee's ability to use innovation in directing resources where 
needed to solve problems; 
Examples: 
National Highway Traffic Safety Administration (NHTSA): SAFETEA-LU 
established penalties for states that fail to enact federally required 
laws to reduce the number of alcohol-related fatalities associated 
with (1) repeat drunk driving offenders[A] and (2) open alcoholic 
beverage containers in motor vehicles.b States that failed to adopt 
these required laws were penalized by having a portion of their 
federal highway construction funds transferred to highway safety 
programs; 
The Environmental Protection Agency affords states with high 
environmental performance levels greater flexibility in spending their 
grant funds, as part of the National Environmental Performance 
Partnership System. 

Type and description of nonfinancial mechanisms: Recognize those 
entities that achieve certain performance goals; Public recognition of 
good performance, for example, through the press, Web sites, 
intranets, newsletters, hearings, testimony, and award ceremonies; 
Potential advantages: Encourages and rewards good performance through 
public recognition; 
Examples: Federal Interagency Coordinating Council on Access and 
Mobility's United We Ride Initiative implemented national community 
leadership awards for transportation coordination. These are 
nonmonetary awards that recognize states, localities, communities, or 
organizations that have provided leadership and action toward 
developing and/or implementing exemplary high-quality coordinated 
human service transportation programs or systems. 

Source: GAO. 

[A] 23 U.S.C. § 164. 

[B] 23 U.S.C. § 154. 

[End of table] 

In short, these mechanisms create a link between performance and 
benefits by either rewarding good performance or penalizing poor 
performance. However, the extent to which a reward or penalty 
motivates performance depends on its importance to the agency--if a 
financial reward or penalty is too small, for example, it may not 
affect behavior. At the same time, a reward that is too small to 
influence a large agency may be significant to a smaller agency. 

Potential Disadvantages to Using Performance Mechanisms Are That They 
Can Burden Transit Agencies, Produce Inequitable Results, and Raise 
Other Concerns: 

Our literature review found not only advantages associated with 
performance accountability mechanisms but some potential downsides and 
concerns as well. 

* Most notably, to demonstrate that an incentive has been achieved or 
that a penalty is not warranted, agencies have to gather, maintain, 
and analyze data, and these tasks require resources. Therefore, to the 
extent possible, the measure on which an incentive or penalty is 
awarded or assessed should be based on readily available information, 
or information that could be readily obtained. If not, it could place 
a burden on the agency's resources. 

* Additionally, when penalizing organizations for not meeting 
requirements, there are concerns that (1) an organization may be 
penalized before it has a chance to address its performance problems, 
and (2) a punitive approach to performance accountability may be taken 
rather than a constructive approach. For example, even if penalties 
are employed to promote performance accountability, there should be a 
constructive, collaborative approach to performance improvement that 
both precedes and follows the penalty. 

Our literature review also identified other disadvantages that relate 
specifically to implementing financial performance accountability 
mechanisms. These include the following: 

* The zero-sum nature of performance-based allocations, particularly 
under constrained resources, can cause inequity, as programs can 
improve and still receive nothing. For example, all recipients might 
improve their performance, so that those improving the least might not 
be rewarded. Also, under resource constraints, performance-based 
allocations are not likely to provide a meaningful incentive to 
improve performance or may not be possible. For instance, a basic 
reason behind tying the allocation of funding to performance is that 
this will provide an incentive for funding recipients to perform 
better (to either generate additional funds or avoid financial 
penalties). However, according to a 2004 study on the use of 
performance standards and measures for public transportation systems, 
there is not much evidence that the various formulas used to fund 
transit agencies actually produce this result.[Footnote 41] One reason 
is that even if a single transit system were to make significant 
performance improvements, the current apportionment formulas do not 
result in much of a funding change from year to year (in part because 
of the fact that the change in one system is but a small fraction of 
the statewide or nationwide numbers that feed into the formulas). 

* Well-funded grant recipients, with the staff and resources to 
implement more sweeping changes, may be rewarded at the expense of 
poorly funded ones that may have more pressing operational concerns. 
Moreover, for poorly funded recipients, the amount of improvements 
required may not be realistically attainable through changes within 
the recipients' control. For example, according to the previously 
mentioned study done in 2004, some transit agencies would like to see 
an increase in the funding provided from local, as opposed to state 
and federal, sources.[Footnote 42] However, a funding stream that 
includes a requirement for contribution of local dollars could be 
particularly difficult to accomplish for rural systems with limited 
revenue or for systems where local leaders do not support a 
contribution of local dollars.[Footnote 43] This could result in a 
transit system being penalized financially for a decision made outside 
its control, with an ensuing decline in service quality. To be fair, 
factors well beyond the control of the transit agency are often 
drivers of performance (e.g., local economic problems leading to a 
drop in employment that in turn leads to a drop in ridership). 

* Grant recipients may be charged with meeting conflicting goals. For 
example, if an important local goal for a transit agency is to 
increase geographic service coverage, the achievement of this goal 
might have negative impacts on performance as commonly defined--
efficiency and/or effectiveness. For a transit system that wants to 
develop new evening or weekend service, generally such service will be 
less productive than weekday service. Performance-based funding is 
likely to provide a disincentive for providing such service.[Footnote 
44] 

* If not designed correctly, performance mechanisms can introduce 
perverse incentives. For example, regarding a federal employment 
program that has used incentive awards--the Workforce Investment Act's 
Title I-B Program for Dislocated Workers--we reported in 2009 that 
local agency officials receiving grants under the program may be 
reluctant to provide services to job seekers that are less likely to 
find and maintain a job, because the incentive award is tied to 
achieving performance levels in placement and retention.[Footnote 45] 
This is contrary to the program's objective, which is to assist all 
job seekers in obtaining employment. 

Finally, when considering the use of performance accountability 
mechanisms for transit agencies, DOT officials noted that transit 
grant recipients operate within the context of their local, state, and 
regional government structures and funding sources. Therefore, some 
changes may need to be enacted by other organizations to improve 
transit service, and it may be appropriate to provide incentives to 
these other government structures as well. 

Key Strategies Can Help Overcome Some Disadvantages of Performance 
Accountability Mechanisms and Help Ensure Successful Implementation of 
Those Mechanisms: 

Our earlier work discusses how five key strategies collectively 
facilitate the effective selection, design, and implementation of 
performance accountability mechanisms.[Footnote 46] They are as 
follows: 

1. Ensure mechanisms are of sufficient value. The value of the rewards 
and penalties--whether financial or nonfinancial--and the cost of 
improved performance are adequate to motivate desired behaviors and 
provide a meaningful return to both the grantor and the grantee. 

2. Periodically renegotiate and revise mechanisms and measures. 
Provide for and use the flexibility to reevaluate performance 
accountability mechanisms and associated performance measures at 
regular, scheduled intervals and allow time to learn from each cycle 
to improve performance. 

3. Ensure appropriate measures are selected. Measures should represent 
performance that is within the grantee's sphere of influence, and can 
reasonably be achieved and evaluated within the specified time frame, 
and should be tested over time to minimize the potential for 
unintended consequences and perverse incentives. Additionally, 
performance data should be tested and validated to make sure they are 
credible, reliable, and valid. Absent these attributes, organizations 
lack the basis for sound decisions about rewards and penalties. 

4. Ensure grantor and grantee technical capacity. Grantors and 
grantees should have the necessary knowledge about performance 
accountability mechanisms and the ability to effectively implement 
them. 

5. Ensure phased implementation. Allow time to design, test, and 
revise measurement systems before linking them to accountability 
mechanisms. 

These five key strategies can help mitigate the disadvantages we have 
previously discussed related to using performance accountability 
mechanisms, as shown in table 4. 

Table 4: Disadvantages of Performance Accountability Mechanisms and 
How Key Strategies Can Help Overcome Them: 

Disadvantages of mechanism: 
* Agencies have to gather, maintain, and analyze data, and these tasks 
require resources; 
Strategies for overcoming disadvantages: 
* Ensure appropriate measures are selected. The performance measure on 
which the incentive is awarded should be based on readily available 
information, or information that could be readily obtained; 
* Ensure phased implementation. The use of performance factors in 
allocating funds could be phased in over several years to make sure 
the data collection methods and application of the measures are 
accurate and well understood by all parties. 

Disadvantages of mechanism: 
* An organization may be penalized before it has a chance to address 
its performance problems, and a punitive approach to performance 
accountability may be taken rather than a constructive approach; 
Strategies for overcoming disadvantages: 
* Ensure grantor and grantee technical capacity. Grantors should help 
recipients solve their performance problems before being financially 
penalized; 
* Ensure phased implementation. The introduction of performance 
factors could be phased in over several years to make sure the data 
collection methods and application of the measures are accurate and 
well understood by all parties. Additionally, phased implementation 
would allow for agencies to measure performance and correct any 
performance issues before being financially penalized. 

Disadvantages of mechanism: 
* The zero-sum nature of performance-based allocations can cause 
inequity, as programs can improve and still receive nothing; 
Strategies for overcoming disadvantages: 
* Ensure mechanisms are of sufficient value. To the extent that a goal 
of performance-based funding is to motivate better performance, if the 
performance component of funding is to be effective, it must be large 
enough to motivate behavior. 

Disadvantages of mechanism: 
* Well-funded grant recipients may be rewarded at the expense of 
poorly funded ones; 
Strategies for overcoming disadvantages: 
* Ensure appropriate measures are selected. Choose measures that are 
within the program recipients' sphere of influence and test the 
performance targets to ensure they are attainable. 

Disadvantages of mechanism: 
* Grant recipients may be charged with meeting conflicting goals; 
Strategies for overcoming disadvantages: 
* Ensure appropriate measures are selected. Choose measures that are 
within the program recipients' sphere of influence and test the 
performance targets to ensure they are attainable. 

Disadvantages of mechanism: 
* Performance mechanisms can introduce perverse incentives; 
Strategies for overcoming disadvantages: 
* Ensuring appropriate measures are selected could mitigate the risk 
of creating perverse incentives. Measures should be carefully linked 
to program goals. 

Source: GAO analysis. 

[End of table] 

Some of these strategies address multiple disadvantages. For example, 
table 4 shows that ensuring appropriate measures are selected could 
mitigate four of the six disadvantages. In addition, we found in our 
literature review that to ensure financial stability, many sources 
advocated for providing transit agencies with a baseline funding 
amount that would enable grantees to know the minimum (or a baseline 
amount) that they would receive each year, and then providing 
additional funds that would be based on performance. Although not a 
key strategy, this more specific option would help address the 
following three disadvantages: the zero-sum nature of performance-
based allocations, well-funded grant recipients being rewarded at the 
expense of poorly funded ones, and grant recipients being charged with 
meeting conflicting goals. 

Appropriateness of and Success in Using Performance Accountability 
Mechanisms Depend on Program Goals, but Little Is Known about Using 
These Mechanisms in Transit Programs: 

Although performance mechanisms can provide advantages, and the 
disadvantages can be mitigated, they are still not suitable for all 
programs. As previously discussed, the eight federal transit programs 
that we reviewed are designed to accomplish different goals, and the 
use of performance accountability mechanisms is better suited to some 
than to others. For example, discretionary grant programs such as New 
Starts, which are designed to award funds to the best potential 
performers, may be better suited to the use of performance 
accountability mechanisms, while formula programs, such as the 
Urbanized Area Formula Grant Program and Fixed-Guideway Modernization 
Program, which are intended to support the financial stability of 
transit agencies or distributional equity, may be less well suited. We 
have found that performance accountability mechanisms need to be 
tailored to specific situations, since not all mechanisms are 
appropriate to all situations, and there is no "one-size-fits-all" 
solution to performance accountability.[Footnote 47] Furthermore, 
according to FTA, transit systems vary in size, resources, and 
community needs, making it less productive to judge all systems on a 
common set of performance measures or performance accountability 
mechanisms. 

Even though mechanisms are not all appropriate for all situations, 
performance accountability mechanisms still hold promise. As we have 
described in the previous section of this report, DOT is requiring 
some transportation grants to be based on performance, with good 
results in some departments. For example, NHTSA used performance 
information on alcohol-related injuries and fatalities to target grant 
funding and specific program strategies to states with the highest 
impaired driver rates. However, DOT has only required transit grants 
to be minimally based on performance. Expanding the use of performance 
accountability mechanisms in the area of transit could help make 
transit grants more performance based. The performance accountability 
mechanisms described in this report suggest opportunities for FTA to 
study their impact and potentially use them to make transit grants 
more performance based--i.e., to identify grantee performance 
problems, look for solutions, and make other important management 
decisions, per leading practices.[Footnote 48] 

Congress also has a role to play in increasing the use of performance 
mechanisms in transit, as part of its process of setting national 
priorities and allocating the resources to achieve them. Congress has 
a number of opportunities to initiate the use of performance 
mechanisms, such as when it establishes or reauthorizes a program, 
during the annual appropriations process, and during hearings focused 
on program and agency operations. Moreover, our 2006 report on 
performance accountability mechanisms recommended that the federal 
Office of Management and Budget encourage and assist federal agencies 
in working with Congress to expand the effective use of performance 
accountability mechanisms when federal grant programs are being 
created or reauthorized. As noted earlier in this report, Congress and 
the administration are currently debating reauthorization of the 
entire surface transportation program, including transit programs. 

However, without FTA analysis of the appropriateness, feasibility, and 
potential impact of using various transit performance mechanisms, 
Congress may lack the information needed to identify and implement the 
most effective mechanisms and better help transit agencies maximize 
their potential. Furthermore, because each mechanism may not be suited 
to every program, such analysis may require careful study to ensure 
the best link between mechanisms and transit programs. 

Selected Transit Agencies Use Performance Measurement to Varying 
Degrees and See a Role for the Federal Government in Transit but Cited 
Challenges in Linking Performance with Planning and Decision Making: 

All Transit Agencies We Interviewed Measure Performance in Some 
Categories, but the Extent to Which They Measure It in Others Varies 
Widely: 

While officials from all 12 of the transit agencies we interviewed 
told us they measure performance in certain categories, the extent to 
which they measure other categories varied widely (see table 5). 

Table 5: Categories Where Performance Is Measured or Studied--Transit 
Agency Responses: 

Category of performance measurement: Customer satisfaction; 
Measures performance in category: 12; 
Has studied or plans to study in ways other than performance 
measurement: 0. 

Category of performance measurement: Ridership; 
Measures performance in category: 12; 
Has studied or plans to study in ways other than performance 
measurement: 0. 

Category of performance measurement: On-time performance; 
Measures performance in category: 12; 
Has studied or plans to study in ways other than performance 
measurement: 0. 

Category of performance measurement: Safety; 
Measures performance in category: 12; 
Has studied or plans to study in ways other than performance 
measurement: 0. 

Category of performance measurement: Cost efficiency or effectiveness; 
Measures performance in category: 11; 
Has studied or plans to study in ways other than performance 
measurement: 1. 

Category of performance measurement: Level of service; 
Measures performance in category: 10; 
Has studied or plans to study in ways other than performance 
measurement: 1. 

Category of performance measurement: Accessibility for the elderly and 
persons with disabilities; 
Measures performance in category: 10; 
Has studied or plans to study in ways other than performance 
measurement: 0. 

Category of performance measurement: Capital planning; 
Measures performance in category: 10; 
Has studied or plans to study in ways other than performance 
measurement: 1. 

Category of performance measurement: Environmental impact and energy 
use; 
Measures performance in category: 7; 
Has studied or plans to study in ways other than performance 
measurement: 4. 

Category of performance measurement: Health impact; 
Measures performance in category: 5; 
Has studied or plans to study in ways other than performance 
measurement: 3. 

Category of performance measurement: Economic development; 
Measures performance in category: 4; 
Has studied or plans to study in ways other than performance 
measurement: 4. 

Category of performance measurement: Connectivity between lines and 
modes of transportation; 
Measures performance in category: 3; 
Has studied or plans to study in ways other than performance 
measurement: 6. 

Source: GAO. 

[End of table] 

For example, 

* Officials at all 12 transit agencies told us that they measure 
performance in the categories of customer satisfaction, ridership, on- 
time performance, and safety. 

* Officials from 7 of the transit agencies told us that they measure 
performance in the category of environmental impact and energy use. 
Officials from 1 of the agencies told us that they do this by tracking 
greenhouse gas emissions from the agency's fuel consumption based on 
methodology published in an FTA report.[Footnote 49] Officials at 4 
other agencies said that they had studied or planned to study this 
category, but they do not regularly measure performance in this 
category. 

* Officials from 4 of the transit agencies told us they measure 
performance in the category of economic development. According to one 
of these officials, to do so the agency tracks the value of property 
developments around transit stations. Officials from 4 other agencies 
told us that while their agencies do not regularly measure economic 
development performance, they had either periodically studied the 
agency's economic impact or were planning to do so. For example, 
officials from 1 of these agencies said that they had studied, among 
other things, the direct and indirect impact of their agency's current 
and planned operations on the agency's local economy by tracking 
factors such as the agency's capital investments and procurement of 
goods and services. However, they do not regularly measure performance 
in this category. 

The transit agencies we interviewed determined performance measures 
based on a variety of factors, including the following: 

* Officials from all of the U.S. transit agencies said that federal 
requirements provide the basis for at least some of their performance 
measures. These officials added that their agencies are required to 
report performance data to FTA's NTD and, hence, determine certain 
measures of performance based on NTD requirements, as discussed 
earlier. 

* Officials from 10 of the transit agencies said that local priorities 
were used to determine at least some of their performance measures. 
For example, officials from 1 agency said that the local metropolitan 
planning organization required that the agency report performance on 
farebox recovery, which measures the agency's recovery of its costs 
from fares. 

* Officials from 8 of the transit agencies added that they determined 
some of the performance measures based on industry best practices or 
their agency's internal needs, such as measures used to track progress 
toward an agency's strategic goals. 

* Officials from 4 of the U.S. transit agencies said that state 
reporting requirements, such as outlined in state legislation on their 
agency, also formed the basis for determining some of their 
performance measures. 

* Officials from 2 of the transit agencies noted that public concerns 
about various issues led to the development of some performance 
measures. Specifically, officials from 1 agency told us that passenger 
concerns about their security while using the transit system led the 
agency to allocate more funding for its transit police force and to 
develop and monitor the agency's performance on a "customer security 
index." Officials from another said that concern about the status of a 
new transit development led the agency to regularly measure and 
publicize performance information on the development's status. 

Challenges to Measuring Performance: 

Transit agency officials we interviewed cited a variety of challenges 
associated with measuring performance. Officials from 8 of the 
agencies stated that measuring performance on outcomes was 
particularly challenging. For example, officials from 5 of these 
agencies told us that it is particularly challenging to determine a 
method for measuring economic impact or to obtain relevant data. In 
particular, officials from 1 agency added that measuring the agency's 
impact on employment generation is challenging because it is difficult 
to isolate the agency's effect on employment. Similarly, officials 
from 5 of the transit agencies said it was challenging to measure 
environmental impact generally because it was difficult to determine a 
method for measuring it or to obtain relevant data. For example, an 
official from 1 agency said that it is difficult to measure how much 
pollution a bus generates compared with the pollution from passenger 
vehicles that the bus is displacing, in part because emissions from 
these passenger vehicles can vary widely and relevant data are 
difficult to obtain. Moreover, we were told by officials from 7 of the 
transit agencies that it is challenging to measure performance because 
performance is affected by numerous factors that are out of a transit 
agency's control, like economic conditions or weather. For example, an 
official from 1 agency noted that ridership is affected by economic 
conditions, such as employment. Officials from another agency also 
said that ridership data can be influenced by the elimination of 
funding for a route because, according to the officials, the 
elimination of routes makes it difficult to measure annual changes in 
overall ridership. Additionally, officials from 1 agency told us that 
some transit systems operate in environments that an agency has less 
control over, particularly bus systems, which can make measuring 
performance on these systems more difficult than for dedicated systems 
like subways. For example, the officials said that buses, unlike 
subways, can travel different distances on any given day, making it 
difficult to measure performance on a month-to-month basis. 

Performance Measurement Affects Agencies' Planning and Decision 
Making, but Other Factors Also Play a Role: 

Officials from all 12 of the transit agencies we interviewed told us 
that they use performance information for agency planning and decision-
making purposes. Officials at 9 of the agencies said that performance 
information is used in decisions or planning related to funding 
allocations. Officials from 1 agency explained that performance-based 
funding allocations were critical because they help to inform the 
agency's annual budget process and address problems, such as 
deterioration of capital assets, before they can have a negative 
impact on the agency's performance. Officials from 2 transit agencies 
said that information on customer satisfaction helped them understand 
customer perceptions about their system, which informed decisions and 
planning regarding issues like funding allocations and setting of 
strategic goals. For example, officials from 1 of these agencies said 
customer perceptions about the transit system's security led the 
agency to make decisions and plans that included allocating more 
funding toward transit police, developing a customer security 
performance measure, and setting a strategic goal of increasing 
customer security. Similarly, officials from the other transit agency 
said that measures of customer satisfaction regarding system 
cleanliness led their agency to allocate funding for cleaning the 
system and to set a strategic goal associated with system cleanliness. 

While performance affects some transit agency decisions and planning, 
other factors are also considered. For example: 

* Funding availability: Officials from half of the transit agencies 
said that funding shortfalls made it difficult to link performance 
measurement to decisions and planning. For example, officials from 2 
of these agencies said that the recent economic recession had reduced 
sales tax revenue and consequently agency funding, resulting in 
reduced service or plans for expansion. 

* Political priorities: Officials from half of the transit agencies 
added that local political priorities also challenge the agencies' 
ability to link performance to decisions and planning. These officials 
said that among other reasons, elected officials can affect decisions 
and planning for routes or funding allocation based on political 
priorities rather than performance information. 

Transit Agencies and Experts See a Role for the Federal Government in 
Transit, but See Challenges to Imposing National Performance Measures: 

Officials from the 12 transit agencies and experts from the five 
organizations we interviewed suggested a variety of changes to the 
federal role in transit: 

* Investment in existing transit infrastructure: Officials from 3 of 
the transit agencies and experts from two of the organizations 
suggested that the federal government address the declining condition 
of transit agency infrastructure by focusing on state of good repair 
needs. Officials from 2 of these transit agencies and one of the 
organizations believed that federal grants for transit too often 
focused on new capital investments rather than updating and 
maintaining existing infrastructure. 

* Short duration of federal grant funding: Officials from 3 of the 
transit agencies stated that the duration of federal transit programs' 
grant funding made it difficult for them to conduct long-term 
strategic planning. According to officials from 2 of these agencies, 
this long-term planning would benefit if grants were provided for 3-to 
5-year periods. 

* Flexibility in implementing federal transit grants: Some of the 
transit agency officials and experts we spoke with stated that the 
federal government should provide greater flexibility to transit 
agencies or local transportation planning officials to decide how 
federal grants should be used. Specifically, officials from 5 of the 
transit agencies and experts from three of the organizations told us 
that federal grants for transit systems should be less specific to 
particular modes, such as bus or rail. Officials from 2 of the transit 
agencies and experts from three of the organizations also told us that 
transit agencies or local transportation planning officials should 
have greater autonomy to determine which transportation solution would 
be most efficient for their circumstances. 

Current SAFETEA-LU programs provide funding for accomplishing goals 
such as modernizing or improving existing transit equipment and 
facilities, providing capital assistance for new transit systems or 
expansion to existing systems, expanding access to elderly persons and 
persons with disabilities, and transporting low-income individuals to 
and from jobs. During interviews, experts from four of the 
organizations and officials from 7 of the transit agencies told us 
that the federal government should set goals that reflect broader 
issues, such as promoting economic development or improving air 
quality, in part to address the differences between transit agencies' 
circumstances and priorities. However, officials from 3 of the 
agencies and experts from three of the organizations told us that the 
goals should address transit-specific issues, such as state of good 
repair needs. As discussed earlier, federal transit programs focus on 
these issues to some extent. The transit agency officials and transit 
experts we interviewed offered a variety of suggestions for 
consideration in developing federal transit program goals, including 
the following: 

* improve air quality; 

* encourage economic growth and access to jobs; 

* reduce roadway congestion; 

* increase the safety of transit systems; 

* provide increased mobility for populations, particularly in regions 
with fast-growing populations; 

* encourage modal shift from automobiles to public transit; and: 

* promote livable communities around transit that reduces dependence 
on foreign oil, encourage economic growth, and addresses environmental 
challenges. 

All of the transit agencies and expert organizations we interviewed 
foresaw challenges to imposing national performance accountability 
mechanisms on transit agencies, some of which we identified earlier in 
our review. Officials from 10 of the agencies and experts from three 
of the organizations told us that it would be challenging to account 
for the varying priorities of transit agencies, such as differences in 
the size or the density of the population they serve, or the ways in 
which they measure performance. For example, officials from 4 of the 
agencies noted a lack of consistency in how performance is measured, 
which makes it difficult to compare agencies' performance. The agency 
officials and transit experts cited a variety of other challenges that 
they said should be considered when implementing a more performance-
based federal transit system, including the following: 

* Some transit agencies, particularly in small cities or rural areas, 
lack personnel or technical resources to measure performance. 

* Some federal support should be based on need rather than performance 
because of factors that could make it difficult for some agencies to 
meet performance goals or maintain performance standards. For example, 
officials from 1 of the transit agencies said that if the federal 
support was based on performance alone, then areas with smaller 
populations would not be positioned as well as agencies in larger, 
more populated areas to perform on measures like passengers per mile 
or recovery of costs from fares. Experts from one organization added 
that some funding for transit agencies should be allocated if there is 
a risk of decreased performance in the future in areas such as safety. 

* For some categories of performance, like economic development, data 
are more difficult to obtain or performance is more difficult to 
measure. 

* Goals attached to a federal performance mechanism could outweigh the 
transit needs or priorities based on local circumstances. 

Some of the transit agencies and experts we interviewed provided 
suggestions for implementing federal performance accountability 
mechanisms that would mitigate some of the challenges they discussed. 
For example, 

* Officials from 1 transit agency suggested that a voluntary pilot 
program be implemented to test a rating system that would measure 
participating agencies' median performance over several years on a 
series of performance indicators. They said such a system would allow 
the federal government to assess how each agency is performing over 
time, rather than comparing agencies with differing circumstances or 
evaluating agencies based on a single performance measure. 

* An official from 1 transit agency suggested that the federal 
government support the development of a national transit benchmarking 
system in which transit agencies could learn best practices from other 
agencies to improve their performance, rather than applying national 
performance targets that would have to account for the many 
differences among transit agencies. The official cited an established 
benchmarking system in which transit agencies can confidentially share 
their performance information and compare it against that of other 
agencies in similar groups, including large subway systems, medium 
subway systems, and bus systems. 

* Experts from two of the organizations also told us that the federal 
government should offer capacity development opportunities such as 
technical assistance to address the lack of resources or potential 
burden that some transit agencies could experience with additional 
federal requirements for performance measurement. 

Conclusions: 

In our 2008 report on surface transportation, we recommended that 
Congress consider instituting processes to make grantees more 
accountable by establishing more performance-based links between 
funding and program outcomes.[Footnote 50] Implementing links between 
transit funding and performance through the use of financial 
performance accountability mechanisms and other tools and approaches, 
as outlined in this report, could help create incentives to local 
transit agencies to improve their performance. Although we have 
identified challenges to making the federal transit program more 
performance based, we have also identified ways to mitigate those 
challenges--through the use of strategies for implementing performance 
accountability mechanisms. As we have illustrated through examples and 
through the concerns and suggestions of local transit agency and 
expert officials, performance accountability mechanisms are not one-
size-fits-all. Nevertheless, with careful consideration, the 
mechanisms and strategies highlighted in this report can be combined 
to achieve a more accountable federal transit program and thus lead to 
improved outcomes in transit and achievement of federal goals. 

One FTA program, New Starts, is frequently cited as a model for other 
federal transportation programs, because of its use of a rigorous and 
systematic evaluation process to distinguish among proposed 
investments based on projected performance. Other FTA programs have 
afforded limited performance accountability, and thus little incentive 
to ensure federal transit grants are being used effectively and 
efficiently. Because of the lack of incentives of sufficient value to 
grantees in formula programs, the federal transit grant system has 
limited ability to influence the activities and priorities of local 
grantees and to ensure that the goals and priorities of the federal 
transit program are achieved. Further decreasing the federal 
government's ability to positively affect the performance of local 
transit agencies is FTA's limited analysis of the extent to which 
transit grants, current formula incentives, and FTA program activities 
have had an effect on transit agency performance. The Government 
Performance and Results Act of 1993, as amended, emphasized managing 
results and identifying opportunities to improve performance and 
increase accountability.[Footnote 51] By not fully measuring and 
analyzing the effects of transit grant programs and FTA program 
activities on local transit agency performance, FTA is missing a 
valuable opportunity to assess both its own activities and the transit 
grant programs for needed changes. 

As Congress and DOT prepare for the upcoming surface transportation 
reauthorization, which includes the reauthorization of all federal 
transit programs, the department and FTA have an opportunity to 
enhance the performance of transit grant programs by incorporating 
performance accountability mechanisms into those programs' legislative 
requirements. Doing so could increase the federal government's ability 
to ensure that federal transit grants are used efficiently and 
effectively and achieve the goals established by Congress, keeping in 
mind the challenges and strategies for mitigating those challenges 
that we have identified. Since little is currently known about 
applying these mechanisms to the transit sector, FTA could help fill 
that knowledge gap by analyzing the feasibility and potential impacts 
of options for using such mechanisms in federal transit programs and 
report that information to Congress to help inform the congressional 
deliberations on the ongoing surface transportation reauthorization. 

Recommendations for Executive Action: 

To enhance the performance of federal transit programs, we recommend 
that the Secretary of Transportation direct the FTA Administrator to 
study and report to Congress on options for adding performance 
accountability mechanisms to transit grant programs. FTA should strive 
to provide such information in time to be considered during the 
reauthorization of the federal transit programs. 

To improve FTA's ability to determine the extent to which transit 
grants, current formula incentives, and FTA program activities have 
had a positive effect on local transit agency performance--and to the 
extent that FTA finds current data sources to be appropriate and 
reliable for such purposes--we recommend that the Secretary of 
Transportation direct the FTA Administrator to further analyze and use 
data submitted to FTA by local transit agencies. As part of this 
analysis, FTA may want to identify and evaluate, when applicable, 

* the extent to which transit grant programs are accomplishing their 
established goals, 

* the areas of performance in which FTA should concentrate its program 
activities to increase the performance of local transit agencies and 
the federal transit program in general, and: 

* the extent to which formula incentives and other performance 
accountability mechanisms have influenced the activities and 
performance of local transit agencies. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOT for review and comment. DOT 
officials provided technical clarifications, which we incorporated 
into the report as appropriate, and DOT said it would consider our 
recommendations. 

We are sending copies of this report to the Secretary of 
Transportation, the Administrator of the Federal Transit 
Administration, and appropriate congressional committees. This report 
is also available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you have any questions about this report, please contact me at 202- 
512-2834 or wised@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Major contributors to this report are listed in 
appendix II. 

Signed by: 

David J. Wise: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Scope and Methodology: 

To address the first objective, on the extent to which federal transit 
programs incorporate performance in funding distribution and 
evaluating transit program effectiveness, we selected and reviewed 8 
of 18 federal transit programs that account for nearly 97 percent of 
all Federal Transit Administration (FTA) grant funds, excluding funds 
provided under the American Recovery and Reinvestment Act.[Footnote 
52] With respect to the distribution of transit funds in these 
programs, we analyzed legislation and FTA documents and interviewed 
FTA officials to determine the current factors used to establish the 
level of grant funding under each of the transit programs and the 
extent, if any, to which the funding is linked to performance. In 
assessing the extent to which programs are funded based on 
performance, we compared the factors used to allocate funding to the 
programs against a definition of performance measures, which requires 
the measurement of activities against capacity, demand, or costs. To 
simulate incentive tier apportionments for the Urbanized Area Formula 
Grant Program's bus tier, we analyzed FTA apportionment documents and 
National Transit Database (NTD) data. Concerning the extent to which 
performance information is incorporated into efforts to evaluate the 
effectiveness of transit programs, we also analyzed FTA documents and 
interviewed FTA officials. We relied on criteria found in the 
Government Performance and Results Act, Transportation Research Board 
reports, and other sources, which indicate, among other things, that 
performance-based systems should have defined goals and objectives, 
link performance measures and program activities, have steps to 
monitor and report on performance, integrate performance results into 
decision making, and review and update performance systems 
periodically. We did not assess NTD or other FTA data to determine its 
reliability or appropriateness for use in assessing the performance of 
the Safe, Accountable, Flexible, Efficient Transportation Equity Act: 
A Legacy for Users (SAFETEA-LU) transit programs. 

To address the second objective, on mechanisms that exist for making 
federal transit programs more performance based and strategies for 
supporting their successful implementation, we conducted a literature 
review to identify pertinent studies and reports and interviewed 
transit agency officials and industry experts. We selected studies and 
reports that focused on performance accountability mechanisms and 
general practices that facilitated the effective use of accountability 
mechanisms or provided examples of using performance accountability 
mechanisms. Our literature search covered studies published from 2004 
onward and was largely drawn from major electronic databases in 
transportation, economics, and other fields (e.g., Transportation 
Research Information Services, EconLit, ProQuest, WorldCat, and other 
databases) and from our past work in surface transportation and 
performance measures and management. We also interviewed transit 
agency officials (see list of agencies in table 6) and a variety of 
industry experts to obtain their views on performance accountability 
mechanisms, their advantages and disadvantages, and strategies for 
mitigating any disadvantages and for helping support their successful 
implementation. We identified industry experts through a literature 
review and interviews with officials from FTA. Collectively, these 
experts were knowledgeable about the transit issues that we were 
addressing.[Footnote 53] In addition to the literature review, the 
examples of agencies or programs where the mechanisms have been 
proposed for or actually used were identified from other sources, 
including our previous work and interviews with transit agency 
officials and experts. 

To address the third objective, describing how selected U.S. and 
foreign transit agencies incorporate performance measurement into 
their planning and decision making and their views on the federal role 
in transit, we conducted semistructured interviews with 12 transit 
agencies--10 from the United States and 2 from foreign countries (see 
table 6). We identified transit agencies for our analysis through a 
literature review and interviews with officials from FTA and industry 
organizations. We further narrowed the list by reviewing the transit 
agencies' Web sites for information about their use of performance 
measurement to ensure the transit agency would be able to discuss 
performance measurement. The 10 U.S. agencies were selected to ensure 
geographic distribution and variation in the size of the population 
served. To select the 2 foreign transit agencies for our review, we 
narrowed the list to include agencies that offer multiple modes of 
transit and that were available to speak with us in English. Because 
the agencies were selected as a nonprobability sample, the results 
cannot be generalized to all transit agencies.[Footnote 54] However, 
the information from these agencies is illustrative of the ways in 
which transit agencies can incorporate performance measurement into 
their planning and decision-making processes. We also conducted 
interviews with industry experts, as previously discussed, to obtain 
their views on the role of the federal government in transit: 

Table 6: Transit Agencies Interviewed for GAO's Analysis: 

Agency location: state or country: California; 
Major area(s) served: San Francisco; 
Transit agency name: Bay Area Rapid Transit. 

Agency location: state or country: Canada; 
Major area(s) served: Montreal; 
Transit agency name: Société de transport de Montréal. 

Agency location: state or country: Colorado; 
Major area(s) served: Denver; 
Transit agency name: Regional Transportation District. 

Agency location: state or country: Illinois; 
Major area(s) served: Chicago; 
Transit agency name: Regional Transportation Authority. 

Agency location: state or country: Kansas; 
Major area(s) served: Wichita; 
Transit agency name: Wichita Transit. 

Agency location: state or country: Maryland, Virginia, Washington, 
D.C.; 
Major area(s) served: Washington; 
Transit agency name: Washington Metropolitan Area Transportation 
Authority. 

Agency location: state or country: Oregon; 
Major area(s) served: Portland; 
Transit agency name: Tri-County Metropolitan Transportation District 
of Oregon. 

Agency location: state or country: Pennsylvania; 
Major area(s) served: Philadelphia; 
Transit agency name: Southeastern Pennsylvania Transportation 
Authority. 

Agency location: state or country: Texas; 
Major area(s) served: Dallas; 
Transit agency name: Dallas Area Rapid Transit. 

Agency location: state or country: United Kingdom; 
Major area(s) served: London; 
Transit agency name: Transport for London. 

Agency location: state or country: Utah; 
Major area(s) served: Salt Lake City; 
Transit agency name: Utah Transit Authority. 

Agency location: state or country: Virginia; 
Major area(s) served: Norfolk and Virginia Beach; 
Transit agency name: Hampton Roads Transit. 

Source: GAO. 

[End of table] 

We conducted this performance audit from November 2009 through 
November 2010 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David J. Wise, (202) 512-2834 or wised@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Rita A. Grieco, Assistant 
Director; Elizabeth H. Curda; Dwayne Curry; Robert J. Dinkelmeyer; 
Katherine E. Hamer; James Leonard; Amy Rosewarne; Sara Ann W. 
Moessbauer; and Mindi G. Weisenbloom made key contributions to this 
report. 

[End of section] 

Footnotes: 

[1] American Public Transportation Association, Impacts of the 
Recession on Public Transportation Agencies, Survey Results 
(Washington, D.C.: March 2010). 

[2] GAO, Surface Transportation: Restructured Federal Approach Needed 
for More Focused, Performance-Based, and Sustainable Programs, GAO-08-
400 (Washington, D.C.: Mar. 6, 2008), and Performance and 
Accountability: Transportation Challenges Facing Congress and the 
Department of Transportation, [hyperlink, 
http://www.gao.gov/products/GAO-07-545T] (Washington, D.C.: Mar. 6, 
2007). 

[3] SAFETEA-LU, Pub. L. No. 109-59, 119 Stat. 1144 (Aug. 10, 2005). 

[4] SAFETEA-LU expired at the end of fiscal year 2009. Since that 
time, Congress has enacted the Surface Transportation Extension Act of 
2010, title IV of Pub. L. No. 111-147, 124 Stat. 71 (March 18, 2010), 
which continues the authorization of the federal transit programs 
through December 31, 2010. Additionally, the Consolidated 
Appropriations Act, 2010, div. A, title I of Pub. L. No. 111-117, 123 
Stat. 3034 (Dec. 16, 2009), appropriated funds for Federal Transit 
Administration funded programs for fiscal year 2010. 

[5] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009). 

[6] Government Performance and Results Act of 1993, Pub. L. No. 103-
62, 107 Stat. 285 (Aug. 3, 1993). 

[7] An urbanized area is an area with a population of 50,000 or more 
that is designated as such in the 2000 Census by the U.S. Department 
of Commerce, Bureau of the Census. 

[8] Designated recipients are entities designated by the chief 
executive officer of a state, responsible local officials, and 
publicly owned operators of public transportation to receive and 
apportion amounts that are attributable to transportation management 
areas. 49 U.S.C. § 5307(a)(2). The designated recipient is 
responsible, among other things, for allocating annual apportionments 
among recipients in an urbanized area or areas based on local needs 
and arrangements, and in coordination with the MPO, submitting a grant 
application for the Section 5307 Program of Projects, and/or 
designating other eligible applicants to apply for all or part of the 
apportionments, and notifying FTA of such designations. FTA C 9030 1D, 
Urbanized Area Formula Program Guidance and Application Instructions, 
Chapter II-3, section 5(a) and (c) (Washington D.C.: May 1, 2010). 

[9] 49 U.S.C. § 5307. 

[10] 49 U.S.C. § 5311. 

[11] Fixed-guideway systems use and occupy a separate right-of-way for 
the exclusive use of public transportation services. They include 
fixed rail, exclusive lanes for buses, and other systems. See 49 
U.S.C. § 5302 (4). 

[12] 49 U.S.C. § 5309. 

[13] 49 U.S.C. § 5309, 49 U.S.C. § 5318. 

[14] 49 U.S.C. § 5309. 

[15] 42 U.S.C. §12101 et seq. 

[16] The designated recipient or state will apply to FTA for funding 
on behalf of itself and any subrecipients within its area. 

[17] 49 U.S.C. § 5317. 

[18] The designated recipient or state will apply to FTA for funding 
on behalf of itself and any subrecipients within its area. 

[19] 49 U.S.C. § 5316. 

[20] Local governmental authorities may be grant recipients when 
Federal Highway Administration funds are flexed to Section 5310 
support services for individuals with disabilities. 

[21] A state may allocate amounts to a private nonprofit organization 
if the public transportation service is unavailable, insufficient, or 
inappropriate. 49 U.S.C. § 5310(a)(2)(A). A state may allocate funds 
to a governmental authority that is approved by the state or certifies 
that there are not any nonprofit organizations readily available in 
the area to provide the services. 49 U.S.C. § 5310(a)(2)(B). 

[22] 49 U.S.C. § 5310. 

[23] American Public Transportation Association, Impacts of the 
Recession on Public Transportation Agencies: Survey Results 
(Washington, D.C.: March 2010). 

[24] Paratransit services are transportation services that are 
typically provided to targeted populations, such as the elderly or 
those with disabilities, without fixed routes or timetables. See 42 
U.S.C. § 12143. 

[25] The grant life cycle includes the application, award, and 
closeout phases. 

[26] GAO, Public Transportation: Improvements are Needed to More Fully 
Assess Predicted Impacts of New Starts Projects, [hyperlink, 
http://www.gao.gov/products/GAO-08-844] (Washington, D.C.: July 25, 
2008). 

[27] See 49 U.S.C. § 5336. 

[28] Under the Small Transit Intensive Cities (STIC) Program, 
additional funding is apportioned to urbanized areas with populations 
of fewer than 200,000 that meet or exceed, in one or more of six 
performance categories, the industry average for all urbanized areas 
with a population of at least 200,000 but not more than 999,999. The 
measures for this program include vehicle revenue miles per capita and 
passenger miles per vehicle revenue mile. 49 U.S.C. § 5336(i)(1) and 
(j). 

[29] A vehicle revenue mile is the distance traveled by a transit 
vehicle between the time it is first available to the public and the 
last passenger drop-off. 

[30] Funding for urbanized areas with populations above 200,000 under 
the Urbanized Areas Formula Program is apportioned and flows directly 
to a designated recipient for the urbanized area and is then divided 
among eligible transit agencies within the urbanized area. 49 U.S.C. § 
5307(a)(2). 

[31] Department of Transportation, FY2009 Performance & Accountability 
Report (Washington, D.C: November 16, 2009). 

[32] The Americans with Disabilities Act (ADA) of 1990 requires that 
transit operators provide accessible paratransit service that is 
comparable to their regular service for disabled individuals who are 
unable to provide their own transportation or access the regular 
transit system. See 42 U.S.C. § 12143. 

[33] See 49 U.S.C. § 5335 for reporting requirements under the NTD. 
Transit agencies that receive federal funding under specific programs 
(Urbanized Area Formula Grants and Nonurbanized Area Formula Grants) 
are required to submit data to the NTD, 49 U.S.C. § 5335(b). 

[34] We have not analyzed the reliability or completeness of NTD or 
other data collected by FTA for the purposes of assessing transit 
agency performance or awarding grant funding based on transit agency 
performance. 

[35] Under GPRA, FTA is required to establish performance goals to 
define the level of performance to be achieved and to establish 
performance indicators to be used in measuring or assessing the 
relevant outputs, service levels, and outcomes for each of its program 
activities. 31 U.S.C. § 1115. 

[36] FTA C 9070.1F, Elderly Individuals and Individuals with 
Disabilities Program Guidance and Application Instructions, Chapter 
II, Section 3 (a) and (b), (Washington, D.C.: May 1, 2007). 

[37] FTA C 9050.1, The Job Access and Reverse Commute (JARC) Program 
Guidance and Application Instructions, Chapter II, Section 3 (a) and 
(b) (Washington, D.C.: May 1, 2007). 

[38] FTA C 9045.1, New Freedom Program Guidance and Application 
Instructions, Chapter II, Section 3 (a) and (b) (Washington, D.C.: May 
1, 2007). 

[39] GAO, Managing for Results: Enhancing Agency Use of Performance 
Information for Management Decision Making, GAO-05-927 (Washington, 
D.C.: Sept. 9, 2005). 

[40] U.S. Department of Transportation, FHWA and FTA, 2008 Status of 
the Nation's Highways, Bridges, and Transit: Conditions and 
Performance Report to Congress. 

[41] Cook, Thomas J., and Judwon Lawrie, Use of Performance Standards 
and Measures for Public Transportation Systems, Institute for 
Transportation Research and Education, North Carolina State 
University, Final Report FHWA/NC/2004-10 (Raleigh, North Carolina: 
September 2004). 

[42] Cook, Thomas J., and Judwon Lawrie, Final Report FHWA/NC/2004-10 
(2004). 

[43] All of the FTA grants programs we reviewed require that grantees 
provide sufficient funds or approved in-kind resources to serve as a 
local match for federally assisted projects. For example, the Job 
Access and Reverse Commute Program requires that the local share of 
eligible capital and planning costs be no less than 20 percent of the 
net program costs and the local share for eligible operating costs be 
no less than 50 percent of net operating costs. 

[44] Transit Cooperative Research Program (TCRP), Synthesis 56, 
Performance-Based Measures in Transit Fund Allocation: A Synthesis of 
Transit Practice, (Washington, D.C.: 2004). 

[45] GAO, Vocational Rehabilitation Funding Formula: Options for 
Improving Equity in State Grants and Considerations for Performance 
Incentives, [hyperlink, http://www.gao.gov/products/GAO-09-798] 
(Washington D.C.: Sept. 30, 2009). 

[46] GAO, Grants Management: Enhancing Performance Accountability 
Provisions Could Lead to Better Results, [hyperlink, 
http://www.gao.gov/products/GAO-06-1046] (Washington D.C.: Sept. 29, 
2006). 

[47] [hyperlink, http://www.gao.gov/products/GAO-06-1046]. 

[48] [hyperlink, http://www.gao.gov/products/GAO-06-1046]. 

[49] Federal Transit Administration, Public Transportation's Role in 
Responding to Climate Change. (Washington, D.C.: January 2010). 

[50] GAO, Surface Transportation: Restructured Federal Approach Needed 
for More Focused, Performance-Based, and Sustainable Programs, 
[hyperlink, http://www.gao.gov/products/GAO-08-400] (Washington, D.C.: 
Mar. 6, 2008). 

[51] GAO, The Government Performance and Results Act: 1997 
Governmentwide Implementation Will Be Uneven, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-97-109] (Washington, D.C.: June 2, 
1997). 

[52] The 8 programs include New Starts, the Bus and Bus Related 
Equipment and Facilities Program, Fixed-Guideway Modernization, the 
Urbanized Area Formula Program, the Nonurbanized Area Formula Program, 
the Special Needs of Elderly Individuals and Individuals with 
Disabilities Program, the Job Access and Reverse Commute Program, and 
the New Freedom Program. 

[53] The experts were from a variety of organizations including the 
American Public Transportation Association, the Bipartisan Policy 
Center, Transportation for America/Reconnecting America, the Railway 
Transport and Strategy Center at Imperial College of London 
(benchmarking programs), the Transit Finance Learning Exchange, and 
the Metropolitan Washington Council of Governments. 

[54] Results from nonprobability samples cannot be used to make 
inferences about a population because in a nonprobability sample, some 
elements of the population being studied have no chance or an unknown 
chance of being selected as part of the sample. 

[End of section] 

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Washington, D.C. 20548: