Research for Public Transit: New Directions -- Special Report 213 (1987)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

SPECIAL REPORT 213

1987 TRANSPORTATION RESEARCH BOARD EXECUTIVE COMMITTEE OFFICERS Chairman: Lowell B. Jackson, Executive Director, Colorado Department of Highways, Denver Vice Chairman: Herbert H. Richardson, Deputy Chancellor and Dean of Engineering, Texas A&M University System, College Station Executive Director: Thomas B. Deen, Transportation Research Board MEMBERS Ray A. Barnhart, Administrator, Federal Highway Administration, U.S. Department of Transportation (ex officio) John A. Clements, Vice President, Sverdrup Corporation, Boston, Massachusetts (ex officio, Past Chairman, 1985) Donald D. Engen, Vice Admiral, U.S. Navy (retired), Administrator, Federal Aviation Administration, U.S. Department of Transportation (ex officio) Francis B. Francois, Executive Director, American Association of State Highway and Transportation Officials, Washington, D.C. (ex officio) E. R. (Vald) Heiberg ifi, Chief of Engineers and Commander, U.S. Army Corps of Engineers, Washington, D.C. (ex officio) Lester A. Hoel, Hamilton Professor and Chairman, Department of Civil Engi- neering, University of Virginia, Charlottesville (ex officio, Past Chairman, 1986) Ralph L Stanley, Administrator, Urban Mass Transportation Administration, U.S. Department of Transportation (ex officio) Diane Steed, Administrator, National Highway Traffic Safety Administration, U.S. Department of Transportation (ex officio) George H. Way, Jr., Vice President, Research and Test Department, Association of American Railroads, Washington, D.C. (ex officio) Alan A. Altshuler, Dean, Graduate School of Public Administration, New York University, New York John R. Borchert, Regents Professor, Department of Geography, University of Minnesota, Minneapolis Robert D. Bugher, Executive Director, American Public Works Association, Chicago, illinois Dana F. Connors, Commissioner, Maine Department of Transportation, Augusta C. Leslie Dawsori, Secretary, Keniucky Transportation Cabinet, Frankfort Thomas E. Drawdy, Sr., Secretary, Florida Department of Transportation, Tallahassee Paul B. Gaines, Director of Aviation, City of Houston Aviation Department, Texas Louis J. Gambaccini, Assistant Executive Director/Trans-Hudson Transportation of The Port Authority of New York and New Jersey, New York Jack R. Gilstrap, Executive Vice President, American Public Transit Association, Washington, D.C. William J. Hams, Snead Distinguished Professor of Transportation Engineering, Department of Civil Engineering, Texas A&M University, College Station Raymond H: Hogrefe, Director-State Engineer, Nebraska Department of Roads, Lincoln Thomas L. Mainwaring, Consultant, Trucking Industry Affairs, Ryder Systems, Inc. James E. Martin, President and Chief Operating Officer, ffiinois Central Gulf Railroad, Chicago Denman K. McNeaj, Chairman, President and Chief Executive Officer, Southern Pacific Transportation Company, San Francisco, California Leno Menghini, Superintendent and Chief Engineer, Wyoming Highway Department, Cheyenne William W. Millar, Executive Director, Port Authority of Allegheny County, Pittsburgh, Pennsylvania Milton Pikarsky, Distinguished Professor of Civil Engineering, The City College of New York, New York James P. Pits, Director, Michigan Department of Transportation, Lansing Joe G. Rideoutte, Chief Commissioner, South Carolina Department of Highways and Public Transportation, Columbia Ted Tedesco, Vice President, Resource Planning, American Airlines, Inc., Dallas/Fort Worth Airport, Texas Carl S. Young, County Executive, Broome County, Binghamton, New York

SPECIAL REPORT 213 Research for Public Trans I*t New Directions Strategic Transportation Research Study: Transit Transportation Research Board National Research Council Washington, DC. 1987

Transportation Research Board Special Report 213 mode 2 public transit subject areas 11 administration 16 user needs 40 maintenance 53 vehicle characteristics Transportation Research Board publications are available by ordering directly from TRB. They may also be obtained on a regular basis through organizational or individ- ual affiliation with TRB; affiliates or library subscribers are eligible for substantial discounts. For further information, write to the Transportation Research Board, Na- tional Research Council, 2101 Constitution Avenue, N.W., Washington, D.C. 20418. Printed in the United States of America NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the In- stitute of Medicine. This study was sponsored by the Urban Mass Transportation Administration of the U.S. Department of Transportation. Library of Congress Cataloging-In-Publication Data National Research Council. Transportation Research Board. Research for public transit: new directions. p. cm.—(Special report; 213) ISBN 0-309-04461-8 1. Local transit—Research—United States. 2. Transportation-Research—United States. I. Series: Special report (National Research Council (U.S.). Transportation Research Board) ; 213. HE4451.R47 1987 87-22878 388.4'0973—dcl9 ISSN 0360-859X CIP

Committee for the Strategic Transportation Research Study for Transit WILLIAM W. MILLAR, Port Authority of Allegheny County, Pittsburgh, Chairman LAWRENCE D. DAHMS, Metropolitan Transportation Commission, Oakland, California Jo D. FEDERSPIEL, Metropolitan Transit Authority, Nashville, Tennessee MARTIN FLUSDERG, Multisystems, Inc., Cambridge, Massachusetts JACK R. GILSTRAP, American Public Transit Association, Washington, D.C. DAVID G. HAMMOND, Daniel, Mann, Johnson, & Mendenhall, La Canada, California Louis L. HElL, McDonald Transit Associates, Inc., Fort Worth, Texas ALAN F. KIEPPER, Metropolitan Transit Authority, Houston, Texas DAVID D. KING, North Carolina Department of Transportation, Raleigh JACK KINSTLINGER, Kidde Consultants, Inc., Baltimore, Maryland ALFRED B. LAGASSE Ill, International Taxicab Association, Kensington, Maryland TIIo1%iAs D. LARSON, The Pennsylvania State University, University Park, Pennsylvania ERNIE A. MILLER, METRO Regional Transit Authority, Akron, Ohio DON S. MONROE, Pierce Transit, Tacoma, Washington WILLIAM W. PARKS, Vapor Corporation, Chicago, Illinois JAMES E. READING, Santa Clara County Transit District, San Jose, California PHILIP J. RING0, ATE Management and Service Co., Inc., Cincinnati, Ohio GEORGE M. SMERK, Indiana University School of Business, Bloomington ROGER F. TEAL, University of California, Irvine CARMEN E. TURNER, Washington Metropolitan Area Transit Authority, Washington, D.C. CHARLES H. WEINSTEIN, Garrett AiResearch, Torrance, California NIGEL H. M. WILSON, Massachusetts Institute of Technology, Cambridge, Massachusetts Liaison Representatives DR. KENNETH W. BUTLER, Urban Mass Transportation Administration, U.S. Department of Transportation FRANZ M. GIMMLER, Urban Mass Transportation Administration, U.S. Department of Transportation (

Transportation Research Board Staff DAMIAN J. KULASH, former Director for Special Projects ROBERT E. SKINNER, JR., Director for Special Projects NANCY HUMPHREY, Program Manager W. CAMPBELL GEuB, Division A Liaison ROBERT J. REILLY, Division D Liaison JAMES COSTANTINO, Consultant DEANE ABOUDARA, Consultant ELIZABETH W. KAPLAN, Associate Editor

Preface The nation's transit industry faces a continuing challenge to provide safe and reliable service at a cost that taxpayers will support. Because of the pressure of meeting daily operating concerns, the importance of research, the benefits of which may not be realized for many years, may be overlooked. Yet research is central to solving the very problems that transit operators experience as they manage today's services. The federal government through the Urban Mass Transportation Admm- istration (UMTA) has provided the major financial support for transit research. During the 1980s, however, federal funding for research and development (R&D) dropped sharply. The orientation of federal R&D efforts also shifted to a smaller strategic program focused on national policy concerns. Other types of research oriented more toward the needs of local operators were scaled back. These changes warranted an assessment of transit research—its agenda, financing, and organization. UMTA requested that the Transportation Re- search Board conduct such a study and provided the necessary funding. To carry out a Strategic Transportation Research Study for Transit, the National Research Council assembled a committee of 22 members represent- ing a broad cross section of industry interests under the chairmanship of William W. Millar, Executive Director of the Port Authority of Allegheny County, Pennsylvania. The findings of the year-long deliberations of that study committee are presented here. The study was performed under the overall supervision of Dr. Damian J. Kulash, former Director for Special Projects, and Robert E. Skinner, Jr., current Director for Special Projects. Significant contributions to manuscript

vi PREFACE preparation were made by Nancy Humphrey and Dr. James Costantino with assistance from Deane Aboudara and Campbell Graeub. Special thanks are due to Nancy A. Ackerman, TRB Publications Manager, for publication of the final report and to Marguerite E. Schneider, Frances E. Holland, and Connie Woldu for their assistance in typing the many drafts and the final manuscript.

Contents EXECUTIVE SUMMARY . 1 1 INTRODUCTION ..............................................7 2 EvoLuTioN OF THE PuliLIc TRANSPORTATION INDUSTRY .........11 Sources of Financial Stress in the Industry, 11 Shift to Public Ownership, 12 Transit Investment and Urban Revitalization, 12 Origins of Federal Assistance for Transit, 13 Milestones in the Evolution of Public Transit: 1960-1985, 16 Conclusion, 19 3 TRANSIT RESEARCH: PROGRAMS AND PRIORITIES SINCE 1962.... 21 Federal Role in Transit Research, 21 Evolution of Research Program Priorities, 25 UMTA's Lead Programs, 33 Implications for Future Research, 35 4 DEVELOPING A PROBLEM-SOLVING TRANSIT RESEARCH PROGRAM .......................................38 Role of Problem-Solving in Transit Research, 38 Bridging the Gap in Problem-Solving Research, 41 Defining the Research Program, 42 Expected Payoff of a Problem-Solving Research Program, 45

5 FINANCING AN OPERATOR-ORIENTED RESEARCH PROGRAM......57 Desired Characteristics of a Financing Plan for Transit Research, 57 Adapting the Highway Research Funding Model for Transit, 59 Funding Proposal for a Problem-Solving Transit Research Program, 62 6 MANAGING AND ADMINISTERING THE RESEARCH PROGRAM......66 Developing an Organizational Structure, 66 Defining the Role of the Governing Board, 69 Selecting a Program Administrator, 71 Developing a Plan for Disseminating Results, 78 7 NEXT STEPS..............................................82 APPENDIX A Human Resources Management..................... 85 APPENDIX B Service Configuration and Marketing.................93 APPENDIX C Service Delivery Models..........................101 APPENDIX D Internal Efficiencies .............................. 109 APPENDIX E Maintenance....................................118 APPENDIX F Equipment......................................124 APPENDIX G Innovative Financing.............................133 STUDY COMMITTEE BIOGRAPHICAL INFORMATION................141

Executive Summary The Urban Mass Transportation Administration (UMTA) has been the princi- pal sponsor of transit research for more than 20 years. UMTA research spending, however, has dropped sharply from a yearly average of $60 million in the 1970s to approximately $22 million today. The orientation of UMTA research also has shifted. The federal transit research program now provides limited support for problem-solving research directed toward the everyday needs of local transit agencies. These changes in UMTA program funding and emphasis warranted a critical review of the public transportation research program and UMTA requested that the Transportation Research Board (TRB) conduct such a study. A study committee, which represents a broad cross section of industry inter- ests, including local transit agencies, state departments of transportation, private management companies, equipment suppliers, contractors, and aca- demic researchers, reached the following recommendations: Transit agencies should sponsor an operator-oriented, problem-solving research program focused on high-priority topics of common interest such as human resources management and maintenance. Program funding of approximately $10 million annually could be provided through a mandated set-aside by local operators of 1/2 percent of their federal formula grants (Sections 9 and 18 of the Urban Mass Transportation Act of 1964 as amended) on which the required local match would be waived. The transit industry should seek legislation to authorize the set-aside and clarify that research by local transit agencies is an eligible Section 9 and Section 18 program activity.

2 RESEARCH FOR PUBLIC TRANSiT Transit agencies should play a dominant role in managing and imple- menting the research program through representation on a governing board to provide program policy guidance. The transit industry, under the leadership of an organization like the American Public Transit Association (APTA), should assume primary respon- sibility for broadening industry support for the recommended research pro- gram, selecting an appropriate program administrative structure, and seeking the required legislation. BACKGROUND Initially, the UMTA-sponsored transit research program emphasized planning and systems studies. Then, motivated by the spectacular successes of the space age, the program took on a technology-oriented perspective. Research was focused on the development of advanced hardware, such as People Mover Systems, during the early 1970s. Responding to criticisms of the futuristic orientation of the program, UMTA boosted research spending in the mid to late 1970s on technology-based improvements to existing equipment and on transit operating problems. Most recently, program emphasis has shifted to privatization and management issues designed to reduce transit dependency on federal subsidies. An effective transit research program should support a wide range of research activities including Federal mission support: research to guide development of federal pub- lic transportation programs and policies in support of national goals and budgetary priorities. Technology development: research that searches for innovative tech- nologies, products, or processes in other industries or countries that could be applied successfully to transit Problem solving: highly applied research geared to solving the problems that local transit operators experience as they manage today's services. Of these research activities, the first category—federal mission support— now receives the most attention. The UMTA research program largely ne- glects problem-solving research, and transit operators and suppliers undertake little research of this type on their own. Federally sponsored research on technology improvements has been significantly scaled back, and here, too, operator- and supplier-conducted research is limited. Problem-solving research is the most pressing unmet need, and transit agencies must take the lead in reestablishing this activity. More research on

EXECUTIVE SUMMARY 3 technological innovations is also desirable. A technology-oriented research program, however, requires a larger scale of funding and longer lead times to conduct and apply successful research. A committee composed of suppliers, research institutes, and universities should be formed to investigate, with input from transit operators, the most appropriate mechanisms for funding and managing a program of research on technology development. Problem-solv- ing research promises the most immediate payoff from research spending, but ultimately the transit industry must decide the extent to which both types of research can be supported. RESEARCH AGENDA Research topics were screened to identify the most promising candidates for a problem-solving program. Topics were included if they demonstrated high expected payoffs in cost savings, revenue growth, system reliability, or safety improvements; high potential for overcoming organizational barriers to imple- menting successful problem-solving approaches; high interest to transit opera- tors; and high likelihood of achieving usable results. The following list of seven broad research topics is representative of the kind of research questions uppermost in the minds of today's transit managers. The list emphasizes "basics," such as maintenance, and operating concerns, such as human resources management. These topics illustrate the basic thrust of a problem-solving research program and indicate that promising research opportunities exist in this area. Human resources management: research topics could include identi- fying key factors in the transit work environment that affect employee perfor- mance, controlling absenteeism, assessing the productivity implications of alternative work rules and use of part-time labor, and introducing incentive programs and restructuring jobs to motivate improved performance. Service configuration and marketing: research topics could include de- veloping service strategies, like timed-transfer, to accommodate decentralized development; improving existing routes and scheduling; and using marketing techniques to increase ridership. Service delivery models: research topics could include examining methods for improving service coordination in a multiprovider environment, identifying types of services or functions most amenable to privatization, and reducing the barriers to contracting with private providers. Internal efficiencies: research topics could include developing energy management programs, identifying effective insurance strategies, improving fare structures and collection equipment, and getting the most Out of automa- tion.

4 RESEARCH FOR PUBUC 1'RANSIT Maintenance: research topics could include recruiting and training main- tenance personnel, developing effective supervisory programs, using com- puterized maintenance management information systems, and developing simplified vehicle subsystems and diagnostic equipment. Equipment: research topics could include introducing automated equip- ment, improving component reliability and life, increasing energy efficiency, responding to environmental regulations, developing better vehicle inspection techniques, and improving procurement practices and policies. Innovative financing: research topics could include analyzing the bene- fits of innovative financing techniques such as joint development, identifying the factors necessary to, their successful introduction, assessing the impact of tax reform on innovative financing for mass transit, and defining appropriate roles for the private sector in public-private partnerships. FINANCING AN OPERATOR-ORIENTED RESEARCH PROGRAM Establishing a problem-solving research program requires sustained long-term funding on a scale sufficient to cover fixed costs and support significant projects. The study recommends a mandated annual 1h percent set-aside of Section 9 and Section 18 grants by transit operators to meet these requirements. The funding mechanism is modeled after the National Cooperative Highway Research Program (NCHRP), which has drawn significant and stable support from an annual set-aside of federal-aid highway funds to state highway and transportation departments through the Highway Planning and Research (HP&R) program. Transit funds would be earmarked for a program of joint research on problems of common interest to local transit agencies; as is the case for the NCHRP program, local matching requirements would be waived. However, because of the large number of transit providers, the voluntary approach of the NCHRP would be unwieldy. A mandated set-aside for joint research would be more workable. Through the dedication of funds, transit properties would gain the opportunity to exert meaningful control over an annual program of approximately $10 million for joint research on practical day-to-day operating problems. Some research by individual transit agencies on problems of purely local interest or of interest only to a limited number of properties is still needed. The recommended set-aside, however, would not be adequate to support these additional activities. Local operators may voluntarily devote an additional portion of their Section 9 and Section 18 funds to this purpose. The mandated operator research program would complement, not supplant, the current UMTA-sponsored transit research program. Together, the UMTA

EXECUTIVE SUMMARY 5 program, which is expected to decline to $13 million annually by the late 1980s, and the recommended problem-solving research program of $10 mil- lion should yield approximately a $23 million annual research effort, or barely more than 2/io of 1 percent of the industry's gross revenues (farebox plus operating subsidies) of $10 billion. In comparison with the private sector, which spends an average of 2.8 percent of gross sales on research, this is a modest investment. To establish the recommended funding plan, Congress should amend the Urban Mass Transportation Act to authorize the set-aside for the joint research program and to clarify the use of Section 9 and Section 18 funds for research by local transit agencies as an eligible program activity. MANAGING AND ADMINISTERING THE RESEARCH PROGRAM The success of the recommended program will depend on the active participa- tion of transit operators in program management and implementation. Their financial participation and direct involvement in determining research pri- orities should increase the relevance of the research agenda and the likelihood that research results will be applied. Direct participation by transit agencies will require an active governing board with strong operator representation. The board should reflect a balance of different operating environments, including bus and rail systems, large and small operators, and urban and rural settings. Also, it should maintain liaison with organizations with a stake in transit, such as UMTA, AP1'A, the Ameri- can Association of State Highway and Transportation Officials (AASHTO), TRB, private equipment suppliers and contractors, and the research com- munity. The primary role of the governing board would be to set policy for and give direction to the research program. The board would also coordinate the recommended research program with parallel transit research activities, such as UMTA's policy research program, the university research program, and private equipment suppliers' research efforts. Finally, the board would take a lead role in developing a plan for disseminating the research results. A suitable institution must be found to provide day-to-day program admin- istration under the guidance of the governing board. An appropriate organiza- tion must demonstrate the capacity to represent industry interests and to manage a sizable research program. The study examined two alternative administrative arrangements. The first would build on an existing structure, such as the Transit Development Corpo- ration (TDC), the National Research Council (NRC), or universities.

RESEARCH FOR PUBUC TRANSiT The second alternative would provide a fresh start by creating a new institutional arrangement, such as a new nonprofit corporation dedicated to managing the transit research program. An additional consideration is whether to adopt a centralized or a regional approach. Final determination of an appropriate administrative structure shOuld be a key task of a follow-on effort. The success of a problem-solving research program will ultimately depend on a strong dissemination component. At a minimum, information dissemina- tion activities should include effective communication of written materials and follow-up with individual properties to determine if the research has addressed their problems. A more extensive outreach effort could include workshops, training sessions, and even demonstration programs. A significant effort would be made to work through organizations with close ties to the operators, such as UMTA regional offices, APTA, state departments of trans- portation, metropolitan planning organizations, university extension and out- reach programs, and relevant TRB committees. NEXT STEPS Establishing the proposed research program will require a substantial effort. The transit industry working through an organization, such as APTA, should take the lead in moving the program forward. More specifically, a special Steering Committee should undertake the following activities: Broaden awareness of the need and build consensus for an operator- funded, problem-solving research program. Make key decisions with respect to program organization including (a) defining more precisely the composition and functions of the governing board and (b) selecting an appropriate administrative structure. Develop a legislative proposal and work for its enactment. The basic objective of these actions is to create industry support for the program; its primary output should be new legislation authorizing an opera- tor-controlled and operator-funded transit research program.

1 Introduction The Urban Mass Transportation Administration (UMTA) has been the princi- pal sponsor of transit research since the Urban Mass Transportation Act of 1964 first authorized the Secretary of Transportation to undertake research, development, and demonstration projects in all phases of urban mass transpor- tation. Throughout the 1970s annual research and development (R&D) spend- ing on transit averaged approximately $60 million, nearly 1.5 percent of industry gross revenues.1 Although not large in comparison with the research expenditures of private industry, the federal R&D program for public trans- portation, centralized in a single agency and funded by yearly appropriations, supported relatively large-scale, multiyear research efforts. For many years the resources of the federal program were used to develop revolutionary improvements in public transportation in the form of new vehicle and guideway systems, such as people movers and tracked air-cushion vehicles. When resources were focused on conventional bus and rail transpor- tation modes, federal R&D efforts still emphasized new technology. Programs such as those for Transbus, heavy rail state-of-the-art cars, and prototype paratransit vehicles attempted to effect wholesale changes in vehicle technol- ogy. Transit operators2 increasingly questioned the wisdom of the program's "high-tech" orientation during the mid and late 1970s, and UMTA-sponsored research began to be focused more on technology-based improvements to existing equipment and on operating problems such as human resources issues. By 1985, however, under the influence of the Reagan administration, which sought to reduce the federal role in public transit, R&D obligations for transit

8 RESEARCH FOR PUBUC TRANSJT were reduced to nearly one-third of what they had been during the 1970s. Transit issues that affect national policy became top priorities, and funding was concentrated on less costly policy studies. Research on day-to-day prob- lems, such as human resources management and rising insurance costs, identified by transit properties as key to the operation of public transportation systems, was given scant attention in the new federal research agenda. As a result industry leaders agreed that the time had come to undertake a critical review of the federally sponsored public transportation research pro- gram. The Transportation Research Board (TRB) of the National Research Council formed a study committee composed of members who represented a broad cross section of industry interests, including local transit agencies, state departments of transportation, private management companies, equipment suppliers, contractors, and academic researchers. This report is a summary of the results of the study committee's year-long assessment—the Strategic Transportation Research Study (STRS) for transit. The STRS for transit was modeled after a recent, highly successful reex- amination of the highway research program (2). The objective of that effort was to develop a 5-year strategic plan of significant research opportunities with high potential short-term payoffs in the highway sector. The resulting study was influential in developing industry consensus on a highly targeted research agenda of six priority topics and in building support for a funding proposal to provide a significant increase in highway funds dedicated to research. However, the transit industry differs in several fundamental respects from the highway industry, and these differences have shaped both the objectives and the expected outcomes of the present study. First, the perceived mission of public transportation has changed several times since the beginning of federal involvement in transit, and, as a result, the direction of transit research has shifted. Even today people from different localities have different ideas about the role and importance of transit, and little consensus exists on how this role may change in the future. The study committee recognized the difficulty of reaching industry agreement, in this environment, on a highly targeted pro- gram of research. The highway industry, on the other hand, has a relatively clear and widely accepted view of its short-term and long-term mission, which provides a clearer mandate for research and an environment more conducive to setting research priorities. Second, transit research is financed directly from federal appropriations, and there is limited participation by local transit agencies.3 Thus funding levels are dependent on annual appropriations. The study committee recog- nized that launching a new research initiative would require a more stable funding arrangement. In contrast, a large portion of the highway research program is funded by a mandatory 1 '/z percent set-aside of federal highway

INTRODUCTION 9 apportionments to state highway and transportation departments through the Highway Planning and Research program. State highway and transportation departments therefore have a financial stake in the success of the research, and program funding is assured a share of federal highway dollars, although absolute funding levels cannot be guaranteed. Third, research program funding arrangements affect control of the research agenda. Transit research activities are centralized in the primary program sponsor, UMTA. In this "top-down" scheme, public transportation providers have little control over the research agenda and little responsibility for per- forming the research. A more industry-oriented program would require opera- tors to assume greater control over setting research priorities. In contrast, the highway research program has a strong grass roots, "bottom-up" component because the states control a significant portion of research funding. States conduct their own research with in-house research units or through university affiliations and pool their resources to undertake larger efforts of common interest. Finally, the sheer number of transit operators, estimated at more than 1,000 public and private fixed-route providers, increases the difficulty of identifying common research needs, developing an industry-relevant transit research agenda, and disseminating research results. For this reason, developing a suitable organizational structure to manage a research program for transit is extremely important. Determining research needs and setting research pri- orities for highways are more manageable activities because they involve a more limited number of players-50 state highway and transportation depart- ments plus the District of Columbia and Puerto Rico.4 The study committee took these differences into consideration when it defined the major objectives of the STRS for transit: To examine the match between research needs and current research expenditures; To develop a research agenda that promises a more substantial payoff for local transit providers and cOntributes to national transit policy; To identify a financing mechanism that assures more stable funding for operator-oriented research; and To consider organizational arrangements that assure greater operator participation in research. The results of the study are presented in the following chapters. Chapter 2 is a brief histOry of the public transportation industry in the post—World War II era, which sets the context for transit research activities. In Chapter 3 the focus is on the evolution of the transit research program since the beginning of federal involvement in the early 1960s and the reasons for the current lack of a

10 RESEARCH FOR PUBLIC TRANSiT problem-solving research orientation. A research agenda of seven broad topics that reflects transit operators' most pressing research needs is proposed in Chapter 4. A financing plan, based on the highway research model, to fund the operator-recommended research program is set forth in Chapter 5. In Chapter 6 the organizational options for managing and administering the program are examined. Follow-on steps to carry forward the key study recommendations into legislation and final program implementation are outlined in Chapter 7. NOTES Revenues include farebox and other non-fare-related revenues as well as federal, state, and local operating subsidies. Transit revenues averaged $4.4 billion annually between 1975 and 1979, the earliest years for which data are available (1, Table 5A, p. 18). Throughout this report, the term "transit operators" will be used interchangeably with the terms "transit agencies," "transit providers," and "transit properties" to denote those who actually manage the delivery of transit service. Local participation in research projects has consisted primarily of in-kind support, including transit agency staff time and use of property facilities and equipment. Dissemination of research results, however, is a more complicated process because research findings must not only reach state highway and transportation departments but also approximately 3,000 counties, 19,000 municipalities, and 17,000 townships, most of which have responsibilities for highways (3). REFERENCES Transit Fact Book. 1985 ed. American Public Transit Association, Washington, D.C., 1985. Special Report 202: America's Highways: Accelrating the Search for Innovation. TRB, National Research Council, Washington, D.C., 1984, 169 pp. Governmental Organization. Vol. 1, No. 1 of Census of Governments. Bureau of the Census, U.S. Department of Commerce, 1982.

2 Evolution of the Public Transportation Industry During the last quarter of a century the nation's transit industry has been rapidly changing. Admittedly, the perception of most transit riders might be the diametrical opposite, reflecting their familiarity with old stations, old vehicles, and old routes. But the often unchanging physical and functional aspects of transit belie profound shifts in the nation's expectations of transit and the institutional approaches it has adopted to meet these expectations. SOURCES OF FINANCIAL STRESS IN THE INDUSTRY Financial stress in many parts of the nation's transit industry was apparent long before 1950. The substantive financial weakness of the industry can be traced to ambitious overcapitalization by many of the properties in the electric Street railway boom at the turn of the century. In 1919 President Wilson appointed the Federal Electric Railways Commission to study the bankruptcy of about one-third of the street railway operating companies in the United States (1, p. 33). The public transit industry entered the 1920s, the time of the rise of serious competition from the automobile, in a badly weakened position. The owners of transit properties, including the utilities, chose for the most part to make only modest investments in improving those properties during that decade and invested even less for improvements in the depression-ridden 1930s. Although public transportation patronage before World War II remained fairly flat—between 11 billion and 14 billion passengers per year from 1931 to 11

12 RESEARCH FOR PUBUC TRANSiT 1940—this was down somewhat from travel volumes before the Great Depres- sion. (Travel volumes totaled between 15 billion and 17 billion passengers per year in the 1920s.) On the eve of World War II the transit industry was greatly weakened by falling ridership and lack of capital replenishment. With the advent of World War II, public transit patronage increased rapidly. Between 1941 and 1946, transit ridership grew by 65 percent to reach an all- time high of 23.4 billion passengers per year. Following the war, however, transit use declined at about the same pace that it had increased during the war. The physical wear and tear from extended use of public transportation facilities during World War II and deferred mainte- nance resulted in significant deterioration of the industry's physical plant by the war's end (2, pp. 73-75). Increases of nearly 50 percent in the average fare by 1950 to meet pent-up wage demands also discouraged ridership. Finally, with the return to peacetime employment levels and rising incomes, the bulk of the population could afford automobiles. By 1953 there were fewer than 14 billion transit trips per year. This rapid postwar downturn in patronage created serious financial problems for many transit companies. SHIFT TO PUBLIC OWNERSHIP As ridership fell and financial problems mounted, operators surrendered their systems to public agencies at a furious pace. This trend resurrected a pattern that had started to emerge even before World War II. For example, following the passage of the Public Utility Holding Company Act of 1935, utility companies often sold off their unprofitable transit subsidiaries (1, p. 35). These were mostly transfers between private companies, and there were only scattered instances, albeit major ones, involving public takeover of systems before World War 11.1 Just before the war, for example, the private subway companies in New York—the IRT and the BMT—passed into public control. Cleveland followed suit in 1942; and two other major cities, Boston and Chicago, saw their once-private systems pass into public ownership and operation in 1947 (3, p. 73). In 1945 only 29 transit systems were publicly owned, and these provided about 16 percent of the nation's transit service. By 1950 publicly owned systems provided about 28 percent of the nation's service. TRANSIT INVESTMENT AND URBAN REVITALIZATION The beginning of the postwar transfer of transit from private to public ownership occurred simultaneously with two other trends that have pro-

EVOLUTION OF THE INDUSTRY 13 foundly molded the nation's transit program, and indirectly its transit research initiatives. Dilapidated Urban Cores Even before World War H the deteriorated condition of urban centers was apparent to all, particularly central-area businessmen. The exodus of house- holds and activities to the suburbs had left downtowns economically declining and physically dilapidated. Social critics such as Frank Lloyd Wright, Lewis Mumford, Clarence S. Stein, and Benton MacKaye proposed utopian plans for broad-scale urban reordering. In 1949 the federal government began financing urban renewal, and transportation—particularly freeways—was seen as a key ingredient in renewal plans (4, pp. 55-60). Extensive urban planning was required as alternative ideas were advocated and discussed. Preoccupation with Congestion Following World War II massive increases in the ownership and use of automobiles created widespread congestion in urban areas. Indeed, congestion was seen as the major urban transportation problem. In that context, advocates of highways and public transportation competed for public attention and funding. At the heart of the debate was the issue of the physical capacities of the systems to relieve congestion. In brief, as the shift of transit from private to public ownership accelerated, the prevailing perspective was that transit was but one aspect of a dilapidated urban physical plant that badly needed overhauling, and that the key transpor- tation need was relief of peak-hour traffic congestion. Renewing the nation's transit systems was viewed as a capital investment problem that required coordination with overall urban development. ORIGINS OF FEDERAL ASSISTANCE FOR TRANSIT The first post-war federal aid for mass transit resulted from coalition building between the railroads and the mayors of a few cities served by commuter rail service. [The urban transit properties, frequently thought to be the architects of federal aid, did not join the railroad-mayor coalition until after its agenda had been firmly established (2, p. 114)]. The Transportation Act of 1958 included a provision that allowed railroads that provided commuter services to reduce or abandon those services if it could be shown that resulting financial

14 RESEARCH FOR PUBUC TRANSiT losses were causing hardship for other railroad operations (5, pp. 34-35). In such cases the Interstate Commerce Commission had authority to grant railroads relief when state regulatory agencies denied their petitions. A number of abandonments of commuter services occurred in the mid- Atlantic states as a result of the 1958 act. The railroads took the position that either the states would provide subsidies or further cuts would follow. New York and New Jersey provided aid and most commuter service in those states was preserved. In Philadelphia the commuter railroads petitioned the city for financial assistance. Philadelphia Mayor Richardson Dilworth and Pennsylvania Rail- road Company Chairman James Symes agreed that federal aid to ensure commuter service was needed, and Mayor Dilworth used uncommitted federal Model Cities funds for that purpose. The railroads were now on record as supporting the view that federal aid was essential for commuter service (2, p. 115). The Dilworth-Symes alliance became the foundation of what was to be- come the transit aid lobby (5, p. 101). Aiding commuter lines with federal grants (i.e., the Philadelphia model) not state grants (i.e., the New York—New Jersey model) became the primary legislative objective of the railroads and big city mayors. Overtures made by the city-railroad coalition for federal assistance to the Public Works Committee of Congress, whose primary concern was highway funding, were turned down. New legislation was drafted to fall within the jurisdiction of the Housing Subcommittee of the Senate Banking, Currency and Urban Affairs Committee—the committee responsible for urban renewal. This strategy removed federal aid for transit from the highway program and placed it within the framework of urban renewal rather than transportation. The resulting transit program's heavy emphasis on rail rapid transit is more readily understandable in this context: the construction and rehabilitation of rail systems were seen by mayors and railroad executives as an important early strategy for urban renewal in large cities. Rail rapid transit, believed to lend itself much more to high-technology projects than buses, also provided the necessary visibility for mayoral grantsmanship and immersed transit in the political cauldron of 1960 presidential election—year politics (6, pp. 22-23). Senator Harrison Williams of New Jersey, a member of the Senate Banking, Currency and Urban Affairs Committee, became the leading advocate of federal transit assistance and drafted legislation that would broaden the pro- gram to include all public transit. Williams' legislative proposal, in order to avoid the appearance of federal subsidies for the private commuter railroads, limited federal assistance to low-interest loans with a relatively small initial authorization of $100 million. This approach avoided the criticism that the federal government was getting involved in "a matter of purely local con-

EVOLU77ON OF THE INDUSTRY 15 cern" or that the proposed legislation was designed to benefit a few eastern railroads (2, p. 118). Publicity for the legislation brought support from urban specialists; academics; transportation experts; central city political leaders; the eastern commuter railroads; and, finally, the old-line transit systems. Thus from its origins as a "commuter railroad—mayor program," the federal aid constituency was broadened steadily to become a metropolitan coalition. This legislative development resulted in the landmark Housing Act of 1961, which authorized up to $50 million in low-interest loans for the acquisition, construction, or coordination of transit facilities and $25 million for mass transportation demonstration projects. In essence, this was the beginning of the early federal transit research program. It also included mass transit plan- ning in comprehensive urban planning (7, p. 5). In 1964 the Congress of the United States found that "the welfare and vitality of urban areas, the satisfactory movement of people and goods within such areas, and the effectiveness of housing, urban renewal, highway, and other federally aided programs are being jeopardized by the deterioration or inadequate provision of urban transportation facilities and services . . [8, Section 2(a)(2)]. To remedy this situation, Congress passed the Urban Mass Transportation Act of 1964. This act established a capital grants program for transportation projects on a two-thirds federal, one-third local matching basis. The legislation again as- sumed the need for federal subsidies if candidate projects were to be finan- cially viable. It also linked the availability of such aid to the existence of urban transportation plans (7, p. 7). Substantial increases in federal support for transit were provided in the Urban Mass Transportation Assistance Act of 1970, which authorized up to $10 billion for transit assistance during a 12-year period. Most of this financial assistance required appropriation, however, so the passage of the authorizing legislation did not guarantee the availability of funds. Even so, total federal capital grants from all sources, including funds transferred to transit from the National System of Interstate and Defense Highways in exchange for road segments withdrawn from the Interstate program, amounted to nearly $24 billion by the end of FY 1983 (9, p. 58). The National Mass Transportation Assistance Act of 1974 permitted federal assistance to be used to meet operating as well as capital costs. The funds involved are distributed, by formula, through Section 5 of the Urban Mass Transportation Assistance Act. This program reached its peak in 1981, when 535 grants totaling $1,129.5 million were made (9, p. 57). The peak of the public takeover wave came between 1965 and 1975, when the number of publicly owned transit agencies jumped from 88 to 333 and their share of the market increased from approximately 48 to 83 percent (9, p. 17). Federal capital funds, which could be used to buy out private

16 RESEARCH FOR PUBUC TRANSiT systems, may have contributed to this trend. Between 1965 and 1973 UMTA helped finance the public takeover of private systems in 49 cities (7, p. 53). One implication of these numbers is that today's public transit agencies are fairly new organizations; of the approximately 600 public transit agencies now operating services in the United States, 85 percent are 20 years old or younger, as is the Urban Mass Transportation Administration. MILESTONES IN THE EVOLUTION OF PUBLIC TRANSIT: 1960-1985 Although the history of most public transit agencies is short, a series of evolving transportation needs, changing public expectations, and varied gov- ernmental actions has made it a turbulent one. The experience in different cities has been too varied to permit any simple, universally applicable re- capitulation of these developments. Sharp differences of opinion about the root causes of transit problems still exist among contemporary transportation professionals, many of whom were actively employed in one capacity or another during the industry's formative years. Nevertheless, six milestones of this history should be highlighted because they are intertwined with the development of transit research activity. Strong Planning Thrust Federal policy has placed great stress on transit planning since the first federal involvement with transit in 1961. This was furthered by the Federal-Aid Highway Act of 1962, which required cities of more than 50,000 to have a comprehensive, continuous, and coordinated planning process for considering various modes of transport. This strong planning emphasis in the early years of the federal transit program is distinctly evident in the UMTA research agenda of the mid to late 1960s. Development of network models, integrated transportation and land use prediction techniques, home survey techniques, and models for forecasting demand were dominant during this period. Technological Remedies The years following the establishment of federal transit programs were characterized by a widespread public renewal of faith in technology. The world was stunned by the successful launch of Sputnik by the USSR in 1957 and by America's Apollo 11 landing on the moon in 1969. The irony of the

EVOLUTION OF THE INDUSTRY 17 cliche, "If we can get three people 240,000 miles to the moon and back, why can't we get 240,000 people three miles across town?" depicts the prevalent public attitude, and this was reflected in congressional, executive, industrial, and academic thinking during the late 1960s and early 1970s when the nation was preoccupied with technological solutions to urban transportation prob- lems. The Freeway Revolt The questions of whether urban freeways were desirable and whether they should be part of the Interstate system had been a subject of debate for more than a decade before the passage of the Federal-Aid Highway Act of 1956. Nevertheless, it was the beginning of Interstate construction that made this issue a subject of intense public concern. Neighborhood relocation, wide- spread use of eminent domain, the jarring visual impact of major freeways, and continuing growth of traffic and congestion led to revolts against the construction of urban freeway segments in various parts of the country. Many people seized on transit as an alternative to highways when the Federal-Aid Highway Act of 1968 instructed states to avoid adverse social and economic impacts of highway construction. Highway legislation was not passed in 1972 because of sharp disagreements about the use of Highway Trust Fund money to finance mass transit projects. This dispute was resolved in the Federal-Aid Highway Act of 1973, which permitted mass transit projects to be substituted for unwanted segments of the Interstate system (10, pp. 52-53). Although such substitute projects were not financed by Highway Trust Fund money, this act made highway and transit projects explicit substitutes as far as local decisions were concerned and made new funding available for transit in precisely those areas where, for one reason or another, antihighway sentiments were apt to be most pronounced. Militancy and Mobilization of Aggrieved Groups Another key factor in the evolution of mass transit programs stems from the growing militancy and mobilization of aggrieved groups in American society, particularly in the late 1950s and early 1960s. Although its origins can be spotted in civil rights activities, Altshuler has described the spread of this trend to other groups (11, p. 41): By the mid-1960s even civil disobedience by organized public employees, including law enforcement officials, had become commonplace. In consequence of this development, and also of various statutory provisions requiring citizen

18 RESEARCH FOR PUBUC TRANSF participation that have been enacted over the past decade, it is now essential for planners to win the support of citizens at the neighborhood level before projects can be viewed as serious candidates for implementation. In the 1950s and early 1960s, by contrast, it was generally enough to consult with key local elected and public works officials and with the professional representatives of large enter- prises that might be affected by transportation investment decisions.... This trend not only affected the format of local decisions, it also created new constituencies and new issues. Research in Support of Modal Advocacy As localities gained greater flexibility in modal investment through the ability to substitute for withdrawn Interstate highway projects, as the battleground for modal investment shifted to involve more and more of the public, and as this debate increasingly was voiced in social and economic terms instead of turning primarily on transportation attributes, some transit research activities were directed to informing, and in some cases steering, this increasingly broad debate. Research focused on developmental impacts of transit; land use consequences of transit, social and economic costs of neighborhood disloca- tions; energy impacts; environmental consequences; and ability to serve disadvantaged groups, such as the poor, those without automobiles, the unem- ployed, the handicapped, and the elderly. Growing awareness of the massive problems of widespread automobile use—highway deaths, pollution, neighborhood dislocation, and urban aes- thetics—further helped to create a climate in which the "side effects" of transportation investment became more central to the debate. At the same time mounting public transit costs and deficits intensified the need for local offi- cials to justify transit budgets, which added to the demand for documentation of the social and economic advantages of mass transportation. Businesslike Attitude In recent years the rate of investment in new urban transportation facilities— both highways and transit—has slowed and memories of core-area freeway battles and the energy crisis have started to fade. Continued increases in transit operating costs and extreme budgetary pressures at all levels of government have intensified the focus on efficiency. Both industry and government have tended to emphasize good management of conventional services and tradi- tional markets. Since the advent of the Reagan administration, increasing interest has been expressed in removing government from provision of services that the private

EVOLUTION OF THE INDUSTRY 19 sector can provide. This renewed governmental interest in privatization ap- pears to be a worldwide phenomenon; illustrative examples can be found in Great Britain, France, China, Spain, Mexico, Brazil, and India (12, p. 20). Support for the concept of privatization is based on both structural concerns about the size and role of government and economic concerns about the comparative flexibility and efficiency of private enterprise. The thrust for privatization is reflected throughout government and includes strong advocacy of the concept as it relates to urban public transportation. Private operation of public transit services, however, will require strong public oversight to ensure adequate accountability of private providers to the riding public. CONCLUSION The history of the nation's transit systems has come full circle during the last quarter of a century. Having begun as private companies in the business of getting people where they needed to go, transit shifted to varied public roles as it was called on to reverse the dilapidation of urban cores; decongest choking urban traffic arteries; and provide escape from pollution problems, highway deaths, energy shortfalls, and damage caused by widespread urban freeway construction. Transit was seized on as a new backbone for urban planning, as a source of technological panaceas to urban ills, as an accommodation to vocal aggrieved groups, and as a counteroffer to those who sought freeway solu- tions. Yet, from this short but turbulent history, transit is re-emerging as, predominantly, a means of providing transportation. Obviously, opinions vary widely about the appropriateness, effectiveness, and importance of transit in serving other public aims. This is reflected in the varied approaches and levels of local financial support for transit in the nation's metropolitan areas. For example, fares of transit patrons in Los Angeles, San Francisco, and Atlanta represent less than one-third of overall system revenues, whereas fares in Chicago represent about one-half of total revenues (13, Table 3.01, p. 3-9). Even though transit is still planned, funded, and operated for many of the reasons noted previously, the relative emphasis has nonetheless shifted back toward transit as a means of transportation. Further, stringent federal, state, and local budgets in the coming years will create a common interest among all transit operators—no matter to what other broad developmental and social purposes they may still aspire—in focusing intensively on the business side of transit—its operational efficiency and market opportunities. The impact of these shifts in transit's role on transit research activities are discussed in greater detail in Chapter 3.

20 RESEARCH FOR PUBUC TRANSiT NOTE 1. San Francisco was the first city to own its transit system, the San Francisco Municipal Railway. In 1912 the Muni was built parallel to the privately owned Market Street Railway (MSR) Company to help develop new residential areas outside the Market Street Railway's service area, an area in which the MSR was unwilling to risk enlarging its service far enough and fast enough for the city's liking. Eventually, the MSR was bought out by the Mum. REFERENCES A. Saltzman. The Decline of Transit. In Public Transportation: Planning, Opera- tions and Management (0. E. Gray and L. A. Hoel, eds.), Prentice-Hall, Inc., Englewood Cliffs, N.J., 1979. D. W. Jones, Jr. Urban Transit Policy: An Economic and Political History. Prentice-FlaIl, Inc., Englewood Cliffs, N.J., 1985. B. J. Cudahy. A Century of Service: The Story of Public Transportation in North America, 1882-1982. Supplement to Passenger Transport. American Public Tran- sit Association, Washington, D.C., 1982. M. W Rose. Interstate: Express Highway Politics, 1941-1956. The Regents Press of Kansas, Lawrence, 1979. M. N. Danielson. Federal-Metropolitan Politics and the Commuter Crisis. Co- lumbia University Press, New York, 1965. J. Reichley. Dilworth's Dilemma. The Reporter, Oct. 29, 1959. G. W. Hilton. Federal Transit Subsidies: The Urban Mass Transportation Assis- tance Program. American Enterprise Institute for Public Policy Research, Wash- ington, D.C., June 1974. Urban Mass Transportation Act of 1964, Part I: The Federal Urban Mass Transpor- tation Program Basic Law. 49 U.S.C. 1601. Transit Fact Book. 1985 ed. American Public Transit Association, Washington, D.C., 1985. P. K. Wheeler. Highway Assistance Programs: A Historical Perspective. Con- gressional Budget Office, Feb. 1978. A. Altshuler. The Urban Transportation System: Politics and Policy Innovation. MIT Press, Cambridge, Mass., 1979. G. S. Becker. Why Public Enterprises Belong in Private Hands. Business Week, Feb. 24, 1986. National Urban Mass Transportation Statistics, FY 1983. Section 15 Annual Report UMTA-MA-06-0107-85-1. Transportation Systems Center, U.S. Depart- ment of Transportation, Cambridge, Mass., Dec. 1984.

3 Transit Research: Programs and Priorities Since 1962 Since the beginning of federal involvement in public transportation, transit research has played a significant role in the federal program. During the last 20 years alone, the Urban Mass Transportation Administration has spent more than $900 million on research (including training). Throughout the 1970s, these expenditures averaged about $60 million, or nearly 1.5 percent of the industry's gross revenues, per year. The recent trend in UMTA research obligations, however, has been sharply down from the average of the last decade, and the share of spending dedicated to research has dropped accordingly (Table 3-1). In FY 1986, for example, transit research obligations were approximately $22 million, barely more than one-fifth of 1 percent of estimated industry revenues of $10 billion. In com- parison with the private sector, which devotes 2.8 percent of sales revenue on average to research, this is indeed a modest investment (1, p. 164). FEDERAL ROLE IN TRANSIT RESEARCH It is difficult to obtain a precise picture of the size and scope of transit research activities. Not all transit research is financed by UMTA. Some transit agencies test products or conduct research on their own. Manufacturers of vehicles and other supplies used by transit agencies also finance their own research ac- tivities. Information on amounts spent by the private sector for research on transit products, however, often is unobtainable or is not separately identified. 21

22 RESEARCH FOR PUBLIC TRANSIT TABLE 3-1 SPENDING TRENDS IN TRANSIT RESEARCH AND DEVELOPMENT UMTA Obligations Research Obligations for Research" as Percentage of FY ($ millions) Total Transit Revenues' 1981 91.9 1.2 1982 62.6 0.8 1983 62.4 0.7 1984 33.1 04c 1985 24.4 0.25c 1986 21.6 0.22c Note: Based on data from the Urban Mass Transportation Administration, Offices of Technical Assistance and Budget and Financial Management, and The American Public Transit Association, Transit Fact Book, 1985 ed., Table 5a, p.18. °Includes Section 6, 10, 11, and 20. t'Includes farebox and other non-fare-related revenues as well as federal, state, and local operating subsides. CBased on estimated revenues. The lines between research and other research-related activities are not always clearly drawn. Research is conducted to advance the state of know!- edge about solutions to urgent problems (2, p. 166). To ensure that research results are translated into practice, research projects are frequently followed by development and demonstration projects to test the feasibility of research ideas and by training and technical assistance to assure widespread adoption and implementation of workable products or services. In practice, however, the lines between research and demonstration of new products or approaches, training, product evaluation, or product modifications are frequently blurred. Even allowing for a broad definition of research, there do not appear to be any transit-related research activities outside of the UMTA program that come close to the scale of the UMTA-financed program. Although vehicle manufac- turers, transit equipment suppliers, and transit system operators have de- veloped and will continue to develop innovative and improved products, the vast bulk of the nation's transit research activity since the early 1960s has been concentrated under the UMTA program. Section 6 of the Urban Mass Transportation Act of 1964 first authorized the Secretary of Transportation to undertake research, development, and demon- stration projects in all phases of urban mass transportation, including new facilities, equipment, techniques, and methods (3). Such research was allow- able if it promised to reduce urban transportation needs, improve transit service, or reduce costs. Funding under this section has provided the vast

PROGRAMS AND PRIORITIES 23 majority—more than 90 percent—of all federal assistance for mass transit research. From 1972 to 1984, between $60 million and $75 million per year was committed or obligated to transit research through Section 6. Table 3-2 gives historical figures on funding for Section 6 as well as for other major research categories. In addition to Section 6, several other provisions of the Urban Mass Transportation Act, as amended, provide financial support for transit research, training, and maintenance of a data base for research and monitoring pur- poses. Unfortunately, the research component of these activities cannot be identified separately. The key provisions are Section 10 authorizes training of transit managers. About $500,000 per year was spent on this activity during the mid and late 1970s. This amount increased to more than $1 million per year between 1982 and 1984. Section 11 authorizes grants to universities for research and investigations of theoretical or practical problems of urban transportation and for training researchers. Preference is given to institutions of higher learning that bring together knowledge and expertise in the various social sciences and technical disciplines that relate to urban transportation problems. Approximately $2.0 million per year has been spent on these activities during the past decade. Section 15 requires the U.S. Department of Transportation to develop, test, and prescribe a reporting system for the transit industry to accumulate financial and operating information. Now that the system has been developed, approximately $300,000 is required annually to maintain the data base. Section 20 authorizes funding to address human resources issues, includ- ing research on public transportation manpower and training needs. The first research expenditures of $1.5 million under this program were made in FY 1984. Expenditures increased to $2.1 million in FY 1985. Several other provisions of the Urban Mass Transportation Act also can be used to provide financial assistance for research or to implement research results. These are Section 3(a)(1)(C), part of the discretionary capital grants program that provides for the introduction of new technology into public transportation service in the form of innovative and improved products; Section 4(i), which authorizes grants for the deployment of innovative tech- niques and methods in the management and operation of public transportation services; and Section 22, which authorizes the Secretary of Transportation to investigate facilities, equipment, or operating procedures that are potentially unsafe.

TABLE 3-2 UMTA RESEARCH SPENDING, HISTORICAL SUMMARY. FY 1972 THROUGH FY 1985 (S millions) Commitments in FY 76/ Research Categories 72 73 74 75 TQb 77 78 Obligations in FY 79 80 81 82 83 84 85 AilYcara Section 6: research, development, and demonstration piecte Bus and paratzansit 3.9 16.0 13.3 4.9 5.8 7.1 6.8 10.7 8.6 17.2 10.1 6.3 2.1 2.4 115.2 Rail and construction 12.6 14.5 16.0 13.2 19.0 13.7 13.8 12.2 10.8 15.6 10.9 6.4 5.5 2.0 166.2 New technology 34.8 31.4 23.4 7.9 12.8 13.8 19.5 22.3 16.5 22.0 9.1 14.5 7.5 0.4 235.9 Safety and security 1.1 0.8 1.5 1.6 3.2 3.5 3.1 2.8 2.0 5.8 25.4 Section 15: reporting system. NCTRP. special 1.0 0.4 0.6 0.6 0.9 1.0 2.1 0.8 2.3 4.1 2.3 4.7 2.7 1.3 24.8 projects Planning methods 0.1 2.3 2.8 2.9 3.4 3.2 3.2 4.9 3.9 4.8 5.1 3.8 2.4 2.0 44.8 Service and'methods 2.5 4.9 7.2 12.3 8.4 14.0 15.5 6.3 21.7 13.8 10.1 15.1 3.4 3.3 138.5 Transit management 6.7 2.1 2.8 3.9 4.1 3.0 3.3 2.3 4.1 5.7 5.7 2.1 0.6 0.7 47.1 Policy - - 0.6 0.9 3.0 2.2 2.0 1.1 2.9 2.7 2.9 1.3 1.5 2.4 25.5 Civil rights 0.7 0.9 0.4 2.0 Subtotal Section 6 61.6 71.6 66.7 46.6 58.5 58.8 67.7 62.2 74.0 89.4 59.3 57.7 28.6 20.7 823.4 Section 10: management 0.3 0.4 0.3 0.5 0.7 0.5 0.5 0.5 0.5 0.7 1.1 2.6 1.0 0.7 10.3 training Section 11: university research and training 2.5d 2.5d 2.3 2.2 2.0 2.0 2.0 2.0 2.3 1.8 2.2 2.1 2.0 0.9 28.8 Section 20 human resources 1.5 2.1 3.6 Total all categories 64.4 74.5 69.3 49.3 61.2 61.3 70.2 64.7 76.8 91.9 62.6 62.4 33.1 24.4 866.1 aUffA reported to 0MB and to the Congress on the basis of commitments until FY 1979, as which time the baits for reporting was changed to obligaticair. As a result, there may be some double counting of dollars that were committed in FY 1978 but not obligated until FY 1979 or FY 1980. It is not possible to isolate those obligationa. bTransition quarter. epolicy research was funded from the plasming activity before FY 1974. dAcLual obligation figurer not available. SoURCE: Office of Technical Auistance, UMTA, U.S. Dqartment of Transportation, spring 1986.

PROGRAMS AND PRIORITIES 25 EVOLUTION OF RESEARCH PROGRAM PRIORITIES Just as the nation's transit industry has evolved in a series of rapidly changing phases, so too have its transit research activities. Looking back over the last two and a half decades, it is convenient to view transit research in four general stages: 1962-1969: planning and systems studies, 1970-1974: development of large-scale new technologies, 1975-1979: beginning of emphasis on improvements to existing technology, and 1980—present: support for public transportation as a business. These four phases are described briefly hereafter. Planning and Systems Studies (1962-1969) During the earliest years of the federal transit program, overall transit research spending was small: less than $10 million per year between 1962 and 1968, with the exception of 1963 when total research obligations exceeded $16 million (Figure 3-1). Before 1968 more than half of the funds for the overall research program was expended on planning, systems studies, and systems management. The underlying rationale for this early program lay in the belief by UMTA that the urban transportation problem stemmed in part from the intellectual and technological stagnation of the transit industry and its un- willingness to risk innovation; UMTA research aimed to make public trans- portation a more effective rival to the automobile (4, p. 13). Given the contin- uous downward trends in patronage and profitability that preceded these years, it is indeed doubtful whether transit managers could have found the motiva- tion and resources necessary to explore the potential of new approaches. The majority of UMTA research funds in the 1960s went into demonstration projects that often involved fare reductions and service improvements. By the late 1960s technology began to play a more dominant role in the UMTA research program. By 1969 UMTA was spending more on equipment research than it was on analyzing fare and service policies or developing planning tools (Figure 3-1).

26 RESEARCH FOR PUBLIC TRANSIT 100 80 Management, Planning, Policy, Techniques Transition El Technology Quarter 60 0 40 20 I LI I I1 11 II I I I '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 Fiscal Year FIGURE 3-1 UMTA research and training obligations, 1962-1984; Section 6 funds only are included except for Section 6 funds provided to the Offices of Policy and Civil Rights. (SomcE: Office of Techni- cal Assistance, UMTA, U.S. Department of Transportation.) Development of Large-Scale New Technologies (1970-1974) In the wake of the success of the National Aeronautics and Space Administra- tion's lunar landing of Apollo 11 in mid-1969, UMTA's research program grew rapidly and took on an overwhelmingly technological orientation in the early 1970s. During these years, UMTA began some extremely large-scale and expensive hardware programs: Morgantown Personal Rapid Transit—UMTA approved this project in 1970 to test and evaluate Personal Rapid Transit (PRT) systems and to develop the necessary data to reproduce the system in other locations in the United States with similar transportation needs [cost: $133.6 million (5, FY 1977, p. 49)]. Advanced Concept Train (A CT-i )—This project was designed to support the development of a completely new urban vehicle for advanced systems and subsystems. This vehicle would serve as the prototype of a new generation of futuristic, standardized urban rapid rail vehicles. Features of the two-car train included a new lightweight monomotor truck, a flywheel energy storage system, an aluminum frame, and modular interior construction [cost: $27.3 million (5, FY 1978, p. 40)].

PROGRAMS AND PRIORITIES 27 Urban Tracked Air-Cushion Vehicle (UTACV)—This project was in- tended to test the notion of a new, pollution-free "advanced concept levitated vehicle." Originally financed by the Federal Railroad Administration, the project was contracted out by UMTA to Rohr Industries to build a fully operational prototype vehicle and a 500-foot test guideway and to develop other plans and specifications [cost: $17.3 million (5, FY 1973, p. 87)]. Dial-a-Ride—This project was designed to test the technological and market feasibility of dial-a-ride service. UMTA funded a demonstration of the concept in Haddonfield, New Jersey [cost: $7.9 million (5, FY 1975, 1976, pp. 8, 13)]. These systems promised quantum leaps in public transportation. The UTACV, for example, used an elevated concrete right-of-way with a vertical metal guide at the center. The vehicles were raised off the right-of-way by a cushion of compressed air. A TACV capable of 300 mph for interstate use was tested at the Federal Railroad Administration's Pueblo Test Center, although UMTA's initial interest in TACVs was for a 150-mph system for use in airport access. During these years UMTA also made substantial investments in conven- tional technology for rail and bus including State-of-the-Art Car (SOAC)—To incorporate the best in existing tech- nology, UMTA developed prototypical rail cars for testing and evaluation in New York, Boston, Cleveland, Chicago, and Philadelphia [cost: $7.0 million (5, FY 1977, p. 30)]. Transbus—To develop a more attractive and functionally superior bus capable of luring motorists out of their private automobiles, UMTA initiated the Transbus program in 1971. The key features of Transbus were improved comfort and ride quality to make buses more competitive with the private automobile; improved safety for passengers, pedestrians, and occupants of other vehicles; reduced maintenance costs and easier maintainability; and specific improvements to facilitate use by elderly patrons [cost: $28.7 million (5, FY 1976, p. 1)]. The massive plunge by UMTA into technological research in the early 1970s reflected not only a general optimism about technological solutions to urban problems but also explicit congressional direction to use the transit program to offset unemployment in the aerospace and defense industries. The 1970 amendments to the Urban Mass Transportation Act instructed the Secre- tary of Transportation to make use of the spare capability of these industries. Support in Congress was strong for advanced hardware and there was never lack of a champion to bring "twentieth-century" thinking to public transporta-

28 RESEARCH FOR PUBLIC TRANSiT tion, no matter what the cost. This emphasis on development of advanced - hardware systems continued through the end of 1974. From 1970 through 1974 UMTA obligations for research from the Section 6 program increased from $18 million per year to nearly $67 million per year, with the vast majority of these funds earmarked for research on large-scale technology development (Figure 3-1). Beginning of Emphasis on Improvements to Existing Technology (1975-1979) Between 1975 and 1979, UMTA continued its hard technology thrust from the early 1970s, completed work on PRT and Transbus, and continued several other major projects, including TACV with testing at the Pueblo Test Center, the SOAC, ACT-i, and the Advanced Group Rapid Transit System (AGRT).' Whereas the early 1970s saw the initiation of new and innovative tech- nologies, this period saw not only the continuation of these major programs but also the beginning of smaller programs to improve the dependability of existing hardware and components. Nonetheless, the principal thrust of UMTA's transit research was for more hardware, albeit nearer term. In addi- tion, research on construction practices, such as improved tunneling technol- ogy, and on operating technologies, such as automatic vehicle monitoring and improved fare collection machines, received considerable attention. Early in 1976 UMTA convened an R&D Priorities Conference at which researchers, transit operators, suppliers of transit equipment, and others inter- ested in transit research met to review the program. The futuristic emphasis of the UMTA research program was criticized by transit operators. For example, William J. Ronan, then Chairman of the American Public Transit Association and Chairman of the Port Authority of New York and New Jersey, noted that a major R&D priority should be to assist the current users of public transit (6, p. 8). He advocated improvements in reliability and safety and made a strong plea for down-to-earth research (6, p. 9): We ought to be establishing our priorities to help the transit industry continue to do what it needs to do—provide increasingly for the movement of people to and from their places of work, of school and of recreation. This means, very frankly, devising a program which is understandable to the legislative bodies, particularly the Congress and also the local bodies so that they understand what is going on. They must have confidence that the research and development program is practical and is going to meet the needs in the immediate present and in the not too far distant future. Speaking 2 years later, Robert R. Kiley, then Chairman of the Mas- sachusetts Bay Transportation Authority, echoed similar concerns (7, p. 18):

PROGRAMS AND PRIORITIES 29 Putting the most maintenance, operations, safety, and training as possible into R&D means that what is important is not whether the wheel is new, but that the wheel works in an operating environment. I think the single most important thing any R&D program can do is hire some top-notch people who have had direct experience in operating vehicles, meeting transit schedules, maintaining vehicles, and being responsible for the safety of passengers. Defending his program against such criticism, G. J. Pastor, UMTA Associ- ate Administrator for Technology Development and Deployment, pointed to various factors that influenced the direction of the UMTA R&D program including changing priorities of various administrations and industry leaders, loss of American technological leadership, a national tendency toward exces- sive self-criticism, and congressional insistence that UMTA use spare capacity in the aerospace and defense industries. In spite of this defense, Pastor acknowledged (7, p. 21) that there was a period of five to seven years where tomorrow's transportation dominated the UMTA program, but we attempted tomorrow's transportation today. We promised and overpromised repeatedly and we underperformed repeatedly. I think the damage is so serious that it will probably take us a generation to live it down. UMTA also responded to increasing concerns about the capital intensive- ness and futuristic orientation of its R&D program by boosting the scale of the Service and Methods Demonstration Program. Testifying before the House Transportation Appropriations Subcommittee in 1976, UMTA Administrator Robert E. Patricelli argued (8, p. 659) that the requested funding increase for the service and methods demonstration program (up to $19 million) reflects my conviction that new equipment and facilities alone are not going to accomplish our objectives. All the money in the world will not persuade people to use mass transit if the service remains poor and unreliable. The aim of this demonstration program is to help introduce into practice a range of innovations that would increase the efficiency and productivity of transit operations, improve the quality and convenience of transit services, and make them more competitive and attractive vis-à-vis the auto- mobile.... and further that a more imaginative use of existing facilities and greater innovation in the provision of transportation services coupled with... a more intelligent and socially responsible use of the automobile together hold the key to future mobility and the preservation of livable and environmentally sound cities. However, in addition to this new emphasis, Patricelli went on to propose and advocate "a strong and aggressive program of research and development

30 RESEARCH FOR PUBUC TRANSIT into new forms of mass transportation" (8, p. 659) and explicitly cited auto- mated guideway systems. Patricelli acknowledged the allegation that "the UMTA program has been devoted too much to high-risk, long-term technol- ogy, and not enough to short-term, high-payoff activities" (8, p. 660), but he argued that the emphasis of his proposed program represented an appropriate balance. As UMTA worked to improve the balance of its research program, it steadily increased contact with the transit industry by holding at least one major workshop or seminar each week. For example, the American Public Transit Association (APTA) Rail Transit Steering Committee joined with UMTA in reviewing the research program and helped set UMTA R&D priorities. The APTA Bus Technology Liaison Board performed a similar function with its UMTA counterparts. In 1979 a National Cooperative Transit Research and Development Pro- gram (NCTRP) was instituted. Based on an idea introduced at the first R&D Priorities Conference in 1976, the objective of the program was to provide a mechanism by which UMTA's principal client groups, including transit opera- tors, could join cooperatively to identify research problems, establish pri- orities, and participate in developing solutions (9, p. 1). Although funding was provided from Urban Mass Transportation Act Section 6 funds, the intent was to provide the transit industry a means of addressing near-term research problems without extensive federal involvement in setting the research agenda (9, p. 2). Ultimately, UMTA's client groups were expected to provide addi- tional financial support to enable the program to address a larger number of problems each year (10, p. 1). Despite these new initiatives, the overall pattern of UMTA research spend- ing between 1976 and 1979 did not show any discernible shift in priorities away from new technology, with the possible exception of the Service and Methods Demonstration Program.2 In 1976 (and the transition quarter), out of a total of $61.2 million, UMTA spent $12.8 million on projects it classified as new technology (Table 3-2). This represented 20.9 percent of all UMTA R&D spending (under Sections 6, 10, 11, and 20). Throughout the rest of the 1970s total annual UMTA research spending exceeded that of 1976, and the share devoted to new technology increased to 22.5 percent of the program in 1977, 27.8 percent in 1978, and 34.5 percent in 1979. Support for Public Transportation as a Business (1980—present) Since 1980 a major thrust of the UMTA R&D program has been to improve the operating efficiency of transit systems by providing technical assistance.

PROGRAMS AND PRIORITIES 31 UMTA's primary research office was renamed the Office of Technical Assis- tance during this period. UMTA continued its commitment to the Service and Methods Demonstra- tion Program during the early 1980s, evaluating and sharing with the transit community innovative transit service and management techniques. The pro- gram analyzed numerous on-site programs and projects to provide operators in other areas with sufficient information to determine if new techniques could be adapted to other environments. '1'pical research projects tackled fare and pricing policies, absenteeism, marketing techniques, paratransit services, rural transportation activities, and innovative techniques for acquiring and funding transit systems. At another R&D Priorities Conference held in Norfolk, Virginia, in late 1980, industry representatives again expressed their interest in improvements to existing systems and showed little enthusiasm for advanced technology (11). Considerable concern was voiced for what had become a serious para- dox: the more money that was spent to improve transit, the more complex the systems became, and the more they cost to operate. In September 1983 a select group of transit officials met at Ann Arbor, Michigan, to address this and other problems that continued to affect the direction of the UMTA research program. A number of specific conclusions emerged, including suggestions that even more attention be paid to near-term hardware research as well as to nonhardware issues, such as human resources. It was agreed that "the UMTA Technical Assistance budget has historically overemphasized hardware at the expense of the human aspects of transit service provision" (12, p. 7). A conscious effort was made to bring transit research activities more in line with near-term industry issues and funding expectations. However, the re- search program was plagued with the twin problems of a residual high- technology, "big system" reputation on the one hand and the Reagan admin- istration's new policy of decreasing the scope of federal programs on the other. The trend away from a hardware emphasis was evident. Although new technology accounted for 54 percent of total research spending in 1972, for example, the same program category in 1984 accounted for 23 percent of the total, primarily for program continuations (Table 3-3). Similarly, spending for safety and security was nonexistent in 1972 but accounted for $2 million, approximately 6 percent of total obligations, in 1984. Nevertheless, the fund- ing totals for all years up to 1985 demonstrate that a substantially larger share went for new technology (28 percent of the total) than for any other single spending category, including rail and construction (20 percent), bus and paratransit (13 percent), and service and methods demonstration programs (16 percent). Of course, some of the greater funding share for new technology can

TABLE 3-3 COMPARISON OF UMTA RESEARCH SPENDING BY PROGRAM CATEGORY 1972, 1984, AND ALL YEARS Percentage Percentage Percentage of 1972 of 1972 1984 of 1984 1972-1984 1972-1984 ($ millions) Total ($ millions) Total ($ millions) Total Busand Paratransit 3.9 6.0 2.1 6.0 112.8 13.0 Rail and Construction 12.6 20.0 5.5 17.0 164.2 20.0 New technology 34.8 54.0 7.5 23.0 235.5 28.0 Safety and security 2.0 8.0 23.5 3.0 Section 15 1.0 2.0 2.7 8.0 23.5 3.0 Planning methods 0.1 0.2 2.4 7.0 42.8 5.0 Service and methods 2.5 4.0 3.4 10.0 135.2 16.0 Transit management 6.7 10.0 0.6 2.0 46.4 6.0 Policy 1.5 5.0 21.1 3.0 Civil rights 0.9 3.0 1.6 0.2 Management training 0.3 0.5 1.0 3.0 9.6 1.0 University research and training 2.5 4.0 2.0 6.0 27.9 3.0 Human resources 1.5 5.0 1.5 0.2 Total 64.4 100.0 33.1 100.0 841.7 100.0 SouRcE: Office of Technical Assistance, UMTA, U.S. Department of Transportation, spring 1986.

PROGRAMS AND PRIORITIES 33 TABLE 3-4 UMTA TRANSIT RESEARCH APPROPRIATIONS AND OBLIGATIONS 1981-1987 Amout of Appropriations Obligationso Carryover Percentage of FY ($ millions) ($ millions) ($ millions) Canyover 1981 67.5 91.9 —24.4 —36 1982 51.6 62.6 —11.0 —21 1983 58.3 62.4 —4.1 —7 1984 54.8 33.1 21.7 40 1985 50.0 24.4 25.6 51 1986 16.6 21.6 5.0 30 1987 17.4 NA NA NA Nore: Based on data from the Office of Technical Assistance and the Office of Budget and Financial Management, UMTA, U.S. Department of Transportation. NA = not available. Obligations include prior years' carryover. be attributed to its intrinsically greater cost compared with the cost of non- hardware research and to congressional directives that required continued funding of several major hardware research programs. As the UMTA research program began to be focused more on operating concerns, however, funding and manpower for research began to dwindle. In 1982 and 1983, for example, obligations for the UMTA research program were more than $60 million with a supporting staff at headquarters and the Trans- portation Systems Center of 260. By 1985 obligation levels were less than $25 million with a total supporting staff of 95. This spending reduction reflected, in part, a decision by UMTA to spend less on transit research than the full amounts permitted under congressional appropriations (Table 3-4). In 1985, for example, 51 percent of congressionally appropriated funds remained un- speni as UMTA began to shift to a smaller research program that emphasized less costly policy-oriented research. By 1986 and 1987, appropriation levels were reduced to reflect the smaller scope of the program. UMTA'S LEAD PROGRAMS In 1985 UMTA restructured its R&D program to reflect the Reagan admin- istration's goal of a reduced federal role and the changing nature of the urban mass transportation industry. The general thrust of the change was toward a smaller, more highly targeted federal research program focused on strategic national policy concerns. The previous program was criticized by administra- tion officials for its emphasis on technology, its ambitious scope and funding

34 RESEARCH FOR PUBLIC TRANSiT scale, and its heavy federal involvement. In contrast with the eight broad research categories of the old program, the new R&D effort was consolidated into four Lead Programs directly linked with UMTA's mission (13, p. 1). Each of the programs provides for a series of interrelated multiyear proj- ects. The first program is focused on what UMTA views as one of its primary management responsibilities-promoting transit passenger safety and se- curity. The second program furthers the administration's goal of minimizing the federal presence in transit by sponsoring research, demonstration, and information dissemination projects on ways to encourage competition in and privatization of transit service delivery. The third program recognizes UMTA's continuing fiduciary responsibility for federal investment in transit by sponsoring studies on improving financial management and maintenance practices of local transit agencies. The fourth and final program recognizes the need for continued federal monitoring of industry conditions and trends to develop sound federal policies and programs. Table 3-5 gives projections of expected program spending during the next 4 years.3 As the data in the table indicate, funding should average $13.3 million after the two initial program years, which will reduce by more than three- quarters the transit research spending levels of the early 1980s. Although additional funds will be available from Sections 10, 11, and 20, the Section 6 Lead Programs will continue to provide the majority of federal assistance for mass transit research. TABLE 3-5 UMTA LEAD PROGRAMS, 1985-1989 ($ millions) Lead Program Fiscal Year 1985-1986 1987 1988 1989 Total Safety and security 4.3 1.9 1.9 1.9 10.0 Competition Privatization 6.5 2.9 2.9 2.9 15.2 Revenue maximization 2.6 1.1 1.1 1.1 5.9 Productivity 1.5 0.7 0.7 0.7 3.6 Methanol 2.9 1.3 1.3 1.3 6.8 Subtotal 133 0 KD & 31-3 Financial iform Financing value 5.0 2.2 2.2 2.2 11.6 Protecting investment 1.6 0.7 0.7 0.7 3.7 Subtotal 6.6 2.9 2.9 2.9 15.3 National leadership 3.3 1.5 1.5 1.5 7.8 Support and contingencies 4.8 1.0 1.0 1.0 Total 32.6 T3 T T3_3 72.5 NoTE: The Lead Programs cover all previous Section 6 funding categories except Policy and Civil Rights. Souica: Office of Technical Assistance, UMTA, U.S. Department of Transportation.

PROGRAMS AND PRIORITIES 35 UMTA's Lead Programs thus represent a significant departure in funding levels and research orientation from earlier federally sponsored transit re- search programs. With federal research budgets estimated at $13 million per year, research spending will soon account for only slightly more than one- tenth of 1 percent of projected transit revenues of $10 billion. Perhaps nearly as important from the operators' perspective, the research projects likely to be funded will focus on federal policy concerns, leaving the day-to-day operating problems of transit properties largely unaddressed. IMPLICATIONS FOR FUTURE RESEARCH The UTvITA transit research program has made some dramatic shifts since its inception. Starting in the 1960s with an emphasis on large-scale planning studies, the program moved through successive periods of change from research on advanced hardware systems motivated by spectacular space pro- gram successes, to an emphasis on nonhardware research, to decreased federal involvement with privatization and policy-oriented studies as primary objec- tives. As might be expected, a transit industry that has been burdened with providing service at ever-increasing costs has sought research programs geared more to its everyday problems than to futuristic high-technology solutions or to national policy concerns. The series of R&D Priority Con- ferences and other important meetings, intended to start a dialogue between the transit community and the federal research program, had pointed out the vast gulf between transit's needs on one hand and the advanced hardware programs on the other. Although the nonhardware programs have amounted generally to half of UMTA's research funding since the mid-1970s (Figure 3-1), they have not devoted proportional attention to labor issues and costs, which account for more than 70 percent of transit's expenses (14, Table 2.08, p. 2-48). Thus the full attention and support of the industry have, understandably, been lacking. The major causes of the perceived gap between industry's needs and the federal transit research program can be summarized briefly. The UMTA R&D program was conceived with a broad and changing mission. Public transit, and with it the direction of transit research, assumed many roles—from an urban traffic decongestant; to a component of urban land use development policy; to a means of solving the mobility problems of the poor, the unemployed, and the elderly; to a means of alleviating urban pollution and energy shortages. The lack of consistent workable goals for transit prolonged the search for major new systemwide technological breakthroughs at the expense of seeking useful but incremental improvements in current technology. The contributions

36 RESEARCH FOR PUBLIC TRANSIT of such incremental improvements to these broad social goals would hardly have been apparent, but their contributions to the efficiency of transit opera- tions would have been extremely valuable. Many UMTA projects were technological successes, or could have been, but consideration of operators' needs and constraints was not always ade- quate. Market analysis and market testing were often insufficient to determine whether technological innovations were salable, and overly optimistic sched- ules and political considerations frequently resulted in inadequate refinement of prototypes before new hardware systems were deployed in service. Thus, given broad and often conflicting roles and missions, changing priorities, and complex technical and political imperatives, the transit research program often found itself in an unenviable no-win position. Since the beginning of federal involvement in public transportation, UMTA has provided the funding for and guided the direction of the transit research program. Relying primarily on UMTA to conduct research has proved ineffec- tive from the standpoint of operators. In this "top-down" arrangement, transit providers have had limited influence over the direction of the research agenda, and research results have not always been relevant to, or applied by, their intended audience. The drawbacks of this arrangement were underscored by operator criticisms that the advanced-technology orientation of the federal program during the early to mid 1970s largely ignored pressing operating concerns. Today UIv1TA has restructured its research activities, but program funding is considerably smaller, and the research agenda is now heavily concentrated on federal program and policy concerns. Although more strategically directed than in the past, UMTA's program provides limited resources for research on the day-to-day operating problems that continue to concern transit providers. NOTES The goal of the AGRT project was to develop an aavanced automated guideway transit system capable of providing a high level of service to dispersed origins and destinations in urban areas (5, FY 1977, p. 36). Spending on the Service and Methods Demonstration Program rose from 13.7 percent of all UMTA R&D spending in 1976 to 22.8 percent in 1977 and 22.1 percent in 1978. The program is a 5-year one. However, because of start-up requirements, the first two program years are consolidated in the table.

PROGRAMS AND PRIORITIES 37 REFERENCES A. Hall. R&D Scoreboard: Where Spending is Strong-And Getting Stronger. Business Week Mar. 22 1985. R. E. Paaswell. Transportation Research and Its Link to Education. In Special Report 210: Transportation Education and Training: Meeting the Challenge, TRB, National Research Council, Washington, D.C., 1985, pp. 166-183. Urban Mass Transportation Act of 1964, Part I: The Federal Urban Mass Transpor- tation Program Basic Law. 49 U.S.C. 1605. W. Hilton. Federal Transit Subsidies: The Urban Mass Transportation Assistance Program. American Enterprise Institute for Public Policy Research, Washington, D.C., June 1974. Innovation in Public Transportation: A Directory of Research, Development and Demonstration Projects. UMTA, U.S. Department of Transportation, 1973-1978. W. J. Ronan. APTA Views UMTA's R&D Program. In Proc., UMTAIAPTA Re- search and Development Priorities Conference, Arlington, Va., Feb. 19-20, 1976. R. R. Kiley. Viewpoints on R&D Priorities: Roundtable Exchange. In Proc., Third UMTA R&D Priorities Conference, Vol. I: Proceedings of General Sessions and Summarized Reports of Workshops. UMTA, U.S. Department of Transportation, Nov. 1978. Department of Transportation and Related Agencies Appropriations for 1977. Hearings before a Subcommittee of the Committee on Appropriations. House of Representatives, Ninety-Fourth Congress, Second Session, Part 2 1976. Transportation Research Board. Proposal to the Urban Mass Transportation Administration to Provide Technical and Administrative Services in Support of the National Cooperative Transit Research and Development Program. UMTA-78-255. UMTA, U.S. Department of Transportation. May 25, 1979. Research Progress Report 10 for the Period January 1 Through June 30, 1986. NCTRP, TRB, National Research Council, Washington, D.C., 1986. Urban Mass Transportation Administration. Fourth UMTA R&D Conference: Is- sues and Directions. Norfolk, Virginia, Nov. 19-21, 1980. UMTA Technical Assistance Advisory Seminar. Ann Arbor, Mich., July 1984. Mission Support Statement. Technical Assistance Program, Office of Technical Assistance, UMTA, U.S. Department of Transportation, Mar. 1986. National Urban Mass Transportation Statistics, FY 1983. Section 15 Annual Report UMTA-MA-06-0107-85-1. Transportation Systems Center, U.S. Depart- ment of Transportation, Cambridge, Mass., Dec. 1984.

11 Developing a Problem-Solving Transit Research Program In this chapter the role that problem-solving research should play in a com- prehensive transit research program is summarized, and a research agenda that reflects the operators' research priorities is presented. A brief summary of each research topic and of the expected benefits from research on that topic for the transit provider is given. ROLE OF PROBLEM-SOLVING IN TRANSIT RESEARCH The nation's public transportation services, like any large and complex busi- ness, improve their operation through a wide range of technological, man- agerial, and organizational innovations. Research makes innovation possible. Research can range from highly theoretical examinations of new approaches to emerging public transportation issues to highly applied solutions to imme- diate problems (1, p. 168). Stimulating innovative research in transit requires a broad understanding of the context in which transit systems operate and of the key issues that will affect the future direction of public transit requirements; more specific under- standing of immediate problems that require solution is also needed. To address this wide range of concerns, a transit research program should support several different types of research activities. As diagrammed in the left-most set of branches in Figure 4-1, these include 38

FEDERAL MISSION SUPPORT /TECHNOL,OGY \_..:•t)EVELOPMENT PROBLEM SOLVING RESEARCH _______TYPES OF RESEARCH [EDS TO ADDRESS NEEDS FEDERAL CONTRACT RESEARCIH SINGLE AGENCY OPERAR PROGRAM -' JOINT RESEARCH FIGURE 4-1 Overview of problem-solving research in the transit research program.

40 RESEARCH FOR PUBLIC TRANSiT Federal mission support, Technology development, and Problem solving. Each of these types of research can help transit services become safer, more reliable, more efficient, more effective, and potentially more economical. The first research category, federal mission support, is focused on the federal role in public transportation. Research can provide valuable guidance so that national transit programs and policies reflect changing domestic conditions, budgetary priorities, laws, and regulations. For example, as part of the current administration's general policy of reducing the scope of govern- ment, a major thrust of the UMTA transit research program is to examine ways in which competition and private participation in transit service delivery can be successfully introduced. This research category is also the appropriate place for research on broad issues and trends affecting the future of public transportation and the develop- ment of effective policy responses to these changes. Research could address such issues as the changing economics of transit service provision; the development of cost models to predict how capital and operating requirements may change over time; the ways in which institutional arrangements facilitate or discourage transit operation; and the impact of suburbanization, shifts in regional growth patterns, and availability of alternative services on the need for public transportation. Although such research is focused primarily on national issues and federal concerns, it must take into account the organiza- tional constraints and incentives of local transit agencies because these are key in shaping the effectiveness of policy responses. The second research category, technology development, provides another source of innovation in the transit industry. In the past the UMTA R&D program invested heavily in developing new transit technologies that sought revolutionary improvements in public transportation. Today the emphasis is on more incremental improvements to existing technologies. The role of research in this context is to seek innovative technologies, products, or processes in other sectors or other countries that could be applied successfully to transit. For example, the transit industry is examining the potential of adapting vehicle diagnostic testing equipment, developed in the automotive industry, for use on transit vehicles to facilitate inspection and repair. Technology-oriented research typically requires long lead times. These long lead times are needed to develop and test prototype equipment and to intro- duce new products successfully into the market. Because of the scale of funding these activities require and the relatively small size of the transit equipment market, the federal government has traditionally shared these risks with equipment suppliers by financing a substantial portion of this type of research activity.

PROBLEdI'I-SOLVJNG RESEARCH 41 The third research category, problem solving, is frequently short term and highly applied. It responds to problems that transit operators experience as they manage today's services. Because probable solutions can be identified, most research of this type involves identifying an existing technology or process and evaluating its performance under various operating conditions. For example, many transit properties are considering the purchase of new electronic farebox equipment to reduce fare evasion and theft and allow more flexible fare collection policies. Research can help identify the fare equipment technologies available and assess the costs and benefits of various options for different types of transit operators and fare collection problems. As a result of this type of research, transit operators can examine new equipment options and service practices, learning from the experience of other industries and innovative transit properties in the United States and abroad, without actually having to experiment with new techniques that may not be well suited to their particular environment. The first of these three types of research, federal mission support, currently receives the most attention. In 1985 UMTA restructured its R&D activities to sponsor a smaller, more strategic, and more policy-oriented program. This program now concentrates on the federal mission in public transportation, which is an appropriate activity, but it largely neglects other types of research oriented more toward the needs of local operators. BRIDGING THE GAP IN PROBLEM. SOLVING RESEARCH The most pressing unmet need from the perspective of the operators on the study committee is for problem-solving research. As Figure 4-1 shows, this type of research can be conducted in two ways (middle set of branches in Figure 4-1), through federal contract research or directly by local transit agencies. Historically the transit industry has relied on the federal government to conduct problem-solving research through an active federal contract re- search program. Once a major activity, federal contracting for problem- solving research now receives only a small portion of the funding currently provided for transit research, and transit operators have limited funds to undertake research of this type on their own. To close this gap in the current research program, transit operators must be prepared to assume an appropriate role themselves. Local transit agencies can develop a strong operator-oriented program in two ways (right set of branches in Figure 4-1), by individual action and by joint research. Single-agency research is appropriate for addressing unique, site-specific problems; joint research offers an efficient way to tackle problems of common interest and

42 RESEARCH FOR PUBLIC TRANSiT address those problems too large for a single operator to solve. Both types of activity are needed in a strong operator program. More research on technological innovations is also desirable. The future health of the domestic transit industry will largely depend on long-range research leading to major technological innovations. Leadership in developing new technologies in Europe and Japan is being fostered through federally sponsored research. Similar research should be conducted domestically using as much of the foreign knowledge base as is practical. The need for long-range research on technology development is recognized by transit managers. Federally sponsored research in this area has been significantly scaled back, and here, too, operator- and supplier-conducted research is limited. Some technology-related topics can be included in a problem-solving research program, but technology development often re- quires a larger scale of funding and longer lead times. The present financial position of the transit supply industry does not allow the necessary magnitude of investment. To address these research needs, a committee, composed of representatives of suppliers, research institutes, and universities, should be formed to investigate, with input from transit operators, the most appropriate mechanisms for funding and managing a program of research on technology development. Problem-solving research promises the most immediate payoff from research spending, but ultimately the transit industry must decide the extent to which both types of research can be supported. Ways in which such a problem-solving research program could be funded and managed are explored in subsequent chapters. The issue of an appropriate research agenda is addressed in the remainder of this chapter. DEFINING THE RESEARCH PROGRAM Defining an agenda of high-priority research topics of common interest to transit operators was a key study activity. As a point of departure, the committee solicited a list of research needs by drawing on the ideas of committee members as well as on a selected survey of transit operators.' The resulting list of topics was then grouped into broad research categories to arrive at a working list for further consideration. Criteria for Selecting Research Topics To identify the most promising research candidates, the research topics were screened using four key criteria:

PROBLEM-SOLWNG RESEARCH 43 Does it promise high payoffs in cost savings, revenue growth, system reliability, or safety improvements? Topics that met this criterion were included in the priority list. In view of transit managers' current concerns— growing operating deficits, difficult-to-serve suburban growth markets, and, of course, safety and reliability—research on measures that promise to reduce costs, increase revenues, or improve system reliability and safety are of great interest. For example, labor costs now constitute more than 70 percent of transit system operating expenses (2, Table 2.08, p. 2-48). Research on ways of reducing significant areas of labor cost, such as absenteeism or inefficient work rules, offers a high return on investment. However, it may not be possible to meet all goals simultaneously. For example, increasing service to far-flung suburban locations through traditional service arrangements may provide additional revenues but at a high cost relative to the added mileage and density of ridership. A promising research area would be to explore opportunities for expanding service, through such mechanisms as timed- transfers, without significantly increasing operating deficits. In other in- stances, one research area may meet multiple goals. Improving maintenance practices may not only reduce operating costs; it may also enhance system reliability and attract new riders or, at a minimum, retain existing customers. Does it have a high potential for overcoming organizational barriers to implementing successful problem-solving approaches? Many of transit's problem, particularly those of the large, fixed-route operators, can be traced to institutional structures and political arrangements that are resistant to change. For example, many properties' difficulties in adapting to shifting market conditions stem not only from the physical configuration of traditional systems but also from a more fundamental reluctance to change. For large, fixed-route operators, restructuring of service may mean major changes in levels of customer demand, scheduling, labor requirements and training, equipment needs, and communications budgets. Introducing change may require a different management orientation, with greater emphasis on long- range planning and monitoring of market conditions, that may necessitate restructuring the organization. Research that provides local operators with practical information on the most successful methods of introducing change, such as service reorientation or private contracting, were considered a high priority. Is it of high interest to transit operators? Meeting this criterion may not prove easy given the many types of transit agencies and their needs. However, the likelihood of successful implementation of research will be enhanced if the topic is of high interest to several properties. For example, many transit managers would agree that the topic of privatization2 has been clouded by poorly substantiated claims both for and against private provision of transit service. More impartial research, sensitive to industry concerns and local

44 RESEARCH FOR PUBLIC TRANSIT operating environments, could help to consolidate the industry position on privatization and facilitate introduction of the most promising nontraditional service options. 4. Does it have a high likelihood of achieving usable results? Meeting this criterion is key to the success of a problem-solving research program. Many broad issues, such as the impact of urban development and highway policies or demographic changes on transit, are important for the industry to address, but they are too general to be included in a research agenda with a problem- solving focus. These research topics are more appropriate for the IJMTA- sponsored research program. Those topics that have a scope of inquiry sufficiently limited to produce practical results and on which information already exists, either from transit industry practices or from private industry experience, are the most promising candidates for a problem-solving research agenda. Research Agenda The application of these criteria resulted in a preliminary list of seven topics that represent the research issues foremost in the minds of today's transit managers. Human resources management: research topics could include identify- ing key factors in the transit work environment that affect employee perfor- mance, controlling absenteeism, assessing the productivity implications of alternative work rules and use of part-time labor, and introducing incentive programs and restructuring jobs to motivate improved performance. Service configuration and marketing: research topics could include de- veloping service strategies, like timed-transfer, to accommodate decentralized development; improving existing routes and scheduling; and using marketing techniques to increase ridership. Service delivery models: research topics could include examining methods for improving service coordination in a multiprovider environment, identifying types of services or functions most amenable to privatization, and reducing the bathers to contracting with private providers. Internal efficiencies: research topics could include developing energy management programs, identifying effective insurance strategies, improving fare structure and collection equipment, and getting the most out of automa- tion. Maintenance: research topics could include recruiting and training maintenance personnel, developing effective supervisory programs, using computerized maintenance management information systems, and developing simplified vehicle subsystems and diagnostic equipment.

PROBLEM-SOLWNG RESEARCH 45 Equipment: research topics could include introducing automated equip- ment, improving component reliability and life, increasing energy efficiency, responding to environmental regulations, developing better vehicle inspection techniques, and improving procurement practices and policies. Innovative financing: research t6pics could include analyzing the bene- fits of innovative financing techniques such as joint development, identifying the factors necessary to their successful introduction, assessing the impact of tax reform on innovative financing for mass transit, and defining appropriate roles for the private sector in public-private partnerships. The list emphasizes "basics," such as maintenance, and focuses on operat- ing issues, such as human resouives management, and pratical service strat- egies, like timed-transfer. Although equipment is a topic, the suggested re- search areas focus on near-term technology issues, such as improving energy efficiency, meeting environmental regulations, and developing improved vehi- cle inspection techniques. The list is significant for what it does not include. As mentioned previously, general policy issues were considered inappropriate for inclusion in a prac- tically oriented, problem-solving research agenda. Nor were such cross- cutting issues as safety, security, and management covered as separate topics. These issues were considered so central to any program of research that they will be addressed, where appropriate, under individual topics. The agenda also is not a list of highly targeted megaprojects that promise major breakthroughs in transit equipment or service methods. The topics are broad in scope, mirroring the range of problems faced by diverse types of transit operators, and the program seeks incremental improvements in all phases of transit operations. As defined, the research agenda represents the types of research concerns that are of primary interest to transit managers and demonstrates that there are promising opportunities for problem-solving research. When the research program has been funded and a managing institution selected, the program will be refined and priorities will be established among research topics. EXPECTED PAYOFF OF A PROBLEM-SOLVING RESEARCH PROGRAM In the subsections that follow, the expected payoff from each of the seven research topics is described. The Appendixes provide a more detailed write-up on each of these topics. The discussions include a brief description of the problem to be addressed, possible research topics, and expected benefits.

46 RESEARCH FOR PUBUC 1RANSIT Human Resources Management More effective management of human resources has been identified as a key factor in improving productivity and thus reducing operating costs in the heavily labor-intensive transit industry. Changing operating environments— increased demand for peak-hour service and service expansion into low- density suburban areas—are in part responsible for declining productivity levels. Costly work rules and high absenteeism rates also contribute to rising transit operating expenditures. Often performance problems, such as absentee- ism, are symptomatic of more fundamental problems in the transit work environment, such as stressful working conditions, inadequate training at all levels, and limited incentives for improving employee performance. Research can be instrumental in helping both management and labor iden- tify programs and practices that could lead to more productive use of transit personnel. Because past research has frequently been focused on the man- ifestations rather than the causes of employee performance problems, effec- tive research on human resources management should start with a better understanding of the interaction between operating requirements and the organization of work to meet these requirements and its effect on employee performance. When the operating environment is better understood, more specific examination of successful strategies for improving performance can be undertaken. Research topics could include identifying good driver recruit- ment and selection practices, assessing effective absenteeism control pro- grams, developing better supervisory and midlevel management and training programs, and successfully introducing part-time labor. Such research would identify the most cost-effective approaches and the key ingredients for suc- cessful program implementation. Additional topics might include more funda- mental strategies, such as incentive programs, job restructuring, and participa- tory management practices, for improving productivity by increasing job satisfaction and fostering a better work environment. Research on human resources management issues may yield enormous benefits in cost savings and fundamental improvements in the transit work environment Because more than 70 percent of total operating expenses is attributable to personnel costs (2, Table 2.08, p. 2-48), the payoff from im- proved productivity is central to cost-control efforts. For example, savings from the use of more flexible part-time labor, were this to become an industry- wide practice, could range between $18 million and $147 million, or between 1 and 8 percent of all operator wages, with likely savings on the lower end of the scale.3 Reexamination of personnel practices is also likely to result in a reevalua- tion of the work environment. More flexible work rules, more incentives to encourage improved employee performance, and more basic restructuring of

PROBLEM-SOLVING RFSEARCH 47 responsibilities to increase job satisfaction are likely to be targeted as worth- while objectives in a thorough reappraisal of human resources management practices. Given the general industry emphasis on cost-control measures and the specific interest in increasing productivity by improving employee motivation and performance, research on human resources management should find a receptive audience in today's transit managers. Although this area has not been a high research priority in the federal R&D program, the industry's own experience with labor-saving practices and positive incentive programs as well as the possible transferability of approaches from other industries should make this a fruitful topic for investigation. Service Configuration and Marketing This topic covers the physical configuration of transit systems and their market environment. Post—World War II land-use development patterns have produced a difficult environment for the traditional central city—focused transit service provider. Many of the nation's older transit systems, par- ticularly in the East and the Midwest, were developed to serve a dense central city core. Population and employment centers have now become more de- centralized in suburban locations. Newer cities in the South and the West have expanded rapidly as a result of sprawling growth patterns that have been encouraged by an automobile-oriented transportation infrastructure. The widely dispersed travel patterns typical of suburban and exurban markets pose a difficult challenge for transit service providers. The difficulties many transit properties have in addressing changing market conditions stem not only from the physical configuration of their systems but also from a more fundamental resistance to change, particularly when change may result in additional requirements for labor and training, major scheduling changes, and new equipment needs. Assessing the cost implications of change is difficult for those systems that may not fully understand their production costs, particularly for peak-hour service. Reluctance to reorient existing service patterns may also be due to transit's lack of a consumer-oriented marketing strategy. Many properties do not know the travel patterns and preferences of their customers, nor have they analyzed the travel market within which they must compete. The marketing function plays a relatively minor role in the provision of service or is narrowly defined to encompass only advertising and promotional activities. Research can assist transit managers in exploring alternatives for restructur- ing service and in identifying appropriate strategies for exploiting new market opportunities. A research project to identify the costs and benefits of alterna-

48 RESEARCH FOR PUBLIC TRANSiT live service patterns and to define those situations that lend themselves best to service reconfiguration could provide a practical guide to the most promising alternatives. Another research area of interest is marketing. Marketing tech- niques that are most appropriate for transit could be identified; the payoff of various marketing strategies could be more precisely documented; and the principal barriers to transit's adoption of a broader range of marketing ac- tivities could be examined. Several benefits can be expected from greater research on these topics. Examining ways to reconfigure transit operations to accommodate multihub suburban development patterns, for example, holds promise for expanding transit's share of the travel market. Studies on the benefits of one approach, the timed-transfer concept, suggest that ridership increases of between 5 and 17 percent can be realized (3, p. 1-1). Research on ways to optimize routes and schedules can also result in improved service effectiveness. Greater service frequency and convenience, in particular, can be realized through changes in existing routes and schedules or more radical system reconfiguration. More timely communication of rou- tine service delays and routing changes, through automated signage and broadcast service updates, can also improve performance. Better service may attract new riders or, at a minimum, enhance the prospects for retaining existing customers. If research can convince transit managers of the benefits of a more competi- tive, consumer-oriented stance in the marketplace, then organizational ar- rangements may be restructured to capture the full potential of the marketing function. The transit industry could draw on the experience of the private sector, which offers numerous models for effectively integrating the market- ing function as a central activity in an organizational structure. Service Delivery Models This topic focuses on various institutional arrangements for providing transit service. Concern about rising industry costs and reluctance to increase public subsidies have caused public transit operators to consider alternative service arrangements as one method of increasing service efficiency. A variety of service alternatives exists. Recently, considerable attention has been focused on private provision of certain transit services to take advantage of the perceived efficiencies of the private sector. Private participation in transit can range from outright provision of service by the private sector to contracting out various types of service (e.g., high-density routes, low-density service) or various functions (e.g., data processing, maintenance) to private providers.

PROBLEM-SOLWNG RESEARCH 49 Another alternative is to incorporate more businesslike management tech- niques in public transit operation without actually involving private providers in the delivery of service or to adopt effective management practices de- veloped by innovative public transit properties. At a more fundamental level, recent interest in service delivery alternatives has caused the traditional view of public transit agencies as exclusive providers of transit service within a service area to be challenged. New institutional arrangements in which the public operator sets policy and coordi- nates service in a multiprovider environment are being tested. Despite opportunities for improved operating efficiency, however, many public operators have been reluctant to consider alternative service delivery arrangements. Although public providers have had considerable experience in contracting with private providers for service for the elderly and the hand- icapped, experience with and information about the costs and benefits of contracting Out existing regular-route service are more limited. Public transit agencies and labor interests are also reluctant to abandon the traditional service model for fear that competition among multiple providers may reduce service quality, result in "cream-skimming" tactics by private or other public providers, fragment service delivery systems, and result in arrangements that are unfavorable to labor. Research could illuminate many of these issues and suggest the most promising nontraditional service options. One topic for investigation would be an examination of the opportunities for, and examples of, effective service coordination in a multiprovider environment. A research project could draw on the experience of several metropolitan areas that are currently experiment- ing with new service delivery models. Another topic of interest is private provision of transit service. Those areas of transit service most amenable to privatization could be identified and classified taking into consideration the costs and benefits of each alternative. Key contractual issues for private-sector participation also could be investigated, and a prototype contract could be developed for use by public transit operators in negotiating with private providers. Research on alternative service delivery models could have a significant financial payoff. Contracting with private providers, for example, is reputed to result in operating savings of between 13 and 27 percent for medium and large public transit agencies, respectively, depending on the amount and type of service contracted (4, Chapter 5). Research can help determine if these claimed savings can be realized and under what circumstances the benefits of private contracting can be maximized. If public providers adopt more flexible work rules, introduce part-time labor, and borrow other private-sector man- agement techniques, operating savings may also be significant. Research on alternative service delivery models is also likely to encourage a reevaluation of traditional operating arrangements. Barriers to introducing

50 RESEARCH FOR PUBLIC 11ANSF more diverse service options are likely to be overcome if research can suggest ways of minimizing labor disruptions, safeguarding service quality, and coor- dinating multiple service providers. In view of the high priority UMTA has given to privatization initiatives and the need for greater industry operating efficiencies in general, more research on nontraditional service options from the operator perspective clearly would be desirable. Lessons may be drawn from private contracting for other munici- pal services, which is currently a widespread practice. Now that more transit properties are experimenting with private contracting, introducing private- sector management techniques, and operating as service coordinators in a multiprovider setting, more industry experience should also be available to study. Internal Efficiencies Continuing increases in operating costs and intense budgetary pressures at all levels of government require today's transit managers to seek greater operat- ing efficiencies. The main contributor to operating expenses, personnel costs, has already been addressed under Human Resources Management. Other significant elements of cost, such as energy, insurance, and fare collection, will be addressed under this topic. Although the price impacts of the energy crises of the 1970s have subsided, the transit industry still devotes nearly 40 percent of nonlabor operating expenses to fuel and electricity to power its buses and trains (5). Concerns about future energy shortages for heavily oil-dependent bus operators and the approaching 1991 deadline for meeting the Environmental Protection Agency's (EPA's) stringent bus emissions standards have spurred industry interest in alternative fuel options and other energy management measures. More recent phenomena, steeply rising insurance premiums and cancellations of insurance contract renewals, resulted in a near doubling (to 7 percent) of the share of industry operating budgets expended on casualty and liability insur- ance between 1983 and 1985 alone (6). Fare collection is another important cost element that represents approximately 4 percent of operating expenses (7). Many existing fare collection systems are not only costly in terms of processing and handling operations but also result in significant revenue losses from fare evasion and theft and from inflexible fare structures. Manage- ment efforts to improve operating efficiencies are often hampered by lack of data, which are critical to track costs and monitor performance. New technologies and strategies for increasing operating efficiencies have been developed recently, but they often present a confusing array of options to transit managers. Research can be instrumental in identifying appropriate

PROBLEPYf-SOLWNG RESEARCH 51 technologies and approaches for different types of operators and operating environments and distilling information on the costs and benefits of adopting new equipment or practices. Research topics could include assessments of operator experience with new technologies, such as electronic fare collection equipment or methanol-fueled transit buses; examinations of the industry's "best practices," such as recent industry-sponsored insurance poois and their impact on premium costs; and studies of the most successful management applications of new automated equipment and computerized management information systems. Research on these topics should be of substantial benefit to a wide range of transit properties. Most operators share a common interest in controlling energy costs, obtaining insurance at reasonable premiums, improving fare collection strategies, and introducing cost-effective automated systems. One of the primary benefits of research should be reduced costs. A status update on high-performance alternatives to diesel fuel, such as methanol, should assist transit managers in selecting among the most cost-effective options for meeting EPA emissions standards. Research can also alert transit managers to the savings to be realized from improved management of existing energy sources through energy audits, use of fuel additives, preventive main- tenance, driver training programs, and load management techniques for rail systems. Strategies for obtaining adequate and affordable insurance coverage repre- sent another source of potentially large savings for the industry. Recently initiated, industry-sponsored group self-insurance or pooled purchasing ar- rangements promise significant reductions in insurance premiums. Research on model insurance programs and guidelines to assist transit operators in assessing insurance options could result in immediate cost savings. Research may also help transit properties recoup revenues lost because of inefficient operating methods. UMTA, for example, estimates that the industry loses approximately 15 percent of farebox revenues each year because of fare evasion and theft and an additional 10 percent because of inflexible fare structures (7). Synthesizing experience with recently developed counterfeiting countermeasures for transit passes and electronic fare equipment technologies should increase industry awareness of available methods for improving se- curity and introducing more flexible distance-based fare structures. Because trips on passes represent from 30 to 50 percent of all transit trips, the potential for increasing revenues could be substantial (8, p. 26). Finally, research can help increase operator awareness of the management applications of new technologies and their potential for improving service performance. Although the benefits are difficult to quantify, the introduction of automated systems (e.g., automated farebox equipment, computerized management information systems) should provide transit managers with the

52 RESEARCH FOR PUBUC TRANSIT data needed to monitor operating costs and develop more effective manage- ment programs. Maintenance Maintenance has been described by several transit properties as the "back- bone of the operation." The quality of maintenance directly affects transit operators' primary mission: providing reliable service. Frequent vehicle breakdowns and missed runs not only wreak havoc with equipment and personnel scheduling but can also adversely affect ridership levels in the long run. Until recently, despite its importance, maintenance received limited atten- tion. During the fiscal crises of the 1970s maintenance deferral became a common practice of many large, older transit properties. In other systems facing less adverse fiscal climates, inadequate maintenance management in- formation systems have sometimes thwarted efforts to develop effective preventive maintenance programs. Improving maintenance practices and pro- grams has also been made more difficult by an inexperienced labor force that lacks the skills needed to maintain today's complex mass transit vehicles. Research on a variety of maintenance issues can help the L'iustry address these fundamental problems. One area for investigation is maintenance labor issues. Research projects could include identifying improved methods for recruiting and training industry maintenance personnel, suggesting ways of developing more effective supervisory programs, and examining those cir- cumstances in which private contracting of certain maintenance functions may prove cost-effective. Another topic of interest is state-of-the-art maintenance techniques, such as computerized maintenance management information sys- tems. Research could assist transit managers in assessing the costs, benefits, and applications of some of the most promising systems. Further topics for investigation are new vehicle inspection methods and diagnostic equipment to facilitate identification and repair of equipment problems. Research on these issues promises a significant return on investment in cost savings and reliability improvements. Because maintenance represents nearly one-third of total operating expenses (9, Figure 1, p. 16), reductions in the need for maintenance spending or more cost-effective use of maintenance resources as a result of better maintenance practices can have a substantial financial impact. Research has indicated, for example, that nearly one-third of all bus repairs may be improperly done (10, p. 179). If a portion of these costs could be recouped through a better trained, more reliable maintenance work force, the savings would be substantial. Maintenance improvements can also have a direct and demonstrably posi- tive impact on transit equipment reliability. Reducing unscheduled vehicle

PROBLEM-SOLVING RESEARCH 53 breakdowns will result in timely service and overall improvement in system performance. More vehicles should be available for service and fewer runs should be missed, which would improve customer service and labor utiliza- tion. For these reasons, interest is high in research on maintenance issues. Although maintenance has not been a high-priority area for research in the past, there now appear to be a consensus among transit operators on the need for a more active research program and a receptive audience for practical and usable research results. Equipment Transit research and development programs have always been focused heavily on equipment. Today hardware research emphasizes a near-term, problem- solving approach that reflects the industry's concern with improving the operating efficiency and effectiveness of existing transit facilities. Longevity and reliability of transit vehicles and equipment are of critical importance to transit systems because of the high cost of capital purchases and the need for a high level of performance. In recent years, however, operators have experienced a decline in equipment performance and useful life. Changes in vehicle design and the addition of complex features to increase passenger comfort have raised maintenance requirements, complicated the diagnosis of vehicle failures, and increased the complexity of the procurement process. Heavier vehicles have also adversely affected fuel performance. Fuel efficiency may worsen if the industry modifies diesel-powered buses to meet the EPA's emissions standards by the 1991 deadline. Equipment problems are further exacerbated by inexperienced maintenance personnel and inadequate information systems to support vehicle monitoring and troubleshooting. Research can be instrumental in increasing operator awareness of new equipment and labor-saving practices. In the long run, research should be key in developing or modifying the transit infrastructure—vehicle components, testing equipment, fuels—that ultimately determines system reliability and performance. One major area of interest is the development of more reliable, easier-to-test transit vehicles and equipment. Expanded testing of automated diagnostic equipment or practices; development of standardized vehicle com- ponents; and further demonstration of the feasibility of using alternative fuels, such as methanol for buses, are all high-priority topics. A second and related topic of interest is procurement practices and policies. Research projects to document the pros and cons of various procurement methods and to evaluate the impact of the growing state role in transit on procurement regulations are topics of widespread interest. A final area for research is the development of training programs on the use of vehicle diagnostic equipment and identifica-

54 RESEARCH FOR PUBLIC TRANSiT tion of appropriate maintenance management information systems for effec- tive vehicle-monitoring and procurement purposes. Because research on solutions to equipment problems is often conducted over several years, the payoff of such research may not be immediately evident. Nevertheless, in the long term, research can be expected to show substantial benefits. One of the major expected outcomes is reduced costs. Automated vehicle diagnostic equipment, for example, can cut maintenance staff time and repair errors and save long-run maintenance and capital replace- ment costs through timely and accurate detection of vehicle repair problems. Standardization of vehicle components offers another opportunity for cost savings from joint purchasing, reduced inventory levels, shorter purchasing lead times, simpler procurement specifications, and reduced training for main- tenance personnel. Finally, research on ways to improve procurement prac- tices, such as developing adequate contractual requirements and better specifi- cation of reliability and maintainability for vehicle subsystems, can result in substantial savings for transit operators. Another likely outcome of research on equipment issues is improved reliability and safety of transit vehicles and equipment. A demonstration of an automated bus diagnostic system at the New York City Transit Authority proved the system's ability to provide early warning of vehicle repair needs and increase vehicle reliability, measured by the number of roadcalls, during the 6-month period of the demonstration project (11, p. 11). Research on ways to increase the useful life of major system components could also result in significantly improved system performance. A final benefit of research on transit equipment is the potential for more fundamental improvements in system management. Training in the use of new maintenance equipment may improve maintenance skills; it may also produce a more motivated and productive work force. Maintenance management information systems can be used for multiple purposes including vehicle scheduling and budgeting as well as monitoring vehicle performance and developing more effective procurement specifications. Innovative Financing Innovative financing refers to the generation of new sources of revenue or to the innovative use of existing revenues. In recent years transit managers have turned to alternative revenue-raising measures as one strategy for meeting investment shortfalls. The transit industry faces substantial investment requirements for renova- tion of older systems and construction of new facilities in growth markets now unserved by transit. The ability to meet these capital investment requirements from traditional revenue sources, however, is constrained. Federal aid has

PROBLEM -SQL WNG RESEARCH 55 declined and passenger fares, transit's primary local funding souite, cannot be raised indefinitely without adversely affecting ridership. Thus many transit systems have explored nontraditional funding arrangements and innovative partnerships with the private sector as ways of raising revenues and broaden- ing the base of support for public transportation. The ability of transit systems to adopt many of these financing techniques is impeded by inappropriate local market conditions, lack of authorizing legisla- tion, and staff inexperience with financing issues. Although creative public- private partnerships have been initiated to further cost-sharing efforts, a clear concept of an appropriate role for the private sector in transit planning and financing decisions has only begun to emerge. Research can help assess the financing techniques that have the greatest potential for filling revenue gaps and, perhaps more important, identify those circumstances under which these funding options are most likely to succeed. For example, much of the information currently available about the financial benefits of joint development projects involving property development near stations in new rail corridors is based on projected rather than actual experi- ence. Now that more projects are under way, the actual benefits attributable to joint development, which are extremely sensitive to local real estate market conditions, can be identified and monitored. This information should be important to other properties that are contemplating similar projects, par- ticularly in their lease negotiations with the private sector. Another project could be to catalog and review examples of successful private-sector par- ticipation in public transportation planning and financing decisions. Research on these topics can provide transit managers with strategies for increasing revenues, broadening their revenue base, and generally strengthen- ing support for transit. Although innovative financing techniques may not offer the revenue potential of traditional funding sources, they can provide an important source of additional revenue. Studies have estimated that joint development projects can defray between 5 and 15 percent of rail construction costs, a not inconsequential part of the local share of a major capital improve- ment project (12, pp. 1-2). Use of alternative funding sources can also broaden the revenue base for transit, which is an important consideration because many of transit's major funding sources—federal aid, farebox revenues—have limited growth poten- tial. Examining new revenue sources, particularly the private sector or other governmental entities such as states, also can provide an opportunity to involve these parties more broadly in addressing and seeking solutions to local transportation problems. Finally, research can help remove the barriers that currently prevent many transit authorities from using innovative financing techniques. It can pinpoint legislative and organizational obstacles and provide information on key re- quirements for successful implementation of various financing strategies.

56 RESEARCH FOR PUBUC TRANSiT NOTES Philip Ringo, President of ATE Management and Service Co., Inc., conducted a survey of research needs among ATE-managed transit systems of various sizes in 25 states. Privatization refers to the provision of transit service in a community by a private corporation. This can cover a range of activities from a fully privately run operation to contracting out various services or functions to a private provider. In 1983, the latest year for which data are available, transit industry operating expenses were $8.4 billion and operator wages averaged 22 percent of operating costs (2, Table 2.07, p. 2-40). REFERENCES R. E. Paaswell. Transportation Research and Its Link to Education. In Special Report 210:Transportation Education and Training: Meeting the Challenge, TRB, National Research Council, Washington, D.C., 1985, pp. 166-183. National Urban Mass Transportation Statistics, FY 1983. Section 15 Annual Report UMTA-MA-06-0107-85-1. Transportation Systems Center, U.S. Depart- ment of Transportation, Cambridge, Mass., Dec. 1984. M. Nelson et al. Timed-Transfer: An Evaluation of its Structure. Performance and Cost. SYSTAN, Inc., Los Altos, Calif., Aug. 1983. R. Teal, G. Juliano, J. Golob, T. Alexander, and E. Morlok. Estimating the Cost Impacts of Transit Service Contracting Alternatives. Final Report UMTA- CA-06-0220-1. UMTA, U.S. Department of Transportation, Feb. 1987. Lead Program Summary: Energy Management. Office of Technical Assistance, UMTA, U.S. Department of Transportation, Jan. 4, 1986. Testimony of Richard F. Davis, APTA Vice President, Management and Finance, and General Manager, Transportation Authority, Kansas City, Missouri, on "The Liability Crisis," before the House Subcommittee on Surface Transportation, Oct. 30, 1985. Lead Program Summary: Revenue Maximization. Office of Technical Assistance, UMTA, U.S. Department of Transportation, Jan. 4, 1986. R. E. Jones. Counterfeit Pass Prevention. Metropolitan, March-April 1986. Transit Fact Book 1985 ed. American Public Transit Association, Washington, D.C., 1985. Testimony of Kay Inaba, Chairman of the Board and Technical Director, XYZYX Information Corporation. In The Financial and Productivity Problems of Urban Public Transportation. Hearings before the Subcommitee on Investigation and Oversight of the Committee on Public Works and Transportation, U.S. House of Representatives, June 23, 1981. R. F. Casey. The Automated Bus Diagnostic System Demonstration in New York City. Transportation Systems Center, U.S. Department of Transportation, Cambridge, Mass., Dec. 1983. Innovative Financing Techniques: A Catalog and Annotated Bibliography. Gladstone Associates, Washington, D.C., Jan. 1978.

5 Financing an Operator-Oriented Research Program Identifying and agreeing on a list of critical industry research needs are the first steps in developing a workable operator-oriented research program. The true test of commitment to an on-going program of research, however, is solid financial backing with strong transit agency support. In this chapter the desired features of a financing plan for transit research are described, the funding method used to support highway research is reviewed as a possible model, and a specific funding proposal for transit is recommended. DESIRED CHARACTERISTICS OF A FINANCING PLAN FOR TRANSIT RESEARCH A strong financing plan should incorporate the general features that are discussed in the following subsections. Financial Commitment Conducting a successful research program requires a predictable and sus- tained source of funds. Because research is inherently a long-term endeavor the benefits of which may not be realized for many years, research budgets are frequently subject to pressure from more immediate operating needs. The UMTA-sponsored transit research program, which is dependent on annual appropriations, is a good case in point. In recent years pressures to 57

58 RESEARCH FOR PUBUC TRANSiT reduce the federal budget deficit have resulted in substantial cutbacks in funds for transit research activities. The amount of funding obligated by UMTA for research dropped from $91.9 million in FY 1981 to $21.6 million in FY 1986, a 76 percent reduction. Dedicating a mandated set-aside of federal funds to research could help insulate research activities from unanticipated funding cutbacks. Although the overall size of the federal program cannot be predetermined, a fixed set-aside would assure that research continues to receive its "fair share" of whatever funds are available. Insulation from Outside Influence A funding mechanism that will increase the likelihood of operator control of the research agenda should be selected for the recommended research pro- gram. If the program were funded directly from UMTA's R&D budget, UMTA would necessarily become involved in project selection and justification. In a more neutral arrangement in which funds were automatically set aside in a separate pool for a problem-solving research program, UMTA's role would be primarily one of oversight. UMTA would determine if proposed research topics met federal funding eligibility criteria but would not determine project priorities or provide technical direction. Viable Program Size A certain minimum level of funding will be required to establish a viable research program. Sufficient funds must be available to support relatively large-scale, multiyear research projects that are of interest to several proper- ties. If research budgets are too limited, funds are typically spread among small projects to stretch limited resources, and the outcome is a large number of projects of narrow interest and limited transferability. Thus a sufficient base of support is needed to fund those projects that promise more widespread payoffs. Adequate funds are also required to cover the fixed costs of the recom- mended research program. Such costs are likely to include the expenses of convening a governing or policy board once or twice a year to determine the research agenda and identify specific projects for study, the costs of a staff to administer the program, and the costs of publishing and disseminating the results.

FINANCING 59 Broad Constituent Participation A broad funding base is desirable to assure widespread support for a research program. If a financial commitment were required, even of the smallest properties, all operators would have a stake in the success of the program. In the past some transit research initiatives have been viewed as the prerogative of the larger properties. A balanced funding scheme should not be tilted disproportionately toward large versus small, or rail versus bus, operators. At the same time, an equitable program will recognize the disparities between the ability of systems to pay for a research program, and these differences should be reflected in the funding formula. Limited Administrative Costs To maximize the funds available for research, administrative costs of the program should be kept to a minimum. This might be accomplished best by piggybacking the funding for a research program onto the existing grants structure. Because of the large number of transit properties, however, provid- ing research grants directly on an agency-by-agency basis would be unwieldy. In addition to the administrative complexity, authorizing grants to individual properties for research could result in a stronger federal role than is desirable in a program that is local agency oriented and controlled. Instead, the program should contain a mechanism to automatically pool funds for research purposes from a direct set-aside of grant funds. To assure that the major part of such funds is used for research, a cap could be put on the percentage of program funds that may be expended for administration. ADAPTING THE HIGHWAY RESEARCH FUNDING MODEL FOR TRANSIT One promising approach to financing an operator-oriented transit research program is to adapt the method used for highways. Since 1934 state highway and transportation departments have, been able to use up to 1 ¼ percent of apportioned federal-aid highway funds for highway planning and research (HP&R) activities.1 The Federal-Aid Highway Act of 1962 restricted the 1 1/2 percent set aside to planning and research purposes only as of FY 1964. As the largest single source of funding for highway research, the FIP&R program has been used by states to improve the quality of services and system management and to develop techniques and materials that have greatly increased the efficiency, strength, and durability of facilities. The sorts of innovations

60 RESEARCH FOR PUBUC TRANSiT incorporated in the Interstate highway program could scarcely have been imagined when the original version of the HP&R program was authorized. The I{P&R program supports two types of research activity: a joint research capability to encourage cooperative research on problems of common interest and single-agency research to address site-specific and other specialized, local research problems. Cooperative research is carried out under the National Cooperative Highway Research Program (NCHRP) established in 1962. Member departments of the American Association of State Highway and Transportation Officials (AASHTO) in cooperation with the Federal Highway Administration (FHWA) develop an annual research agenda that must be approved by at least two-thirds of the member departments (2, p. 1). The program is funded by a voluntary commitment of a portion of each state's earmarked planning and research (HP&R) funds through contracts with the National Academy of Sciences, the program administrator. Currently, annual contributions to the NCHRP average from approximately $7 million to $8 million. States may also pool their HP&R funds to support research projects of interest to a more limited number of states. Although HP&R funds must be matched with state dollars (i.e., 85 peitent federal, 15 percent state), this requirement is normally waived for all joint research including NCHRP and pooled-fund projects. This encourages the states to work together in areas in which a combined attack on common problems works to the benefit of all involved. Finally, states may reserve a portion of their HP&R funds for conducting research on problems of purely local interest. Some states may elect to perform this research in-house; others may contract with universities or consultants to conduct the research. In either case, state matching funds must be provided. The approach for financing highway research has many of the desired features of a solid financing plan for transit. First, a required set-aside of federal-aid funds each year has assured continuity of funding for highway research. Second, because funds come from state-earmarked federal aid and not directly from the FHWA research budget, the states control the research agenda with oversight by the FHWA. Third, the set-aside program raises sizable funds to support a national research program as well as individual state research projects. Fourth, the financial commitment to research is broad based because all state highway and transportation departments must provide finan- cial support. By requiring a percentage contribution, however, the funding formula provides an equitable basis for taxing states that have highway programs of varying sizes and different funding capacities. Finally, the auto- matic reservation of a portion of federal-aid highway funds each year to

FINANCING 61 support research activities makes possible a relatively simple adminisirative structure. A program for problem-solving research for transit could operate in a similar manner. A requirement could be enacted whereby some percentage of federal transit apportionments would be reserved for research each year. The required local match could also be waived for joint research projects. The highway model, however, would have to be modified to reflect dif- ferences between the transit and highway industries. First, the combination of a larger number of operators, a greater diversity in agency sizes, and a smaller funding base in transit would make it more difficult to support a full range of research activities, including joint and single-agency research, without in- creasing the set-aside to burdensome levels. For example, in FY 1985, the median Section 18 grant to a state transportation department was $1.2 million (3). Because these funds are further divided among small rural transit opera- tors, a set-aside of 1 'h percent would not provide adequate funds to support joint projects and a local research staff or contracted local research. Thus transit research funds raised by a set-aside mechanism should probably be restricted to a program of cooperative research under which greater economies of scale could be achieved. A second major difference between transit and highways is the number of agencies involved. Fifty state highway and transportation departments plus the District of Columbia and Puerto Rico can voluntarily give their support each year to a national program of cooperative research. This approach would be unwieldy in the transit industry, which numbers nearly 1,000 fixed-route providers of which approximately 600 are public agencies receiving public funds. A mandated set-aside for joint research would be more appropriate as long as the operators retained control over the research agenda. Finally, a transit research program financed by a set-aside of federal grants might not be as stable as is the highway program because of the differences in funding sources. Highway funds are typically authorized for a 4-year period from user fees that are earmarked and held in the Highway Trust Fund. Thus the revenue yield is relatively predictable. Although transit funds are autho- rized on the same 4-year cycle, less than one-third of these funds comes from the Highway Trust Fund. A majority of the funds come from general revenues and thus are more vulnerable to cutbacks. Because these differences in funding are unlikely to change in the near future, the greater instability of transit funding in general, and of transit research funding in particular, may simply have to be accepted. In the following section a specific funding proposal for a new operator- oriented transit research program is outlined.

62 RESEARCH FOR PUBUC TRANSIT FUNDING PROPOSAL FOR A PROBLEM- SOLVING TRANSIT RESEARCH PROGRAM The study committee recommends a required set-aside of formula grant funds to finance a $10 million annual program of research on problems of common interest to local transit agencies. Type of Funding and Program Size The program would be funded from a mandated /2 percent set-aside of existing Section 9 and Section 18 formula grants so that no new federal aid for transit would be required.2 By dedicating to research a small portion of their federal grants, which are now slated for operations and capital spending, transit agencies can expect a payoff many times larger than this modest investment. Moreover, they would gain the opportunity to finance a practical, operator-oriented research program over which they would exert meaningful control. Based on federal fiscal 1987 appropriation levels,3 the proposed set-aside would yield an annual program of approximately $10 million. The scale of the program was determined by balancing the need for adequate funding to support multiyear research and cover fixed program costs with the funding constraints of many transit operators. The proposed set-aside should sustain a viable program of high-interest projects yet not place a burdensome funding requirement on local operators. Because this program is intended to comple- ment rather than supplant the federally sponsored transit research program, together they should yield a $23 million annual research effort,4 or barely more than two-tenths of 1 percent of the industry's gross revenues of $10 billion. Equipment manufacturers and suppliers should continue to conduct their own research, and an operator-oriented research program should help focus these efforts on problems of high priority to local providers. Type of Research Activities Supported The proposed program would be supported by a broad operator base and would be focused on high-priority research problems of interest and ap- plicability to a wide range of transit providers. As is done in the NCHRP program, the requirement for local matching funds to support federal dollars for this joint research program would be waived. A transit property or group of properties with interest in and the capacity to do research could contract to undertake one or more of the research projects.

FINANCING 63 Some research by individual transit agencies on problems of purely local interest or of interest only to a limited number of properties may also be needed. Because the recommended set-aside will not provide adequate funds to support all of these activities, properties that are interested in pursuing research projects of a more local nature are encouraged to devote an additional portion of their Section 9 or Section 18 funds to this purpose. However, local matching requirements for these projects would be retained. Rationale for Funding Support The recommended plan provides for the financial participation of a wide range of transit operators including small urban and rural systems. Although consid- eration was given to limiting program funding to the large properties, the study committee rejected this option in the belief that the smaller systems will not want to be excluded from shaping and participating in the benefits of an operator-oriented research initiative. The study committee also examined the option of tapping the discretionary Section 3 capital program and thereby including more of the rail properties, which are the primary recipients of these grant funds. However, an analysis of the 27 largest Section 9 grantees shows that 15 of these systems operate rail services and two more are in the final planning stages for federally financed rail facilities (4, Table 3.18.4, pp. 3-375-3-376). Thus rail systems are heavily represented even without explicit inclusion of Section 3 grantees. Moreover, administrative complexities, which will be discussed subsequently, also made this option less desirable. The recommended plan requires that the set-aside be mandatory because the large number of transit properties affected, approximately 600 public transit agencies, would make a voluntary approach unworkable. The plan takes into account financial differences among transit agencies by structuring the set-aside on a percentage-of-grant-award basis. The size of the set-aside was established at a modest '/z percent. Program Administration The proposal recommends that the research program be financed with funds apportioned by formula to assure a relatively predictable and consistent funding base. Although the inclusion of Section 3 funds would broaden the funding base, program administration would be severely complicated by this addition. Section 3 funds are allocated at the discretion of the Secretary of Transportation. Because these funds do not go to the same properties in the

64 RESEARCH FOR PUBUC TRANSiT same amounts each year, earmarking of Section 3 funds for research could result in sharp variations in the specific properties participating in and the amount of funds they contribute to the program from year to year. Moreover, some systems might perceive a set-aside of Section 3 funds as a "tax" on their capital grants. To assure that program funds are spent to the maximum extent possible on research, a cap on the share of funds available for administration should be established. Legislative Requirements Legislation will be required to amend the current Urban Mass Transportation Act to authorize the set-aside of formula grant funds for the research program. Clarification also should be sought that research is an eligible use of Section 9 and Section 18 funds. Section 9 funds can now be used to finance planning as well as construction of transit facilities [Section 90)]. However, it is unclear if the legislative intent was sufficiently broad to include research under this general planning category. States are already authorized to use a small portion of, Section 18 grants, limited to 15 percent of program apportionments, for research purposes as well as for other technical assistance and management activities. However, it is unclear if local operators are also eligible to use these funds for the same purposes. New legislation should clarify these ambiguities and provide a strong statement of program purpose and sources of funding support. When legisla- tion is in place, program autonomy and continuity should be assured. Program Benefits The recommended financing proposal is structured to Assure sustained funding to support a viable research program in a time of budgetary restraint that threatens research budgets, .. Insulate research funds from outside influence to ensure that the program is controlled by the transit operators, Secure a program of sufficient size to support significant research proj- ects and cover the fixed costs of a joint research program, Assure that program benefits reach a broad-based constituency by requir- ing .a financial commitment of the medium and small as well as the large operators, and Limit administrative costs by using an existing funding mechanism and placing a cap on the percentage of funds that can be expended for administra- tion.

FINANCING 65 NOTES The Hayden-Cartwright Act of 1934 provided that the 1 'h percent set-aside could be used for surveys, planning, and engineering investigations. The Federal-Aid High- way Act of 1944 broadened the provision to include research (1, p. 321). Should these funds be replaced with a new formula grant program funded from the Mass Transit Account of the Highway Trust Fund, as the current administration is proposing, this same set-aside would apply to this or any alternative funding arrangement substituted for the current Section 9 and Section 18 programs. The 1987 Appropriations Bill for the Department of Transportation and Related Agencies (P.L. 99-500) appropriated $1.92 billion for Section 9 and $75 million for Section 18 for a total of approximately $2 billion. UMTA is expected to obligate an estimated $13.3 million annually for federally sponsored research during the next several years. An analysis of UMTA grant awards in FY 1985, for example, showed that 71 percent of all Section 3 funds were allocated for rapid and commuter rail projects. The other largest categoly was bus maintenance facilities (3). REFERENCES America's Highways: 1776-1976. FHWA, U.S. Department of Transportation, 1976. Swninary of Progress Through 1985. NCHRP, TRB, National Research Council, Washington, D.C., 1985. Computer File on Grant Awards for FY 1985. Office of Management Information Systems, UMTA, U.S. Department of Transportation, 1985. National Urban Mass Transportation Statistics, FY 1983. Section 15 Annual Report UMTA-MA-06-0107-85-1. Transportation Systems Center, U.S. Department of Transportation, Cambridge, Mass., Dec. 1984.

6 Managing and Administering the Research Program The success of the recommended problem-solving research program will depend heavily on the active participation of transit operators in program management and implementation. Their direct involvement in determining research priorities should increase the relevance of the research agenda and the likelihood that research results will be applied. Developing an appropriate governance structure and implementation strat- egy requires three key decisions: Defining the composition and role of a governing board to provide policy guidance for the research program, Selecting an institution to provide day-to-day program management under the guidance of the governing board, and Developing an implementation plan and program incentives to assure dissemination of research results. DEVELOPING AN ORGANIZATIONAL STRUCTURE The essential components of an organizational structure for the problem- solving research program are shown in Figure 6-1. An active governing board must set policy for and give direction to the program. Strong operator repre- sentation on this board as well as operator involvement in proposing research topics are critical to assuring that the research program is relevant to operator

UMTA APTA AAsFrF0 Private equipment suppliers and conactors Academic research Community Other interestui parties TRANSIT OPERATORS —Research Propose I GOVERNING BOARD I Formulate --p • Tranirt Operators - Policies and Topics • State DOTs Research Program PROGRAM I Manage and RESEARCH ADMIN1S- Review Research CONTRACTORS TRATOR ] Projests Disseminate Reviewed Results Research Resalat FIGURE 6-1 Organizational structure—transit problem-solving research program.

68 RESEARCH FOR PUBLIC TRANSiT interests. Input from the broader transit community also will be important, particularly to assure that the program is coordinated with parallel transit research activities. A suitable institution must be found to carry out the directives of the governing board and provide the day-to-thy administration of the program. This administrative body will be responsible for managing and reviewing research projects, awarding and monitoring contracts, and assuring that the research results are disseminated widely to the intended audience. The organi- zational structures of other client-focused cooperative research programs provide possible models for the recommended problem-solving research pro- gram. The approach of the National Cooperative Transit Research Program (NCTRP) may be particularly germane because it was organized for the express purpose of providing a mechanism through which the transit com- munity could join cooperatively in a research program to address near-term problems in public transportation (1, p. 1). The program provides for broad industry representation on a policy board and an administrative arm to manage the research, both of which are essential components of the recommended program (see Figure 6-1). Specifically, the program is managed under a three-way agreement: the American Public Transit Association (APTA) manages the Technical Steering Group (TSG), which formulates the research agenda; the National Research Council (NRC), through its TRB staff, administers the research program; and UMTA provides the funding. The TSG is made up of representatives of transit operators, state depart- ments of transportation, local governments, and UMTA.1 The primary activity of this group is to develop an annual program of research. Research problems and topics submitted directly by transit operators and others are reviewed and then ranked in order of priority. TRB staff then screen the topics to identify possible areas of duplication with other on-going research. When a program has been developed by the TSG and approved by UMTA, it is turned over to the NRC to administer. Panels of experts, working with TRB staff support, define specific research projects from broad problem statements. The NRC advertises widely for proposals and lets contracts. Staff monitor research in progress and review project reports. Although program funding levels have curtailed implementation activities, prompt publication and dissemination of project reports help ensure that the research findings reach the intended audience. Operator participation in pro- posing research topics and on project panels2 also increases the likelihood that research products will be practical and focused on operator needs. The role of UMTA is intended to be primarily one of oversight. UMTA representatives, as members of the TSG, review and approve annual NCTRP programs to assure that proposed research projects are eligible for federal

MANAGEMENT AND ADM!NLSTRATION 69 research funds and are well coordinated with other research activities both within and outside the federal government (1, p. 3). Although program fund- ing is provided directly from UMTA's Section 6 research budget, UMTA is not expected to intervene in setting research priorities or in providing technical direction to projects (1, p. 1). The NCTRP program is intended to provide a mechanism whereby the transit industry can directly influence a small portion of the federal transit research budget by reaching consensus on its own research needs (2, p. 1). Program objectives have not always been met in practice. In particular, reliance on discretionary funding for projects that appear as line items in UMTA's research budget has resulted in closer federal scutiny of the research agenda than program architects had intended. In recent years UMTA has become more concerned that NCTRP projects meet federal as well as local research priorities and more involved in the project selection process. To avoid these problems, the proposed research program should adopt financing arrangements patterned after the highway research programs. As was discussed in the previous chapter, highway research funds are provided from an automatic set-aside of federal-aid highway funds to state highway and transportatioti departments. By earmarking a portion of federal-aid funds that are already intended for distribution to the states, the Federal Highway Administration (FI{WA) recognizes state primacy in determining research priorities. A similar arrangement, whereby funds for a problem-solving re- search program are automatically set aside from federal grants to local transit operators, is recommended for transit. By combining the key organizational components of the NCTRP approach—a governing board and a program administrator—with a funding mechanism like that for highway research, the most desirable features of each can be incorporated into an appropriate structure for the recommended problem-solving research program. In the sections that follow the main features of each of the organizational elements of the recommended program will be discussed in turn and issues that require further decisions will be noted. DEFINING THE ROLE OF THE GOVERNING BOARD An active governing board that represents key industry interests is central to the success of the recommended research program. Strong operator represen- tation on the board is essential and a well-designed structure will seek a balance of different operating environments, including bus and rail systems, large and small operators, and urban and rural settings. To assure a broad representation of industry interests, the governing board should also maintain

70 RESEARCH FOR PUBUC TRANSiT liaison with other organizations that have a stake in transit such as UMTA, APTA, TRB, AASHTO, private equipment suppliers and contractors, and the academic research community (Figure 6-1). Setting up the governing board will require major decisions about composi- tion of the membership, voting rights, and tenure in office. Because of the wide range of different sized transit systems, it may be desirable to stratify the board into subunits that reflect the interests of large and small systems. Because of their large numbers, small properties might be represented on the board by members from state departments of transportation as well as from individual properties. Voting rights of member operators will have to be established to reflect an equitable balance of transit prnperty types and interests and to be commensurate with their financial participation in the program. Decisions about the election of officers and the frequency of meet- ings also will be required. After the board has been established, it is unlikely that it will need to meet more than once or twice a year to carry out its primary activities. The major distinguishing feature of the proposed research program is the dominant role to be played by the operators in shaping the research agenda. A primary activity of the governing board, as representatives of the operators, will be to set policy and give direction to the research program. Starting with the research agenda defined during this study, the board will further refine the program, set priorities among research topics, establish policies and incentives to encourage nomination of promising projects, identify criteria for selecting among competing proposals, adopt a research management plan to guide projects from concept to implementation to dissemination, and give direction to program staff. The governing board must take whatever actions are neces- sary to assure that the operators not only become involved in project selection but also actively participate in proposing needed research projects and in disseminating research results. Although most of these activities will be focused on the joint research program, individual operators could request guidance from the governing board in undertaking single-agency research projects. In addition to these program-related activities, the board will coordinate the recommended program with parallel transit research activities including UMTA's policy research, the university research program, and private equip- ment suppliers' research efforts. Although the primary rationale for an opera- tor-oriented program is the limited attention now being paid to problem- solving research, there could still be some areas of overlap with existing transit research activities. For example, one of UMTA's program units under the Lead Program initiative addresses opportunities for privatization through innovative financing techniques as well as institutional arrangements. These subjects have also been identified as the third and seventh research topics of

MANAGEMENT AND ADMINISTRATION 71 the problem-solving research agenda. However, specific research topics that are germane to each sponsor's interests could be defined in a way that would avoid duplication of effort. Operator-sponsored research might examine prac- tical ways to structure contracts to encourage greater use of private contract- ing by public transit agencies. Projects defined under the Lead Program, in contrast, might focus on the federal regulatory impediments to privatization, such as labor protection clauses [i.e., Section 13(c)] and restriction of federal capital grants for vehicle purchase to public operators. The board's coordinat- ing role can best be fulfilled by establishing an on-going liaison with represen- tatives of other research programs, including UMTA, the academic research community, and industry equipment suppliers. Finally, the board should take a lead role in developing a plan to widely disseminate research findings in a usable form to transit managers, operating personnel, and the transit community at large. This aspect of the governing board's role will be discussed in the last section of this chapter. SELECTING A PROGRAM ADMINISTRATOR Several factors should guide the critical choice of a program administrator. A candidate institution must demonstrate the capacity to represent industry interests and to manage a sizable research program. An institution's ability to meet these requirements can be gauged by several considerations. Selection Criteria Evidence of Close lies to Transit Operators Trust between the operators and the administering organization is key to assuring operator support of the recommended research program. Transit operators will want to be convinced of the ability of the administering institution to bring an unbiased and independent perspective to the program. Operator support of and participation in the program will be facilitated if good working relationships already exist between the operators and the program administrator. Ability to Establish a Governing Board Representative of Industry Interests The administering organization must demonstrate the ability to bring together and balance a wide range of interests on a governing board. This will mean enlisting the participation of medium- and small-sized transit operators as well

72 RESEARCH FOR PUBUC TRANSiT as the larger properties. State involvement also must be sought because states play an increasingly important role in transit.3 Finally, the views of industry trade associations, equipment manufacturers and suppliers, the academic research community, and other organizations with an interest in transit should be represented. The managing institution must be in a position to use or adapt one of its own structures to act as the governing board, to work with another organiza- tion to fulfill this function, or to create and empower a new entity. A track record of creating and working with committees clearly would be an asset. Capability of Managing a Research Program The administering organization must also have the capacity to manage a sizable research program. The recommended multimillion dollar annual pro- gram of problem-solving research will require considerable staff support to define specific projects from broad research topics, to solicit and evaluate proposals, to award and monitor contracts, and to ensure quality control in reviewing final products. A solid track record in research management will be critical to assuring that, when funding has been secured, the program will be operative quickly and the research results will be available in a timely and usable fashion to the transit agencies. Priority Given to Research The importance given to research in the overall mission of the administering institution can also affect the success of the recommended program. If re- search is accorded a high priority, or is central to the mission of the organiza- tion and has the backing of the chief administrative officer, a major new research program is likely to be given high visibility and support. Strong support is even more likely if the central business of the organization is transit. related. If research plays a more limited role in the institutional mission or if modal concerns are broad based, a higher probability exists of diluting resources and diverting attention from a transit research program. Ability to Administer Federal Funds Because the recommended program would be funded from a set-aside of federal grant funds, the administering organization must be capable of receiv- ing and processing federal funds. Staffing requirements and other administra-

MANAGEMFRF AND ADMINISTRATION 73 tive costs of the program may be minimized if the administrative burden is piggybacked onto an existing structure and extensive changes in existing accounting and contractual procedures are not required. Ability to Disseminate Research Results Because the success of the recommended program ultimately depends on the widespread distribution of research results in a format that is useful to transit operators, the program administrator should have experience with techniques of research dissemination. Reaching the transit audience will be more likely if the administering institution has the capability of structuring the program to involve the transit operators in the research process itself through such mechanisms as operator participation on project panels. Dissemination can move more rapidly if the administering organization already has dissemina- tion mechanisms in place, such as technical committees and publishing ca- pability, through which research results can be publicized. Organizational Options A number of organizational alternatives were screened on the basis of the factors just discussed, and a short list of the most promising options was developed. Three potential candidates—APTA, UMTA, and AASHTO—were eliminated from further consideration because these organizations, as they are currently structured, fail to meet key prerequisites for administering the recommended research program. As an association of transit systems and other transit-related organizations,4 APTA is in a good position to represent industry interests: it has well- established working relationships with transit operators; it should be able to create a governing board that is broadly representative of industry interests; and, finally, through its various committees and contacts, it should be in a good position to disseminate research results. The primary weakness of the organization as a potential program administrator is its limited capacity to administer a sizable research program. Currently, APTA's mission is directed toward nonresearch objectives. UMTA was also eliminated as a potential program administrator. Although UMTA has been the primary sponsor of transit research for more than 20 years, its current research program is focused almost entirely on federal research priorities and limited attention is paid to the research needs of local operators. This perceived gap in the current UMTA-sponsored research pro- gram has, indeed, provided the impetus for recommending an operator-

74 RESEARCH FOR PUBUC TRANSiT sponsored, problem-solving research program. Were UMTA to assume admin- istration of this research effort, transit operators would be highly skeptical of its ability to operate the program in an unbiased, independent manner. Finally, AASHTO was ruled out primarily because of its weak ties to transit operators. Its interests cover the principal transportation modes, but the strongest emphasis traditionally has been on highways. Although the associa- tion's involvement in transit has grown as its member state transportation departments' role in transit has expanded, AASHTO is not perceived as representing operator interests. Moreover, AASHTO may sponsor and orga- nize research activities through its committee structure, but the association typically does not administer research programs. No other existing institution meets all of the key prerequisites for admin- istering the recommended research program. Identifying an appropriate candi- date, then, will require a decision on whether to restructure an existing organization or to create an entirely new structure. The primary advantage of a new organization is that it would provide a fresh start, free of prior associa- tions. The main drawbacks are the start-up costs and the lack of a proven track record. A second decision is whether to adopt a centralized or a decentralized approach. The advantages of a centralized administrative structure are the cost savings that can be derived from scale economies of a single administrative entity and the uniformity of approach that can be achieved through a single program manager. The primary disadvantage is the potential for being located in a "national" headquarters that is far removed from the program's clients. The study committee concluded that final determination of an appropriate administrative organization should be part of a follow-on effort that will be described in the next chapter. The committee narrowed the options to four, and an "other" category, in recognition that a better alternative may yet be found. With the exception of the university option, the candidate organizations would operate the program in a centralized mode. Transit Development Corporation This alternative entails rebuilding the Transit Development Corporation (TDC), a nonprofit organization founded in 1972 by then key leaders in the transit industry to foster a transit research and development program oriented to operator interests. Convinced that UMTA's research program was not responsive to industry needs, 18 major public transportation agencies served on the TDC Board of Directors5 to guide a new research agenda directed toward improving the safety, reliability, and performance of transit systems (5). These founding operators financed TDC staff and other administrative

MANAGEMENT AND ADMINISTRATION 75 costs and loaned staff support. Research projects, however, were funded primarily from UMTA's R&D funds, although broader state and local support was envisioned. The research agenda was focused heavily on rail issues, reflecting the interests of the board of directors and the belief that these projects would have the greatest financial payoff. In 1976 UMTA withdrew funding support for TDC-sponsored research, citing, among other reasons, dissatisfaction with what the agency perceived as the relatively narrow constituency reflected on the board of directors. Dual membership by most directors on APTA's executive committee and the TDC board was also viewed by UMTA as compromising TDC's role as an indepen- dent research organization. Today, the TDC still exists as a corporate entity with officers and a board of directors, although it no longer conducts a research program. A rejuvenated TDC could meet many of the prerequisites for successful administration of an operator-oriented research program. First, the TDC approach attempted to assure a research agenda relevant to transit agency interests by encouraging operator participation in project development, super- vision, and evaluation. Second, the primary mission of the organization was research related, and staff capability existed to administer the research pro- gram. These features could be recaptured in a redesigned TDC. The main limitations of reconstituting the TDC along the lines of its predecessor, however, are the time and money required to develop a new research staff capability and an administrative apparatus. Moreover, a new TDC would also have to overcome its prior image as a large-property, rail program. Because both medium- and small-sized operators would contribute to the recommended research program, their interests and participation would need to be reflected more heavily in the governance structure and in the research agenda. National Research Council An alternative would be to administer the program through the National Research Council (NRC). The NRC was established by the National Academy of Sciences (NAS) in 1916 to act as the principal operating agency of both the NAS and the National Academy of Engineering (NAE). The staff of the Transportation Research Board (TRB), a unit of the NRC, currently manages the NCTRP as indicated previously. The advantages of administering the recommended problem-solving research program through the NRC would be to use existing staff capability and experience in managing transit and other transportation research, to take advantage of the organization's ability to convene panels of experts who represent wide-ranging interests, to operate in

76 RESEARCH FOR PUBUC TRANSiT a program or project advisory capacity, and to capitalize on the organization's ability to receive and administer federal funds. These strengths should limit the start-up time and costs involved in setting up the new program. The limitations of selecting the NRC are, first, that the ties of transit operators with the organization are not strong. For reasons discussed earlier, UMTA has delayed funding for the NC'FRP; the most recent annual program was developed by the industry-based Technical Steering Group in December 1984 and TRB was asked to prepare a proposal to administer this program in March 1987. Thus the Technical Steering Group has not been active in setting new research initiatives and priorities in recent years. Second, the position of transit research as a high-priority area within the NRC and TRB is not as strong as it could be. The National Cooperative Highway Research Program, which is also managed by TRB, is funded on an annual program basis at approximately seven to eight times the level of the companion transit pro- gram. Some of these concerns should be mitigated by the proposed financing plan for the problem-solving research program. The size of the recommended program—approximately $10 million annually for joint research—and greater stability of funding should produce a more meaningful program of significant transit research projects. A more substantially funded effort, in turn, should increase program visibility to the industry, encourage more regular industry input to defining a relevant research agenda, and raise the transit research program to more nearly equal status with its highway counterpart at TRB. Universities Universities, or alternatively a select group of university transportation cen- ters, represent the only decentralized administrative approach of the four options. The attraction of operating through universities is the opportunity to build on existing research capability and on the universities' track record in managing transit research projects. Many universities currently receive grants from Section 11 of the Urban Mass Transportation Assistance Act to support research and training in urban and rural transportation problems. The recently passed Surface Transportation Act also authorizes establishing 10 university transportation centers, one in each federal region, to conduct research on surface transportation issues, including transit.6 In theory, universities could have the added advantage of greater oppor- tunities for communication and interaction with nearby transit properties than a national organization operating from a single location. In practice, however, one of the major limitations of the university option is the relatively weak ties

MANAGEMENT AND ADMINISTRATION 77 universities have to transit operators. Because university research project funding and selection of grantees are handled directly by UMTA, the current university program is geared to the federal transit research agenda and not necessarily to operator concerns. UMTA's key administrative role in manag- ing the program also casts doubt on whether the universities would be sufficiently trusted by the operators to administer a program oriented to operator interests. The mechanics of administering the program could also be complicated and costly with a decentralized approach. An organization like TRB, or the National Advisory Council of the university transportation centers program ,7 could be retained to coordinate research efforts, but this would add to the program's administrative burden. New Special-Purpose Nonprofit Transit Research Corporation As the preceding discussion indicates, the primary advantage of building on an existing structure is to capitalize on an existing capability and track record in managing research. The major disadvantage is the perception that each of these organizational options still falls short of an ideal administrative struc- ture. Another alternative is to create a new organizational arrangement, such as a new nonprofit organization dedicated to managing transit research. The main advantage of this approach is that a new organization can provide a fresh start, free of the criticisms associated with existing organizations. A new corporation can be structured from the beginning in a way that will encourage operator participation in the program. Moreover, with a single mandate—to develop and manage the problem-solving research program—it should be well focused and highly visible in its mission. The major drawback of this option is that setting up a new corporation would require substantial start-up costs as well as time to develop staff capability and a proven track record in program management and dissemina- tion of research results. Special arrangements would also have to be made to enable the corporation to receive federal funds. Lack of an existing structure on which to piggyback this administrative apparatus would increase program costs. Whatever administrative institution is selected, a major concern of this organization as well as of the governing board will be to develop a plan for dissemination of research findings. The key ingredients of an effective dis- semination program are discussed in the following section.

78 RESEARCH FOR PUBUC TRANSrF DEVELOPING A PLAN FOR DISSEMINATING RESULTS The success of any research program ultimately depends on widespread communication and application of research findings. A frequently heard criticism of past transit research initiatives is that the research results are inadequately disseminated. Much potentially valuable research is poorly pub- licized, and thus the results are underutilized (6). Several factors hamper the transfer of research results to transit agencies (7). Perhaps the most frequently mentioned is the lack of operator participa- tion in defining relevant research problems and in monitoring the research process. The nature of the research audience is itself a problem in the transit industry. Transit properties are diverse in size and and operating environments and thus have a wide variety of research problems and needs. The level of sophistication among operators also varies widely, which limits the trans- ferability of generalized research applications from one property to another. Many operators are also averse to taking risks in the current financial environ- ment and are therefore hesitant to adopt research innovations that do not have a pmven track record and payoff. Finally, information transfer in the transit industry is hindered by the lack of a well-developed information transmission and delivery network. The recommended operator-oriented transit research program is structured to increase the likelihood of successful dissemination of research results. First and foremost, the operators will be directly involved not only in defining the research agenda but also, as members of project panels, in reviewing and monitoring the research products as they evolve. Second, the operators will have a direct financial stake in the success of the program. Third, the objective of many of the research topics will be to identify industry "best practices" and examine the most effective ways of incorporating these practices in properties with different operating environments. Finally, the program should increase awareness of research at the operator level and thus enhance receptivity to innovation and application of new ideas. Several additional mechanisms could be built into the program to assure the successful dissemination of program results. One of the first research projects, for example, could analyze the successes and failures of past transit research initiatives so that the lessons learned from these experiences could be realized at the outset of the new program.8 The involvement of transit properties in the success of the program could be increased by encouraging some amount of local funding support for research projects, perhaps on a sliding scale as a function of system size. Those projects with higher local participation would receive a higher priority in setting the research agenda. Finally, a formal dissemination effort, based on the model of the university transportation

MANAGEMENT AND ADMINISTRATION 79 center proposal, could be built into the program. In that case not less than 5 percent of program funds are explicitly set aside to carry out technology transfer activities. A similar arrangement could be built into the recommended program structure. At a minimum, research dissemination activities should include the publica- tion and distribution of research results and follow-up with individual proper- ties that identified the research need to determine if the results addressed the problem. In addition to publication and distribution of technical reports, research results could be packaged in a more compact and "user-friendly" form for transit operators. A research newsletter, technical "briefs," state-of- the-art reports, films, videotapes, user guides, and trade journal articles are some of the methods that could be adopted to facilitate transmittal of research results. Following the TDC model, loaned staff support from transit properties could be provided to assist in developing an effective dissemination program. A more expanded technology transfer effort could include field workshops on innovative techniques that emanate from research as well as operator training courses on more proven practices. Operator site visits could also be sponsored to locations where successful implementation of innovations has taken place. When research applications are in a more experimental stage, demonstration programs offer an effective method for testing good ideas without asking the operators to assume the risk of implementing an untried technology. Individual transit properties with interest in the topic could be solicited as candidates for such demonstration efforts, and funding support would be provided by the program. Demonstration programs, however, re- quire a substantial funding commitment and investment of staff time and other resources by the host operator. Almost as important as the type of activities included in a research dis- semination program are the channels through which the information is trans- mitted. A centralized implementation effort, at UMTA for example, may not be responsive to the large numbers and various types of transit operators. Greater use of organizations closer to the operators—UMTA regional offices, state departments of transportation, metropolitan planning organizations, uni- versity extension and outreach programs, and technical committees of organi- zations like APTA, AASHTO, and TRB—may be more effective in reaching the operators. Operators themselves can be effective communicators of re- search results. Centers, each addressing one of the proposed research topics, could be established at a number of transit properties. The mission of these centers would be to monitor research in progress and to coordinate dissemina- tion of results to other interested operators. The centers could be funded from a set-aside of program funds for technology transfer activities. One model for facilitating the dissemination of research to particularly difficult target groups in rural and small urban areas is the Federal Highway

80 RESEARCH FOR PUBUC TRANSiT Administration's Rural Technical Assistance Program (RTAP). Since 1982 when the program was initiated, a network of 42 universities and state transportation departments has been designated to operate as technology transfer centers. Among other activities, these centers publish and exchange newsletters on recent research applications, hold workshops and training sessions on topics identified by local users, and house relevant documents for loan. The centers currently receive funding from FHWA, matched by an equivalent amount from the states.9 Because these centers are already autho- rized to provide technical assistance to transit properties, efforts to dissemi- nate results of the problem-solving research program that are targeted to the small operators could be piggybacked onto the existing RTAP program or a similar model could be developed independently for the recommended pro- gram. Decisions on each of the key issues raised in this chapter—the composition and role of the governing board, selection of an appropriate program admin- istrator, and developing a way of disseminating research results—will all be addressed in greater depth in a follow-on effort to the current study as described in the next chapter. NOTES In the early program years, the TSG also included representatives from labor and urban interests. To date, approximately one-third of the members of NCTRP panels have come from transit operating agencies (2, p. 3). State funding for public transportation now equals the amount contributed by the federal government (3, Introduction). States also handle the administration of major federal grant programs for transit, including Section 9 funds for urban areas of fewer than 200,000 in population and Section 18 grants for rural systems (4). APTA's membership includes 350 bus and rail systems and 500 manufacturers, consultants, state departments of transportations, transit associations, transit indus- try publications, and universities. The Board of Directors was composed primarily of large bus and rail properties but also had representatives of private transit management companies who represented smaller bus systems. The Surface Transportation and Unifonn Relocation Assistance Act of 1987 (P.L. 100-17) provides program funding for a 4-year period of $5 million in new authorizations from the Highway Trust Fund and $5 million in new authorizations from the Transit Account of the trust fund; federal funds will be matched on a dollar-for-dollar basis. The function of the National Advisory Council shall be to coordinate research on surface transportation issues (highways and transit) with other relevant research activities, review and evaluate the research perfonned, and act as a clearinghouse between the centers and the transportation industry to foster the dissemination of research results.

MANAGEMENf AND ADMINISTRATION 81 This activity might not involve new data gathering. It could distill from UMTA- funded studies and seminars the primary reasons for barriers to information transfer in the transit industry. The states can use other federal grant funds as match. Highway planning and research funds are the most common state funding source. REFERENCES Transportation Research Board. Proposal to the Urban Mass Transportation Administration to Provide Technical and Administrative Services in Support of the National Cooperative Transit Research and Development Program. UMTA-78-255. UMTA, U.S. Department of Transportation, May 25, 1979. Progress Report 10 for the Period January 1 Through June 30, 1986. NCTRP, TRB, National Research Council, Washington, D.C., 1986. 1986 Survey of State Involvement in Public Transportation. American Association of State Highway and Transportation Officials, Washington, D.C., 1986. Urban Mass Transportation Act of 1964 as amended. 49 U.S.C. 1605. Review and Preview. Transit Development Corporation, Inc., Washington, D.C., undated. UMTA Technical Assistance Advisory Seminar. Ann Arbor, Mich., July 1984. R. P. Schmitt and E. A. Beimbom. User Perspectives on the Use of Urban Trans- portation Research. Transportation Quarterly, Vol. 36, No. 1, Jan. 1982, pp. 99-112.

7 Next Steps Establishing a problem-solving research program will require a substantial effort. Enacting legislation to authorize a new operator-funded research pro- gram will require broad support from the transit industry and agreement on how such a program will be administered. Because these activities could not be concluded within the time frame of the study, the study committee agreed that a follow-on mechanism was needed. The experience of the Strategic Highway Research Program (SHRP) provided a good model. When the study phase of that project had been completed, the project moved to a preimplementation phase under the leader- ship of the primary organization representing industry interests—The Ameri- can Association of State Highway and Transportation Officials (AASHTO). Over a period of approximately 2 years, an AASHTO Task Force worked to broaden industry awareness and support of the recommended research pro- gram, decided how the program would be administered, and developed legis- lation that was included in the recently passed surface transportation bill. The study committee recommends a similar approach for transit. Figure 7-1 shows the proposed progression of events from study through legislation and indicates the appropriate parties to be involved at each stage of the process. The study committee recommended that the transit industry, working through an organization like the American Public Transit Association (APTA), take the lead in moving the program forward during the next phase of the project. More specifically, a special task force, representing a broad spectrum of industry interests, would be created and charged with the following mission: Broaden awareness of the need and build consensus for an operator- funded, problem-solving research program; 82

NFXT STEPS 83 Enabling Legislation IV Project study Preimplementation Continuing Phases (1112 years) (1 to 2 years) Researvh Key Study Special Task Governing Players Committee Force Board HGURE 7-1 Overview of the phases of the strategic transportation research study project. Make key decisions with respect to program organization; and Develop a legislative proposal and work for its enactment. The most immediate and perhaps most challenging task of a follow-on effort is to build broad-based support within the transit industry for a problem- solving research program. Because the program will include a large number of the approximately 600 public fixed-route transit providers and will require their financial participation, the task force must inform these operators about the program and gain their support. It must also inform other industry interests represented by such groups as equipment manufacturers and suppliers and the academic research community, because a problem-solving program should be closely coordinated with the research performed by these groups. One of the primary activities of the task force will be to develop a communications plan and to work through appropriate industry channels to inform these audiences of the proposed program. Another task will be to clarify the organizational structure of the recom- mended program. The initial study committee provided guidelines for the composition and functions of the governing board and options for an admin- istrative structure but stopped short of recommending an institution to provide day-to-day program administration. The task force will need to define more precisely the composition of the governing board, particularly the balancing of interests between the large and small operators and the type of participation by other organizations with a stake in transit. It will also need to clarify the functions of the governing board, paying particular attention to the role of the board in coordinating the problem-solving research program with other on- going transit research and dissemination efforts. Finally, the task force must decide on the relationship between the board and the program administrator. Making the latter decision will require the task force to arrive at a final decision on an appropriate administrative structure for the program. The study committee examined possible options along two dimensions—whether to build on an existing structure or create a new institutional arrangement and

84 RESEARCH FOR PUBLIC TRANSiT whether to adopt a centralized or a decentralized approach—and provided a short list of four alternatives for further consideration. Among existing institu- tions, the study committee examined the Transit Development Corporation, the National Research Council, and universities as possible candidates for administering the program. The option of creating a new nonprofit corporation was also explored. The study committee considered the pros and cons of a centralized versus a regional administrative structure. Of the four options, managing the program through regional university transportation centers represented the only decentralized approach. The task force must reexamine these alternatives, adding others as may be appropriate, and make a final detennination. Finally, the task force must develop a legislative proposal that contains the recommended financing plan and build support for its enactment. If transit operators and the broader transit community are convinced of the need for and payoffs of a problem-solving research program, the task of obtaining legisla- tion should be made easier. Opportunities for attaching that legislation to annual transit appropriations bills or to other legislation should be available, so it should not be necessary to wait until the next reauthorization of the mass transit program in 1991 to implement the recommended program.

Appendix A Human Resources Management The cost-revenue squeeze facing the transit industry underscores the impor- tance of better management of human resources, the single largest component of transit operating expenses. Much of the industry's response to cost escala- tion has been focused on controlling wages and productivity decline through moderate wage settlements, elimination of costly work rules, and more effi- cient use of vehicle operators. In recent years attention has also been directed to the transit work environment itself as a major cause of employee perfor- mance problems. Introducing training and development programs, restructur- ing jobs, and creating a better work environment have all been examined as approaches to improving the morale and motivation of industry personnel. THE PROBLEM More effective management of human resources has been identified as a key factor in stemming the burgeoning cost increases of transit operations. Al- though transportation experts disagree on the most appropriate way to mea- sure productivity, one widely used indicator—passenger vehicle miles per employee, a measure of output per employee—has declined by 20 percent during the last decade from 13,042 in 1973 to 10,858 in 1983, the most recent year for which data are available (1, pp. 117-118; 2, Tables 11 and 14, pp. 34, 37). Several of the factors that affect this productivity index reflect changing operating environments, which are difficult for transit workers or managers to control. For example, increased provision of peak-hour service to accommo- date commuter traffic has exacerbated the problem of underutilization of labor during off-peak hours. A recent study found that since 1960 bus systems in 50 large U.S. cities have shown increased peak-hour service that contributes, in part, to the decline in productivity (3, p. 15). 85

Service area expansion, particularly to low-density suburban areas to meet changing population and employment patterns, has also adversely affected productivity levels. Adding low-density routes increases service costs because operator wages are spread over a small number of customers who typically travel longer distances than do passengers on central city mutes. Research on ways to deploy transit labor more cost-effectively to meet peaking and route requirements, such as the use of part-time labor, has a high priority for transit operators. Other factors that affect productivity can be controlled more directly by management action. For example, many transit operators have ideitified absenteeism as a major labor problem that results in significant unwarranted operating costs. A national study (4, p. i) of the problem based on a survey of 208 transit systems found that unscheduled operator absence (i.e., other than holidays and vacation) averaged 29 days per operator per year, a rate well above the experience of private-sector firms. Absentee rates for illness, for example, have reached 5 percent, and even 10 percent, in certain transit systems; the comparable number in private industry is closer to 2 '/z percent (personal communication with Operations Manager, Orange County, Califor- nia, Transit Disthct). High absenteeism rates are frequently a symptom of more fundamental problems in the transit work environment. Transit drivers, for example, must operate in conditions of limited supervision, meet difficult schedules (i.e., split shifts, weekend duty), and perform multiple tasks such as driving safely while meeting schedules and interacting with passengers (5, p. 1). Without greater management attention to adequate training programs, job restructuring to improve working conditions, and methods to motivate and reward good performance, transit systems are likely to see continued high absenteeism rates, stress-related employee health problems, and poor worker morale. Research on the underlying factors that affect employee performance should assist transit managers in designing programs focused on the causes rather than the symptoms of personnel performance problems. Improving the quality of management itself—higher standards of profes- sionalism among management personnel, better supervisory and middle man- agement training programs—can help assure that efforts to improve employee performance span the entire organizational structure. EXPECTED IMPACT OF RESEARCH Research on appropriate strategies for making more effective use of human resources is of interest to nearly every transit operator. With operating deficits on the rise, transit managers are searching for ways to improve the perfor-

87 mance of their largest cost item, personnel. Research can be instrumental in identifying successful policies and practices that should yield not only cost savings but also more fundamental improvements in the work environment. Cost Reduction Improvements in productivity are central to cost control in the heavily labor- intensive transit industry. Personnel costs, including fringe benefits, accounted for 71 percent of total operating expenses in calendar year 1983 (6, pp. 23-24). These costs ranged from 56.3 percent for the smallest systems to 73 percent for the largest. Reductions in personnel costs thus promise a substantial payoff for transit operators. Part-Time Labor Changes in work rules to provide greater flexibility in hiring practices and deployment of the work force offer significant opportunities for savings, particularly for systems with heavy peaking requirements. Use of part-time labor to meet peak-hour schedules can reduce the need for costly remunera- tion of underutilized full-time drivers during nonpeak periods. Now that use of part-time operators has become a more widespread practice among transit properties, estimates of savings in the range of from I to 8 percent of operator wages have been advanced (7, p. 24). Seattle Metro, the first major U.S. transit district to employ part-time labor beginning in 1977, estimated savings of up to 8 percent of operator wages, or $2.7 million based on 1983 figures.' Applying these estimates to the industry as a whole, where operator wages on average represent one-fifth (22 percent) of total operating costs, indicates that savings in the range of from $18 million to $147 million are possible from the use of part-time workers.2 In practice, the magnitude of savings will depend on the operating environ- ment (i.e., the higher the peaking requirements and the more restrictive the work rules before the introduction of part-time labor, the higher the expected savings) and on bargaining agreements with respect to the use of part-time labor (7, pp. xiii, xv). Wage concessions to full-time operators to win the right to use part-time labor, wage and benefit differentials between full- and part- time operators, and restrictions on the number and utilization of part-time personnel can all affect the extent of savings realized. Now that the industry has had more experience with part-time labor, further research on the probable level of savings and the ways in which savings can be maximized would clearly be useful.

88 Absenteeism Management actions to address such human resources problems as increasing absenteeism also hold promise for substantial savings, particularly because many policy changes can be implemented at management discretion. In 1980 the Orange County Transit District recorded an absentee rate of approximately 12 percent and estimated the cost of an unscheduled absence at nearly three times that of a regular paid workday (personal communication with General Superintendent, Orange County, California, Transit District). A new absenteeism policy the following year reduced absenteeism rates by nearly two percentage points (each percentage point reduction is equivalent to savings of approximately $200,000 in today's dollars or 2 percent of current operator wages).3 Because absenteeism levels at many transit properties appear to be prob- lematic, many operators are exploring new policies for and approaches to controlling absenteeism. Research on the real costs, both direct and indirect, of absent workers as well as studies of various options for dealing with the issue, ranging from disciplinary actions to improvements in working condi- tions, could help operators institute effective policies for handling an impor- tant industry problem. Organizational Change Research on human resources management issues is likely to spawn recon- sideration of current organizational arrangements to encourage a more pro- ductive and motivated work force. Seattle Metro, for example, indicated that one of the nonquantifiable benefits of employing part-time labor was a broader reevaluation of the system's work rules. Similarly, properties that have tried to deal with the absenteeism problem have frequently found that it is a symptom of more fundamental problems in the work environment that need attention. Reorganization of supervisory arrangements to encourage greater accountabil- ity for bus operators, supervisory training in managerial and motivational skills, physical fitness programs, and rewards—honorary and monetary—to reinforce good employee attendance and safety records are just some of the methods of fostering a better work environment under consideration by transit agencies. The Milwaukee County Transit System, for example, recently introduced what appears to be a successful incentive program for reducing absenteeism costs that averaged nearly $1 million annually between 1980 and 1984 (9, p. 9). The main objective of the Individual Recognition Award Program is to improve the attendance records of the 45 to 50 percent of the operators with

89 moderate absenteeism rates by providing positive awards for good attendance. After 1 year of operation, the system reports savings of $200,000, a more than fivefold return on program costs of $36,000. According to system managers, nonquantifiable benefits, such as improved operator morale, have also been considerable. Research on similar types of incentive programs and the circumstances under which they are likely to succeed should be useful to other properties contemplating strategies for improving employee attendance records. High Interest to Transit Operators Transit providers have increasingly come to recognize the importance of the human aspects of transit service provision. A recent survey of 56 metropolitan areas found that two-thirds of survey respondents were already working to improve the cost-effectiveness of their existing conventional transit services (10, p. 7). Eighty-seven percent maintained, however, that "productivity in- creases greater than the present would be needed in the future to adapt to changing conditions" (10, p. 7). Research on the options available for im- proving productivity as well as estimates of probable savings should thus provide useful benchmarks and policy direction for transit managers. Research in this area, however, has not been a high priority in the federal R&D program. An examination of UMTA's FY 1984 transit research program, for example, found that only about 35 percent of the tasks involve possible improvements in the management of human resources. Given the substantial share (more than 70 percent) of transit operating expenses attributable to labor and the emerging operator consensus on the importance of improving produc- tivity, there are clearly both an opportunity to allocate greater resources for research in this area and interest in such allocation. High Likelihood of Achieving Usable Results Many transit systems already have considerable experience with labor-saving measures, such as use of part-time labor and institution of absenteeism policies, and with training and development programs to improve employee performance. These should provide a fertile field for further investigation. Research can help document the effectiveness of various approaches and the operating circumstances in which they are most successful. Perhaps more important, it can facilitate sharing of information among transit management and labor. on what works and what does not.

90 The transit industry may also learn from the experiences of other industries that have grappled with similar issues. Policies for controlling absenteeism, training programs for supervisory personnel, and alternative strategies for addressing difficult operating requirements are just some of the areas in which the experience of private industry may be relevant. PROPOSED RESEARCH APPROACH Because research on human resources management has frequently been focused on the manifestations rather than the causes of employee performance problems, effective research on this topic should start with a better under- standing of the operating environment within which transit workers must perform.4 Research should focus not only on the operating requirements or the tasks demanded of various types of workers (vehicle operators, mainte- nance crews, etc.) but also on how management has structured the organiza- tion of work to meet these requirements and how this may affect performance. Other service industries with comparable operating characteristics (i.e., split shifts, long hours of operation with limited supervisory contact) might be examined to identify similarities with and differences from transit and to assess alternative approaches for structuring work to meet operating require- ments. This research should help transit managers pinpoint the factors that are unique to the transit operating environment and identify where new or bor- rowed approaches may have the greatest chance of success. When the operating context is better understood, an examination of specific policies and programs for improving human resources management can be undertaken. Research topics could include identifying good driver recruitment and selection practices, examining effective absenteeism control policies and programs, developing better supervisory and midlevel management training and development programs, and documenting ways of successfully introduc- ing part-time labor. Methods of protecting the compensation of full-time drivers while providing sufficient flexibility to employ part-time operators could be investigated, and ways to package proposals for the use of part-time labor for management-labor negotiations could be examined. More fundamen- tal strategies, such as labor participation in management decisions, broadened labor operating responsiblities, and other approaches to improving labor relations, could also be evaluated. Research on each of these topics should help identify the expected payoffs of alternative approaches, the most salient factors affecting their successful implementation, and the underlying operat- ing characteristics that need to be addressed to maximize potential benefits.

91 SUMMARY Research on management of human resources has potential for enormous benefits to the industry in cost savings and fundamental improvements in the transit work environment. Because more than 70 percent of total operating expenses is attributable to personnel costs, the payoff from improved productivity is central to industry cost-control efforts. For example, savings from the use of more flexible part- time labor, were this to become an industry-wide practice, could range between $18 million and $147 million, or between 1 and 8 percent of all operator wages, with savings on the lower end of the scale most likely. Thus research on the most effective ways to introduce and use part-time labor should help maximize the financial payoff from this practice. Reexamination of personnel practices is also likely to result in a reevalua- tion of the work environment. More flexible work rules, more incentives to encourage imjiroved employee performance, more basic restructuring of re- sponsibilities to increase job satisfaction as well as efforts to improve the quality of management itself are likely to emerge from a thorough reappraisal of human resources management practices. Given the general industry emphasis on cost-control measures and the specific interest in increasing productivity by improving employee motivation and performance, research on human resources management should find a receptive audience in today's transit managers. Although this area has not been a high research priority in the federal R&D program, the industry's own experience with labor-saving practices and positive incentive programs as well as the possible transferability of approaches from other industries should make this a fruitful topic for investigation. NOTES Seattle's situation is perhaps unique in the industry, however, because it has an unusually high peak-base ratio; few restrictions on the use of part-time labor (in 1983, 50 percent of all operators were part time); and, until more recent bargaining agreements, significantly lower wages and benefits for part-time operators (personal communication with the Manager of Base Operations, Seattle Metro). In 1983 transit industry operating expenses were $8.4 billion (8, Table 2.08, p. 2-48). The system reports 760 operators with wages of $17.8 million (8, Tables 3.08 and 3.14, pp. 3-71, 3-208). This section draws heavily on a discussion of high-priority research needs proposed by the Canadian transit industry (5).

92 REFERENCES Statement of Henry Eschwege, General Accounting Office. In The Financial and Productivity Problems of Urban Public Transportation, Hearings before the Sub- committee on Investigation and Oversight of the Committee on Public Works and Transportation, U.S. House of Representatives, June 23, 1981. Transit Fact Book. 1985 ed. American Public Transit Association, Washington, D.C., 1985. Twenty Years of Federal Mass Transit Assistance: How Much Has Transit Changed? General Accounting Office, Sept. 18, 1985. Peat, Marwick, Mitchell & Co. Study of Operator Absenteeism and Workers' Compensation Trends in the Urban Mass Transportation Industry. Final Report. UMTA, U.S. Department of Transportation, March 1980. Proposed Research Topic: Strategies in Labor Relations. Canadian Urban Transit Association, Toronto, Ontario, Oct. 1985. D. Budin et al. Compendium of National Urban Mass Transportation Statistics: 1983 Report Year. Washington Consulting Group, Inc., Washington, D.C., July 1985. K. M. Chomitz et al. Fiscal and Organizational Impacts of Part-Time Labor in Public Transit. Institute of Transportation Studies and School of Social Sciences, University of California, Irvine, July 1985. 8 National Urban Mass Transportation Statistics, FY 1983. Section 15 Annual Report UMTA-MA-06-0107-85-1. Transportation Systems Center, U.S. Depart- ment of Transportation, Cambridge, Mass., Dec. 1984. K. J. Warren and A. G. Connelly. Milwaukee County Transit System's Individual Recognition Award Program. TRNews, No. 126, Sept.—Oct. 1986. Metropolitan Transit in the 1980s: An Intergovernmental Challenge. Draft report. Advisory Commission on Intergovernmental Relations, Washington, D.C., June 1985.

Appendix B Service Configuration and Marketing Many of the nation's older transit systems, particularly in the East and the Midwest, were developed to serve a dense central city core. Today land-use patterns have shifted to greater decentralization of population and employ- ment centers, which poses a difficult challenge for transit service providers. Transit managers are exploring a variety of alternatives for restructuring operations in their search for cost-effective ways to provide more convenient service to existing customers and to exploit new market opportunities. This shift in orientation from a production focus to a consumer-based outlook has alerted many transit operators to the need for more sophisticated marketing strategies and practices and for better integration of marketing activities into the organizational mainstream. Research can play a major role in facilitating this fundamental shift in transit property service options and outlook, particularly because transit sys- tems, preoccupied with cost and efficiency concerns, have only recently begun to explore opportunities for increasing service effectiveness. Ways in which research can support the efforts of public transit properties to optimize service configuration patterns and to identify appropriate market- ing strategies and practices to meet customer needs are discussed in this Appendix. Institutional arrangements for increasing service effectiveness, such as better coordination of multiprovider service and private contracting of certain lines and services, are discussed in Appendix C. THE PROBLEM Land-use development patterns of the post—World War II era have produced a difficult market for the traditional central-city-focused transit service provider. Between 1970 and 1980 population grew by 18 percent in suburban areas and by 15 percent in nonmetropolitan areas, and many large and predominately 93

94 older central cities suffered sizable population losses (1, p. 38). During the same time, newer cities in the South and the West expanded rapidly as a result of sprawling growth patterns that were encouraged by an automobile-oriented transportation infrastructure. Because most transit operations are radial and structured to serve one principal hub, the central business district (CBD), transit properties generally have viewed the widely dispersed travel patterns typical of suburban sprawl as an unfavorable market for transit service. In recent years, however, growth in suburban employment has spawned the development of large regional office and retail complexes, which has encour- aged the creation of more densely developed minihubs in many metropolitan areas. Such clustering of development can provide a more viable base on which to develop a network of suburban transit routes. For most transit operators, still oriented to providing service to the CBD, these new market trends can provide an opportunity for expanding service and ridership. Research on the circumstances most conducive to service reconfiguration and the service delivery patterns most cost-effective for targeting these new markets should provide valuable information to those providers interested in exploiting new service opportunities. The difficulties many transit systems have in addressing changing market conditions stem not only from the physical configuration of traditional sys- tems but also from a more fundamental resistance to change. Many large, fixed-route operators, for example, are hesitant to consider restructuring service, particularly when major changes may affect demand for service, scheduling, labor requirements and training, equipment needs, and communi- cations budgets. Inadequate understanding of their production costs, par- ticularly for peak-hour service, can hamper efforts to assess the cost implica- tions of change. Political opposition to change can also be strong. Downtown interests may oppose service to outlying suburban areas because it is perceived to adversely affect the existing quality of service to transit's primary market (2, p. 64). Finally, reluctance to reorient existing service patterns may be due to transit's lack of marketing orientation and understanding of the competition. As sole providers of transit service in most market settings, many transit properties tend to be production oriented rather than market focused. In contrast with the private sector, where profits and market share are dominant concerns, transit operators face a multitude of broad, often competing, objec- tives. As a result, marketing plays a relatively minor role at many properties or is narrowly defined to encompass only advertising and promotional activities (3, pp. 8-9). The majority of small- and medium-sized transit operators spends between 2 and 4 percent of farebox revenues on marketing activities. In contrast, private manufacturing firms devote from 10 to 20 percent of sales to marketing purposes (4, p. 48). The reluctance of transit managers to adopt a

95 more aggressive marketing posture stems in part from a lack of concrete evidence of the benefits of various marketing techniques. Research can be instrumental in providing examples of successful ap- proaches taken by transit properties to introducing major service changes and of appropriate marketing tools that have facilitated the implementation of new service patterns. EXPECTED IMPACT OF RESEARCH The purpose of a research program on service configuration patterns and marketing strategies will be to provide transit managers with appropriate tools for achieving a variety of service objectives: serving existing riders at less cost; improving service to certain market segments, such as suburban or elderly riders; or attracting new markets at the least incremental cost. A wide range of benefits can be expected from greater research on these topics. Ridership Increases Reconfiguring transit operations from the traditional fixed-route radial system to a gndl or timed-transfer approach provides alternative methods for captur- ing a greater share of the suburban or non-CBD-corridor travel market. Timed-transfer systems, in particular, offer a flexible means of serving the dispersed trip patterns typical of low-density suburban travel. Essentially, the timed-transfer concept is an operating strategy by which transit vehicles (i.e., buses) are routed and scheduled to meet simultaneously at common locations, in some cases at regional hubs, to minimize passenger transfer times (5, p. 1-1). Although research on outcomes is limited, the introduction of a timed- transfer approach is projected to expand ridership anywhere from 5 to 17 percent (6, p. 54). Larger ridership increases are generally attributed to im- provement in level of service as well as redelineat.ion of existing routes and destinations. Tn-Met of Portland, Oregon, offers a good example of a transit system that has used the timed-transfer approach to implement a policy of providing multidestinational transit service in a metropolitan area. The service design, which links two suburban centers with a series of local buses timed to intersect with trunk routes to downtown Portland, has produced systemwide ridership increases of approximately 5 percent (5, p. 5-66). In the Westside suburban area alone, ridership grew by 40 percent after the first year of timed- transfer service, and there were substantial increases in local and nonwork

96 trips, which are difficult markets for traditional transit operators to penetrate (7, p. 24). Successful implementation of the timed-transfer approach is not without cost, however. Implementing a timed-transfer system can require capital investments at transfer points and increased operating costs may be incurred because of the need for schedule changes, driver training, extra supervision, and longer vehicle layovers to synchronize arrivals and departures (6, p. 50). Perhaps more important, transit service must be reliable and operating capability sufficiently sophisticated to handle complex scheduling for timed- transfer to be effective. Most timed-transfer systems currently operate in either medium-density cities or in medium-density suburbs of major cities where demand is sufficient to cover the system's added costs and complexities (5, p. xviii). On balance, available data suggest that, where system expansion is desired to provide service for widely dispersed trip origins and destinations, a timed- transfer approach can provide a less costly alternative than increasing conven- tional fixed-route service (5, p. xxv). Research on the impacts of service reconfiguration should provide a more definitive assessment of its relative costs and benefits and should help identify those operating conditions most conducive to changing service delivery pat- terns. Improved Service Effectiveness Service reconfiguration can result in major improvements in the frequency and convenience of service to transit customers, and restructuring routes can bring transit service to areas where there was little or no coverage before. Service on existing routes can also be improved. Transit managers can monitor existing routes and schedules to determine if shifts in travel patterns and patronage levels warrant service changes. If a more radical service reconfiguration is contemplated, such as the introduction of a timed-transfer system the major purpose of which is to minimize passenger waiting times, the potential for improving service is significant. One study of timed-transfer systems operating in the United States and Canada found that, in many cases, average transfer waiting times on conventional service can be reduced by 50 percent or more, from 10 to 15 minutes to 5 minutes, with a timed-transfer arrangement (5, p. xxi). However, estimating the systemwide consequences of service changes is important: decision makers need to know when im- proved service to one market segment will be offset by degraded service for customers served by more conventional arrangements. Identifying opportunities for service improvements may require a more market-oriented approach on the part of many transit operators. Where major

97 restructuring of service appears warranted, market research to analyze the travel patterns and preferences of potential and existing customers will be critical because this information can guide the location of transfer points and the layout of mutes and schedules to optimize passenger travel convenience. An effective public information program can also help minimize service disruption caused by routing and scheduling changes. The Denver Regional Transit Authority, for example, developed a massive public information sys- tem to explain a major restructuring of the system. One month after the changes were implemented, 93 percent of the general public was aware of the change (8, p. 22). Finally, service effectiveness can be improved by more timely communication of routine service delays and route changes to transit passengers. Computerized scheduling systems can be used to support auto- mated signage and to broadcast frequent service updates. Organizational Change Adopting a more consumer-oriented approach should alert many transit man- agers to the need for reevaluating the role of marketing in the transit agency structure. A recent review of the state of the art in transit marketing concluded that, although significant strides had been made in introducing innovative marketing techniques, an unrealized opportunity lay in developing an organi- zational structure that captures the full potential of the marketing function (3, p. 49). Many transit managers continue to view marketing as solely an advertising and promotional activity. Other key aspects of marketing, such as market research and long-range strategic planning, are frequently neglected or are not well integrated with critical operating functions, such as service development and pricing. Consequently, the marketing department is frequently placed with such activities as communications and public information in the organiza- tional structure; as a result, operating decisions often lack a consumer focus. Even in those areas of advertising and consumer information to which transit agencies now devote the major part of their marketing budgets, little informa- tion exists on which promotional techniques have proved most cost-effective (3, pp. 33-34). If the transit industry is to adopt a more consumer-oriented approach, transit managers must be more convinced of the benefits of various marketing practices. Research can help document the marketing techniques that are most appropriate for transit, identify more precisely the payoff of various marketing practices, and suggest ways that the marketing function can be incorporated most usefully into the organizational structure. Opportunities abound to bor- row from relevant experience of the private sector, which has made significant

98 advancements in marketing practices, particularly in taking advantage of the benefits of new data-processing technologies. PROPOSED RESEARCH APPROACH Research on several topics would advance the state of knowledge about appropriate transit service configurations and, more fundamentally, about ways to integrate a marketing perspective into transit operations. A research project to identify the costs and benefits of alternative service patterns and to define those situations that lend themselves best to service reconfiguration could provide a practical guide to the most promising alterna- tives. Despite the apparent opportunities for transit operators to reach new markets in growing suburban subcenters, surprisingly little comparative infor- mation is available on the payoffs of various methods of restructuring service. An APTA survey reported in Newman et al. (5, p. 3-3), for example, reported that information to guide implementation of the timed-transfer concept was limited, particularly with respect to such issues as selecting the number of transfer points and bus systems that can be coordinated feasibly within one system. More thorough "before" and "after" assessments of timed-transfer and other service delivery options might be made to isolate their relative costs and benefits as well as the more practical issues of system design and implementation. Another area for investigation is marketing. Topics for research could include identifying those marketing techniques that are most appropriate to transit, demonstrating the payoffs of various marketing strategies, examining ways of incorporating a consumer orientation in the organizational structure, and identifying the major barriers to a marketing orientation. The role of market research in identifying strategic transit markets and in developing effective service and communications strategies for reaching particular market segments could be studied. Various organizational arrangements to enhance the marketing function within transit agencies and ways to facilitate imple- mentation of desired organizational changes could also be examined. SUMMARY Research on ways to reconfigure transit operations to accommodate multihub suburban development patterns holds promise for expanding transit's share of the travel market. Studies on the benefits of the timed-transfer approach, for example, suggest that ridership increases of between 5 and 17 percent can be realized. Increased operating costs and scheduling complexities associated

99 with restructuring service, however, will require more definitive research on the relative costs and benefits of these approaches and on the circumstances most conducive to their successful introduction. Research on ways to optimize routes and schedules can also result in improved system performance. Greater service frequency and convenience, in particular, can be realized with changes in existing routes and schedules or more radical system reconfiguration. Identifying opportunities for service improvements may require a greater marketing orientation on the part of many transit managers. Research on travel patterns and ridership preferences is essential if opportunities for improving service effectiveness are to be identi- fied. If the transit industry is to adopt a more competitive, consumer-oriented stance in the marketplace, transit managers must be more convinced of the benfits of various marketing practices. Research can be instrumental in identi- fying the marketing techniques that are most appropriate for transit, docu- menting more precisely the payoff of various marketing strategies, and exam- ining the ways that the marketing function can be integrated most usefully into the transit decision-making process. The private sector offers numerous mod- els for effectively incorporating the marketing function as a central activity in an organizational structure. NOTE 1. Grid systems, designed to provide north-south, east-west service connections to most regional destinations, require a level of transfers that is economically feasible only in high-density locations that support high service levels (2, p. 56). REFERENCES D. E. Priest and J. L. Walsh-Russo. Land-Use Trends and Transit Operations. In Special Report 199: Future Directions of Urban Public Transportation, TRB, National Research Council, Washington, D.C., 1983. J. B. Schneider and S. P. Smith. Redesigning Urban Transit Systems: A Transit- Center-Based Approach. In Transportation Research Record 798, TRB, National Research Council, Washington, D.C., 1981, pp. 56-65. C. A. Walb and W. R. Loudon. Transit Marketing: A Review of the Stare-of-the-Art and Handbook of Current Practice. Cambridge Systematics, Inc., Cambridge, Mass., April 1985. M. R. Couture. Public Transit's Survival and Prosperity in the 1980s: Effective Marketing Management Can Lead the Way. In Transportation Research Record 936, TRB, National Research Council, Washington, D.C.. 1983, pp. 47-55. D. A. Newman et al. Tuned.Transfer: An Evaluation of its Structure, Performance and Cost. SYSTAN, Inc., Les Altos, Calif., Aug. 1983.

M. Nelson, D. Brand, and M. Mandel. Use and Consequences of Timed-Transfers on U.S. Transit Properties. In Transportation Research Record 798, TRB, National Research Council, Washington, D.C., 1981, pp. 50-55. M. Kyte et al. Planning, Implementaion. and Evaluation of a Timed-Transfer System in Portland, Oregon's Suburban Westside. Service Planning Department, Tn-County Metropolitan Transportation District of Oregon, Portland, Jan. 1982. M. Abkowitz and M. Driscoll. A Comparative Study of Public Transit Promotion. Department of Civil Engineering, Rensselaer Polytechnic Institute, Troy, N.Y, Feb. 1984.

Appendix C Service Delivery Models Concern about rising industry costs and reluctance to increase public subsidies have caused public transit operators to consider alternative service arrange- ments as one method of increasing the efficiency, and thus reducing the cost, of service. The usual strategies of attempting to reduce deficits through fare increases or service cutbacks are second-best alternatives, given the industry's primary mission of providing affordable and adequate service. Recently attention has been focused on private provision of certain transit services as one service delivery alternative. Before the 1960s public transpor- tation was provided primarily by the private sector. As many private com- panies grew unprofitable, public agencies assumed more and more respon- sibility for providing these services so that today less than one quarter (23 percent) of fixed-route public operators contract with the private sector for some or all of their transportation services (1, p. 7).1 Rising industry costs, however, have rekindled interest in private providers who may be less encum- bered by the costly and inflexible wprk rules and the high overhead rates of their public counterparts. The range of service options includes outright provision of transit service by the private sector and contracting out various types of service (e.g., high-density routes, low-density service) or various functions (e.g., data processing, maintenance) to private providers. Many public operators have had considerable experience contracting with private providers for service for the elderly and handicapped; contracting out of existing regular-route service, however, has been more limited. Another alternative is to improve operating efficiency by incorporating more businesslike management techniques in public transit operations without private participation in the actual delivery of transit service, or to adopt effective management practices developed by innovative public transit prop- erties. Several techniques, such as the introduction of more flexible work rules and the use of part-time labor, are discussed in Appendix A. Recent interest in service delivery alternatives has caused many transit managers to reevaluate the traditional role of public transit authorities as sole 101

102 providers of transit service. New institutional arrangements in which the public operator sets policy and coordinates but does not necessarily provide service are being tested. Because many questions remain about the most desirable options for improving service efficiency and the new institutional roles of public au- thorities, these are topics that could fruitfully be addressed by research. THE PROBLEM Despite expansion of service and gains in ridership since the early 1970s, transit's revenue gains due to patronage increases have been outpaced by operating costs. Mounting costs are, in part, the product of changes in the market transit serves. Population and employment have shifted to the suburbs, and traditional central-city-focused,-fixed-route, radial transit systems cannot efficiently serve the dispersed trip patterns that have resulted. Serving more far-flung suburban locations often requires expensive extensions of existing routes and costly operation of low-density runs that raise service costs. Substituting more flexible, lower cost forms of service, such as vanpools and shared taxis, or contracting certain fixed-route services to a private operator offers alternatives for providing service that is better matched to today's ridership demands. Such substitutions should also reduce the need for further increases in public subsidies (2, Appendix, p. 10). Operating cost increases can also be attributed to work rules and labor practices that traditionally have stymied more flexible and efficient use of the labor force by public operators. One of the primary advantages of contracting is the ability of private providers to operate with more flexible work rules, such as use of part-time drivers and split shifts, so that peak ridership demands and low-demand services can be accommodated at lower cost (3, p. 24). Public providers, however, may achieve some of the same operating savings by reaching labor agreements that allow more flexible work rules. Despite opportunities for increased operating efficiencies, many public operators are reluctant to consider alternative service delivery models. A myriad of service options exists, yet limited information is available to suggest which offer the biggest payoffs and under what ciitumstances they can be successfully introduced. Institutional barriers also make public transit managers reluctant to explore alternative service delivery options. Public transit authorities typically func- tion as exclusive providers of service within an area. Their reluctance to encourage competition stems from several sources: fear of sacrificing service quality for cost; perceived need for protection to prevent private or other public operators from "skimming the cream" by taking over the most heavily

103 patronized routes (4, p. 285); and concern that decontrolling service will result in fragmented, uncoordinated delivery systems. Labor interests, too, are strong supporters of the traditional service delivery model; they argue that alternative arrangements, such as private contracting, can result in poorer service and less accountability to the public (5, p. 50). Moreover, federal labor protection regulations2 and local collective-bargain- ing agreements that restrict private contracting present major impediments to changing existing institutional arrangements to include private providers. Research can help address these issues and facilitate the introduction of appropriate new service delivery alternatives. Examination of the experience of various privatization3 initiatives as well as other service delivery alterna- tives would reveal the best ways to improve operating efficiency while providing adequate safeguards to protect service quality and labor interests. UMTA has given the alternative of privatization a high priority in its research agenda. A complementary research effort that addressed this issue from the operators' perspective would contribute significantly to an assess- ment of the perceived benefits of this service delivery alternative. EXPECTED IMPACT OF RESEARCH The objectives of a strong industry-based research effort on alternative service delivery models are to encourage more cost-effective services, to expand service options by introducing greater flexibility in service delivery, and to reinforce the businesslike approach characteristic of today's transit managers. The expected payoff of such a research effort could be substantiaL Cost Reduction Advocates of privatization claim that contracting Out fixed-route services to private providers can result in operating savings of between 13 and 27 percent on average for medium and large public transit agencies, respectively (6, Chapter 5).4 Cost savings inherent in stimulating a more competitive environment for the public provision of transit service, although less readily quantifiable, may also be substantial. More flexible work rules, use of part- time labor, and incorporation of private management techniques can reduce public operator costs significantly. Private contracting of commuter services to low-density residential areas offers a good example of the cost advantages of private participation in service provision. One success story is provided by the Dallas Area Rapid Transit (DART) system that contracted with Trailways Commuter Transit,

RIM Inc., in 1984 to operate and maintain a suburban express system between downtown Dallas and the surrounding communities. Under Trailways' man- agement, operating costs were estimated to be 30 to 40 percent lower than if the service had been provided by DART directly (personal communciation with DART staff). Trailways attributed its ability to deliver the service at significant savings to more flexible work rules, better maintenance productiv- ity, and lower overhead (7, p. 24). A study of the potential for increased private provision of commuter service in the Los Angeles area estimated that private companies, on average, could operate at a cost as low as one-half the cost of public operators (8, p. ii). The cost differential was attributed to lower operator salaries and overhead ex- penses as well as more flexible work rules. When service expansion is involved, contracting out new lines to private operators may also save substantial capital costs because public systems will not have to expand their fleets. However, private providers' operating costs will increase significantly vis-à-vis their public counterparts' if the former's operating costs reflect the capital recovery charges of vehicle purchases.5 Full realization of the benefits of private contracting will depend ultimately on the amount and type of service contracted. For example, if estimated savings from private contracting average approximately one-quarter of large public-operator costs for peak service and only 10 percent of all service is contracted, then systemwide savings will be 2.5 percent of operating costs (10, p. 81). Savings potential may also vary with the type of service provided, be it commuter express service or low-density local service. Many transit experts caution that, in contrast with other cost-saving alterna- tives, service contracting requires difficult organizational and institutional changes that may stymie large-scale adoption. Others argue, however, that private contracting agreements will become more prevalent if they make good economic sense (11, p. 9). More research on experience with private provision of transit service can test the claims that savings are large, identify the types of service or functions best suited for private operation, and suggest the most effective ways of integrating private service into public transit authorities' overall service deliv- ery networks to maximize the savings potential. Organizational Change Research on various service delivery models is likely to lead to a reevaluation of the role of public transit authorities. With the emergence of more private operators, the role of government as the necessary deliverer of transit service as well as the financial sponsor is being challenged. Restructuring public

105 transit authorities to separate the policy-making from the operating flinctions and to encourage competition in the provision of service is already under way in several major metropolitan areas including Minneapolis/St. Paul and Chi- cago among others (12, pp. 272-273). The public authority provides overall policy direction to guide and coordinate transit service in a given area; the actual service, however, may be provided by both public and private opera- tors. The larger the existing system and the more traditional services included, the greater the likely resistance to change. Many public authorities have experience with private providers for commuter express service and demand- responsive service for the elderly and handicapped but have not considered contracting out or franchising existing regular-route service. Large systems are apt to view with concern the managerial and quality control issues of coordinating a more diverse service mix and face well-organized labor resis- tance to changes that are perceived as affecting job security or remuneration levels. Research on ways to structure contracts with private providers to assure service transition without labor disruptions (i.e., through attrition or reassign- ment) and to incorporate performance standards and incentives to safeguard service quality could go a long way toward oveztoming current objections to nontraditional service arrangements. Industry Consensus In the wake of federal funding cutbacks and increasing industry costs, most public operators are considering options for increasing service efficiency. Despite much that has been written recently about privatization, few of the claims both for and against private provision of transit service are well supported. Many operators concur on the need for more impartial research that is sensitive to industry concerns and local operating environments. Operator- oriented research could help consolidate industry support and facilitate intro- duction of the most promising nontraditional service options. PROPOSED RESEARCH APPROACH Three separate topics have been identified for research under the broad category of service delivery models. One area of investigation would be the role of transit authorities in the provision of service. Several models, which range from the traditional role of the public authority as the exclusive provider of service to transit authorities

as coordinators of service delivery, are feasible. Because several metropolitan areas are currently experimenting with new service delivery models, this should be an opportune time to take stock of such efforts. Opportunities for, and examples of, service coordination in a multiprovider environment could be examined. Another topic of interest is private provision of transit service. Those areas of transit service (e.g., low-density service, peak-hour service) or operations (e.g., maintenance, management information systems) that are most amenable to privatization could be identified and classified. Consideration would be given to the costs and benefits of each alternative. Examples of private service provision under each option could be identified; experience to date could be documented; and a contact person for follow-up purposes could be identified. A final topic of interest is the mechanics of private-sector participation, including contractual terms, payment alternatives, incentive and penalty clauses, competitive bidding procedures, and performance-monitoring methods. A prototype contract or contracts that could be used by public transit operators in negotiating with private providers might be developed. Although privatization initiatives for traditional transit services are a rela- tively new phenomenon, more transit properties are now experimenting with private contracting and introducing private-sector management techniques so a greater range of experiences should be available to study. The transit industry already has considerable experience with private management com- panies and with contracting for service for the elderly and handicapped; cost comparisons between publicly and privately managed services could be drawn from this experience. Lessons may also be learned from experiences in contracting for other municipal services. A recent survey by the International City Managers Association of 3,130 cites and 1,570 counties found that nearly two-thirds of the respondents were engaged in some form of private contracting (2, p. 8). Methods of structuring municipal service contracts to provide labor protection and assure service quality may have application for public transit. SUMMARY Research on alternative service delivery models could have a significant payoff. Contracting with private providers is reputed to result in operating savings of between 13 and 27 percent on average for medium and large public transit agencies, respectively, depending on the amount and type of service contracted. Research can help determine if these claimed savings can be realized and under what circumstances the benefits of private contracting can be maximized.

107 Research on alternative service delivery arrangements is also likely to encourage a reevaluation of the traditional role of public transit authorities as exclusive providers of transit service. Restructuring public transit authorities to separate the policy-making from the operating functions as a way of encouraging more competition in the delivery of service is already being tested in a number of major metropolitan areas. By suggesting ways to minimize labor disruptions, safeguard service quality, and coordinate service in a multiprovider environment, research may help reduce resistance to intro- ducing more diverse service options. - In view of the high priority UMTA has given to privatization initiatives and the need for greater industry operating efficiencies in general, more research from the operator perspective would clearly be desirable. Lessons may be drawn from private contracting for other municipal services, which is cur- rently a widespread practice. Now that more transit properties are experiment- ing with private contracting, introducing private-sector management tech- niques, and operating as service coordinators in a multiprovider setting, more industry experience should also be available to study. NOTES Privately contracted service accounts for 8.5 percent of transit miles and 5 percent of operating expenditures. These figures do not include nonsubsidized, privately operated systems (1, p. 8). Section 13(c) of the Urban Mass Transportation Act of 1964 as amended does not preclude contracting for service with the private sector but requires that such practices not lead to any loss of jobs by existing transit employees. Thus considera- tion of private contracting is frequently restricted to situations in which service is to be expanded. Privatization refers to the provision of transit service in a community by a private corporation. This can cover a range of activities from a fully privately run operation to contracting out various services or functions to a private provider. Transit agency size is defined by number of vehicles. Medium-sized operators have between 25 and 150 vehicles. Large operators have more than 150 vehicles (6, Chapter 5). Capital recovery charges for buses can easily run 20 to 30 percent of total operating costs when vehicles are fairly new (9, p. Xi). REFERENCES R. Teal. Public Transit Service Contracting: A Status Report. Working Paper 86-16. Institute of Transportation Studies, University of California, Irvine, Dec. 1986. Blue Ribbon Panel Report. In Overcoming Barriers to Private Sector Transporta- tion Contracting with Public Agencies, Airport Ground Transportation Associa-

108 Lion, and The International Taxicab Association; UMTA, U.S. Department of Transportation. Oct. 1984. Contracting Cuts Costs. Metropolitan, Sept.—Oct. 1985. M. A. Kemp and R. F. Kirby. Government Policies Affecting Competition in Public Transportation. In Urban Transit: The Private Challenge to Public Trans- portation (C. A. Lave, ed.), Ballinger Publishing Co., Cambridge, Mass., 1985. L. Lampkin. Contracting Out. American City and County, Feb. 1984. R. Teal, G. Juliano, J. Golob, T. Alexander, and E. Morlok. Estinating the Cost Impacts of Transit Service Contracting Alternatives. Final Report UMTA- CA-06-0220-1. UMTA, U.S. Department of Transportation, Feb. 1987. J. M. Dodd. Public, Private Efforts Improve Dallas Transit. Metropolitan, Sept.—Oct. 1985. Commuter and Express Bus Service in the SCAG Region: A Policy Analysis of Public and Private Operations. Southern California Association of Governments, Los Angeles, Feb. 1982. R. Teal et al. Private Sector Options for Commuter Transportation. Final Report UMTA-CA-11-0022. UMTA, U.S. Department of Transportation. March 1984. K. Chomitz et al. Fiscal and Organizational Impacts of Part-Time Labor in Public Transit. Institute of Transportation Studies and School of Social Sciences, Univer- sity of California. Irvine, July 1985. C. Henke. The Business of Privatization. Mass Transit, Vol. 8, Aug. 1986. C. K. Orski. Redesigning Local Transportation Service. In Urban Transit: the Private Challenge to Public Transportation (C.A. Lave, ed.), Ballinger Publishing Co., Cambridge, Mass., 1985.

Appendix D Internal Efficiencies Faced with continuing increases in operating costs and intense budgetary pressures at all levels of government, today's transit managers are searching for ways to operate more efficiently to bring costs under control. The indus- try's major contributor to operating expenses, personnel costs, is discussed in Appendix A. Other significant elements of cost, such as energy, insurance, and fare collection, many of which have shown rapid increases over the last several years, are discussed in this Appendix. Unlike exogenous market factors (e.g., increased demand for peak-hour service, requests for low-density suburban service) that are largely outside of transit managers' control, many of the items discussed here are directly within the purview of management action. Automation can streamline fare collec- tion; energy management measures can reduce fuel and electric power costs; and new industry self-insurance options hold promise for substantial premium savings. Many of the technologies and strategies, however, have been de- veloped recently and often present a confusing array of options to transit managers. Research can assist in the identification of state-of-the-art practices and information about the pros and cons of various alternatives in a nontechnical form suitable for management review and action. THE PROBLEM Costs of providing transit service have risen significantly during the past decade and have contributed to mounting operating deficits. Between 1975 and 1983, the latest year for which data are available, operating expenses per passenger vehicle mile, a common indicator of transit service costs, rose by approximately one-fifth (21.1 percent) after adjustment for inflation.' Al- though labor has been identified as the single largest cost component, other D]

110 cost elements have been identified as significant and growing factors in transit's total cost picture. The energy crisis had a significant impact on the prices of fuel and electricity. Between 1970 and 1980, for example, inflation-adjusted fuel and electric costs increased by 164 percent (2, pp. 86-87). In the 4-year period between 1978 and 1981 alone, the per gallon price of No. 1 and No. 2 diesel fuels, the primary energy source for transit buses, rose by 264 and 267 percent, respectively (3, p. 1). By 1983, the most recent year for which data are available, utility costs reached a peak at 5.4 percent of total transit operating expenses (1, Table 7A, p. 24). Fortunately, energy costs have de- clined substantially since the early 1980s. However, the possibility of future energy shortages, increasing consumption of electric power and diesel fuel by transit passenger vehicles,2 and the EPA's 1991 emissions regulations for transit buses suggest the need for continued vigilance and research to keep energy costs under control. A more recent phenomenon has been rising insurance premiums for transit operators. Underwriting losses in the insurance industry—a product of invest- ment policies,3 declining interest rates, and substantial court awards—have translated into dramatic premium increases or cancellation of insurance con- tract renewals for transit properties. Insurance costs, which represented 2.3 percent of total transit operating expenses in 1983, accounted for 6.5 percent of these costs in 1985 (5). A 1985 survey by APTA found that 70 percent of member transit systems had, or anticipated, difficulties in obtaining renewal of their liability insurance coverage (6, p. 1). Although transit is not the only industry affected, it is perceived to be in the same risk category as long-haul trucks and interstate buses, which is not a high-profit market for the under- writers (7, p. 37). The problem extends not only to public transit authorities but to private operators as well. Recently passed federal legislation (RL. 563),4 which allows associations, businesses, and state and local governments to self-insure commercial general liability risks, may provide a solution to the current insurance crisis, but industry experience with self-insurance options is limited. Information about model industry self-insurance programs needs to be collected and disseminated. Another major cost element for transit providers is fare collection. An UMTA study estimated that it costs the transit industry approximately $270 million annually,5 or 4 percent of total operating expenses, to collect fares from 53,000 fareboxes on buses and 7,400 turnstiles and gates in rail systems (8). Now that many transit fares have reached, or are near, $1, the use of paper currency has become more commonplace and can add significantly to process- ing costs (9, p. 3). State-of-the-art electronic farebox equipment, although expensive, can be cost-effective because it increases efficiencies in fare collection and can

111 handle paper currency. Electronic equipment also can reduce opportunities for fare evasion and theft and provide opportunities for more flexible, revenue- maximizing fare structures. The revenue implications of the latter will be discussed subsequently. Research can assist transit properties in evaluating the costs and benefits of various fare collection strategies. In many areas, transit managers' efforts to control costs and increase efficiency are hampered by lack of data on the specific elements of cost. For example, without automated farebox equipment, many transit operators lack precise passenger information by time of day, passenger type, and route— information that is critical for optimizing routes and schedules and developing marketing programs. Automation can lead to greater efficiencies in many other operating areas, such as maintenance and administration, but the costs, in terms of both equipment and training, must be weighed against the expected savings. This is another key area in which research can help identify the trade- offs. EXPECTED IMPACT OF RESEARCH Research on strategies for improving operating efficiency should be of interest to a wide range of transit properties. All transit operators—large and small, bus and rail, urban and rural, public and private—share a common interest in controlling energy costs, obtaining insurance at reasonable premiums, im- proving fare collection practices, and introducing cost-effective automated systems. In many of these areas, new technologies have been developed, are available, and promise significant savings. The role of research should be to identify appropriate technologies for different types of operators and oper- ating environments and to get a better idea of the costs and benefits associated with adopting these new approaches. Cost Reduction Although the energy crises of the 1970s have subsided, energy costs continue to be a major expense for transit providers. UMTA estimates that the transit industry spends $600 million per year, or 40 percent of nonlabor operating expenses, on fuel and electricity to power its buses and trains (8). Significant cost savings can be achieved through better energy management measures. Spurred by concerns about long-term availability of energy supplies and by EPA's stringent 1991 deadline on meeting emissions standards for buses, the industry is giving serious consideration to alternatives to diesel fuel. Methanol, the primary candidate, can be produced from ample U.S. supplies

112 of natural gas and coal, which would limit vulnerability to foreign-dominated energy supplies and pricing (10, pp. 6-7). Although methanol has not yet been produced in commercial quantities for transportation purposes, indica- tions are that it could become competitive with diesel fuels, particularly if diesel prices rise as expected and greater demand for methanol develops.6 Moreover, methanol has superior emissions performance and thus will be more likely to meet the EPA's 1991 standards, a topic that is further discussed in Appendix F. Despite its advantages, methanol has not been widely adopted by the transit industry; it is still in a testing and demonstration phase. Some of the major disadvantages with methanol as an alternative transit fuel are the high capital investments associated with its safe storage and handling, costs of retrofitting vehicle engines and assuring their performance, and questions about the maintenance costs associated with methanol-fueled engines (10, p. 7). The experience of programs now under way in several U.S. cities and abroad to test methanol-powered buses could be examined, and those areas in which further research needs to be undertaken before methanol can achieve wide- spread industry acceptance could be pinpointed. Another option for achieving significant energy savings is to improve management of existing energy sources. Energy audits could be used, for example, to monitor and ultimately control energy costs associated with transit building and station lighting and climate control. Other measures, such as use of fuel additives, more frequent engine maintenance, and bus driver education, could help assure more energy efficient vehicle operation. Finally, measures to reduce electricity costs on rail systems by load management techniques (i.e., reducing peak-power demand) and more effective rate nego- tiations with utility suppliers can help offset one of the most rapidly growing components of rail transit operating costs (12, pp. 1-2). Information on avail- able energy management techniques and their likely savings potential needs to be disseminated to the industry. Strategies for reducing insurance premium costs represent another area of significant savings potential for transit operators. One option is to self-insure. The Chicago Transit Authority, for example, in response to a proposed 600 percent premium increase for disaster coverage with a $10 million deductible, extended its self-insurance by establishing a $9 million reserve (6, p. 9). Another alternative is to form group-sponsored self-insurance pools. In Wisconsin 15 cities facing liability premium hikes of as much as 700 percent for their bus systems formed their own captive insurance company, Transit Mutual Insurance Corporation of Wisconsin (13, p. 5). The cities expect to cut insurance costs by at least 50 percent for policies covering the first $1 million of liability; members will continue to seek additional coverage on the open market (13, p. 6). Numerous statewide studies of similar transit self-insurance

113 options are under way in California, Michigan, Minnesota, North Carolina, Pennsylvania, and Virginia (14, p. 2). Six major transit properties have formed a new captive company, TRANS- CAP which stands for Transit Capture, to provide excess liability insurance.7 TRANSCAP is modeled after a recently established railroad insurance com- pany, Railroad Association Insurance, Ltd., which provides excess liability coverage to rail members. TRANSCAP is expected to provide adequate and affordable excess liability coverage, which is difficult for transit operators to find at any price. With federal legislation in place to facilitate formation of self-insurance and pooled purchasing groups and several model arrangements under develop- ment in transit and related industries, information about successful insurance strategies should be available for dissemination to a wide industry audience. Revenue Growth Research on efficiency improvements may also lead to increased revenues. UMTA research on current fare collection methods indicates that industry revenue losses from fare evasion and theft are about $400 million annually, based on 1980 figures, or approximately 15 percent of farebox revenues (8). Additional losses of 10 percent of farebox revenues are attributed to inflexible fare structures; the fare structures of many transit systems are constrained by available fare collection equipment as well as by fare policy decisions (8). Some systems have adopted state-of-the-art counterfeiting counter- measures, drawing heavily on the experience of the airline industry. The Southern California Regional Transit District (SCRTD) in Los Angeles, for example, recently introduced new anticounterfeit labels on its transit passes. Monthly pass sales have averaged 6,000 above previous levels, yielding additional yearly revenues of $2.3 million or 2 percent of farebox revenues (16, p. 94). The break-even point to cover the cost of the special labels is only 500 passes per month. Because trips on passes represent from 30 to 50 percent of all transit trips, the potential for increasing revenues and improving security by adopting new pass technologies could be substantial (17, p. 26). New pass technologies are often combined with electronic farebox equip- ment. Electronic technologies not only raise revenues by making fare evasion and theft more difficult, they also enable transit authorities to consider alterna- tive fare collection policies, particularly more equitable distance-based fare structures (18, p. 23). The cost of new electronic equipment, however, is high. The Washington Area Metropolitan Transit Authority, for example, plans to spend more than $5,600 per bus to equip its fleet with electronic fareboxes (19). Farebox revenues would have to increase by 7 percent to cover invest-

114 ment costs. Given the range of new fare equipment technologies available and the substantial capital costs involved, research can be critical in identifying appropriate technologies for different types of transit operators and fare collection problems. Improvements in System Performance Although their benefits are more difficult to quantify, industry efforts. to introduce automated equipment and computerized management information systems (MISs) should provide transit managers with data needed to monitor costs and performance and, ultimately, to improve service. Several transit properties are using the opportunity to integrate the introduction of electronic farebox equipment with changes in revenue processing, security procedures, and data processing (18, p. 23). Electronic equipment can provide needed ridership data, revenue profiles, audit trails, and various management informa- tion reports. The maintenance benefits to be derived from MIS in terms of equipment reliability and performance are discussed in Appendix E. Recent studies suggest that a myriad of software systems have been developed for transit application (20). The role of research will be to sort through this wealth of information to identify the systems that have proved most effective in practice. This information should be broadly disseminated to interested transit properties. PROPOSED RESEARCH APPROACH Newly developed technologies and innovative practices hold promise for greater operating efficiencies in many areas of transit. With the exception of energy, where fuel alternatives are still in the developmental phase, the technologies are available but present a bewildering array of options, costs, and uses. Research can be key in synthesizing the pros and cons of various options. Information about the most successful technologies and practices should then be disseminated. One topic for investigation could be the new technologies themselves: electronic fare collection systems could be examined; the various technologies available could be reviewed; and the costs and benefits to properties that have recently introduced new equipment could be documented. In addition, a status update on research findings, both in the United States and abroad, could be provided on alternative fuels, a topic of great importance to transit managers given the upcoming EPA deadline on bus emissions standards. A second broad area for research is to identify industry "best practices" and catalog innovative methods for achieving greater operating efficiencies.

115 Industry-sponsored insurance pools and studies of insurance options, for example, are recent phenomena. Research on the most promising insurance strategies and a "how to" guide for assessing insurance options should be of great interest to many transit managers. A review of transit systems' experi- ence with computerized MISs, including guidance regarding costs, uses, and acceptance by transit personnel, could assist transit managers in identifying the systems most appropriate for their needs and level of expertise. A final research topic could be management applications of new tech- nologies. A recent survey of APTA members regarding an upcoming fare collection workshop indicated that information on data collection use and management applications of fare collection systems was a high priority. Many observers of the insurance situation have suggested that a project to amass industry-wide data on employee injury levels, types of injury, costs to em- ployers, return-to-work programs, and the like would not only help offset insurance companies' perception of transit as a high-risk industry but could also help transit operators pinpoint areas that need improvement and develop effective risk management programs. SUMMARY Research on methods of improving operating efficiencies in areas of signifi- cant expense for transit, such as energy, insurance, and fare collection, should yield tangible benefits for most transit operators. According to UMTA, energy costs represent approximately 40 percent of transit's nonlabor operating bill. As transit operators near the EPA's 1991 deadline for meeting bus emissions standards, research on higher performance fuel alternatives to diesel, such as methanol, should assist transit managers in selecting the most cost-effective options for meeting these requirements. Energy costs may also be reduced by improved management of existing energy sources. Research on the benefits of energy audits, use of fuel additives, preventive maintenance, driver training, and load management techniques for rail systems could alert transit operators to the savings potential of various energy management measures that may not require a large initial investment. Another area of potential savings is insurance. Faced with significant premium increases, or with cancellation of policy renewals entirely, many transit properties, which now devote nearly 7 percent of their operating budgets to casualty and liability expenses, are investigating self-insurance and pooled purchasing arrangements. Research on new industry-sponsored insur- ance groups anddevelopment of guidelines for evaluating insurance options should thus be of great interest to a wide range of transit managers. Research may also assist transit properties in recouping revenues lost from inefficient operating methods. IJMTA estimates that the industry loses approx-

116 imately 15 percent of farebox revenues, or $400 million, each year to fare evasion and theft. Additional losses of $300 million, or 10 percent of farebox revenues, are attributed to inflexible fare structures. Countermeasures to counterfeiting of transit passes and electronic fare equipment technologies are now available and provide substantial improvements in security and oppor- tunities to introduce more flexible distance-based fare structures. Because trips on passes represent from 30 to 50 percent of all transit trips, the potential for increased revenues could be substantial. Investment costs for new equip- ment are high, however, so research can be instrumental in identifying cost- effective options for different types of transit operators and fare collection problems. Finally, although the benefits are more difficult to quantify, the introduction of automated systems (i.e., automated farebox equipment, computerized MISs) should provide transit managers with the data needed to monitor operating costs; develop more effective management programs; and, in the long run, improve system performance. A wide range of automated systems and software packages has already been developed for transit application. The role of research should be to identify those that have proved most successful in practice and to highlight factors that are key to their successful introduction. NOTES Transit operating expenses (excluding depreciation, amortization, and other recon- ciling items) were adjusted for inflation using the implicit price deflator for GNP. Historical information on operating expenses and passenger vehicle miles is avail- able from American Public Transit Association statistics (1, Tables 6A and 11, pp. 22, 34). Between 1978 and 1983 electric power consumed increased from 2,223 million kilowatt hours to 2,930 million. Diesel fuel consumed increased from 423 million gallons to 450 million gallons over the same period (1, Table 15, p. 40). During the period of high interest rates, underwriters relaxed underwriting rules and guidelines and rates were discounted to maximize industry investment oppor- tunities. As interest rates declined, cash flow was insufficient to cover expected losses and reinsurers pulled out of the market (4, pp. 46-47). Risk Retention Amendments to the 1981 Risk Retention Act were passed October 27, 1985. Estimates were based on 1980 costs. On a per gallon basis, methanol is currently cheaper than diesel fuel. However, the energy content of methanol is 45 percent of that of diesel fuel so it takes 2.3 times as much methanol fuel to operate over a comparable distance and period of time (11, p. 8). Organizers include Metropolitan Dade County, Miami, Florida; Sacramento, Cal- ifornia, Regional Transit District; San Diego, California, Metropolitan Transit Development Board; San Francisco, California, BART; Boston, Massachusetts, MBTA; and Philadelphia, Pennsylvania, SEPTA (15, p. 1).

117 REFERENCES Transit Fact Book. 1985 ed. American Public Transit Association, Washington D.C., 1985. D. H. Pickrell. The Causes of Rising Transit Operating Deficits. John F. Kennedy School of Government, Harvard University, Cambridge, Mass., July 1983. Stable Diesel Fuel Costs Projected for 1987. Passenger Transport, Vol. 44, No. 48, Dec. 1, 1986. R. E. Jones. The Insurance Crisis. Metropolitan, Sept.-Oct. 1985. Testimony of Richard F. Davis, APTA Vice President, Management and Finance, and General Manager, Transportation Authority, Kansas City, Missouri, on the liability insurance crisis before the House Subcommittee on Surface Transporta- tion, Oct. 30, 1985. Transit Operators Under the Gun. Passenger Transport, Vol. 43, No. 46, Nov. 18, 1985. Metro Executive Dialogue: Wallace Ryland and Larzy E. Salci. Metropolitan, March-April 1986. Lead Program Summary: Revenue Maximization. Office of Technical Assistance, UMTA, U.S. Department of Transportation, Jan. 4, 1986. L. E. Diebel, P. Wood, and B. Zumwalt. Synthesis of Transit Practice 6: Transit Bus Fare Collection: Problems with and Alternatives to Paper Currency. NCTRP, TRB, National Research Council, Washington, D.C., Aug. 1985. Methanol-An Alternative? Passenger Transport, Vol. 44, No. 35, Sept. 1, 1986. A. J. Bloch. Alternative Fuels for Buses: Current Assessment and Future Perspec- tives. Polytechnic Institute of New York, Brooklyn, May 1984. R. A. Uher and N. Sathi. NCTRP Report 3: Reduction of Peak-Power Demand for Electric Rail Transit Systems. TRB, National Research Council, Washington D.C., Dec. 1983. Wisconsin Cities Insure Themselves. Metropolitan, March-April 1986. Indiana Transit Systems Investigate Self-Insurance. Passenger Transport, Vol. 44, No. 32, Aug. 11, 1986. Transit Systems Forming Captive Insurance Company. Passenger Transport, Vol. 44, No. 47, Nov. 24, 1986. Bogus Transit Pass Prevention. Metropolitan, Sept.-Oct. 1986. R. E. Jones. Counterfeit Pass Prevention. Metropolitan, March-April 1986. The Electronic Revolution and Farebox Management. Metropolitan, March-April 1983. S. J. Lynton. Some Buses To Get Electronic Fare Boxes. Washington Post, Dec. 5, 1986. Research Results Digest 4: National Transit Computer Software Directory. NCTRP Project 38-1. NCTRP, TRB, National Research Council, Washington, D.C., 1985.

Appendix E Maintenance Maintenance has been described by several transit properties as the "back- bone of the operation." The quality of maintenance directly affects transit operators' primary mission: providing reliable service. Frequent vehicle breakdowns and missed runs not only wreak havoc with equipment and personnel scheduling but can also adversely affect ridership levels in the long run. Moreover, maintenance represents a significant share of total transit operating expenses. THE PROBLEM Until recently maintenance received limited attention even though transit properties now spend nearly one-third (30.1 percent in calendar year 1983) of their operating budgets for maintenance (1, Figure 1, p. 16). Maintenance deferral became a common practice of many large, older properties, such as New York, Cleveland, and Philadelphia, when they were beset by fiscal crises in the 1970s. Trimming maintenance budgets appeared to be an attractive strategy for stretching limited resources without immediate adverse service consequences. The long-run costs and service impacts of deferred maintenance have now become evident. Massive deferral of track maintenance since the mid-1970s at the New York City Transit Authority, for example, has resulted in a level of deterioration that now requires major reconstruction of nearly three-quarters of the track system (2, p. 1). In other systems facing a less adverse fiscal climate, inadequate maintenance management information systems (MISs) have sometimes thwarted efforts to develop effective preventive maintenance programs. Improving maintenance practices and programs is made more difficult by an inexperienced maintenance labor force. Approximately 50 percent of bus 118

119 maintenance workers nationwide are estimated to have 5 years or less experi- ence on the job (3). Inexperience can lead to poor performance. Recent estimates suggest that roughly one-third of all bus repairs may be improperly done (4, p. 179). Transit managers recognize the importance of better mainte- nance training to integrate inexperienced personnel into the work force. In response to a survey of 40 of the 60 largest transit properties regarding maintenance problems, 12 properties identified limited training of mechanics as the single greatest obstacle to timely preventive maintenance (5, pp. 12-13). The increased complexity of mass transit vehicles also makes maintenance more difficult. Maintenance tasks require more skilled personnel just at a time when the latter are in short supply. More sophisticated equipment complicates diagnosis of vehicle failures and frequently necessitates more difficult and time-consuming repairs. EXPECTED IMPACT OF RESEARCH The need to upgrade maintenance practices and train inexperienced mainte- nance personnel is shared by nearly every type of transit operator—large and small, bus and rail. Research on improving maintenance programs thus prom- ises widespread benefits. Cost Reduction Because maintenance represents a significant share of operating expenses— second only to costs associated with operating transit vehicles—research on ways to improve maintenance has potential for substantial cost savings. Maintenance expenditures have been increasing at an annual rate of between 14 and 20 percent for all transit modes, in part as a function of the aging of the fleet.' This trend further reinforces the payoff potential of increased attention to maintenance. With the high cost of new equipment—a new bus now costs in the neigh- borhood of $140,000 and a new rail car close to $1 million—and declining federal aid to finance new purchases, improved maintenance of the existing stock should prove even more cost-effective in the future for local operators. Research on ways to improve the skills and productivity of the maintenance labor force also holds promise for significant savings. According to a recent APTA survey, labor costs represent nearly two-fifths of the maintenance budget (7, p. 28). If nearly one-third of all bus maintenance costs can be attributed to maintenance errors, substantial savings should be possible if even

120 a portion of these costs can be recouped through a better trained, more reliable maintenance work foree. Improved Service Reliability Maintenance not only represents a high-cost item in transit budgets, it is also correlated directly with service reliability. Although it cannot be proved conclusively, deferred maintenance and vehicle age are believed to be the primary causes of poor equipment performance (8, p. 25). A dramatic illustra- tion of this was provided by the performance of the Southeastern Pennsyl- vania Transportation Authority's (SEPTA's) bus fleet in the late 1970s. Before 1980 more than 30 percent of the fleet was 12 years old (some buses dated back to the mid-1950s) and maintenance was characterized as "limited" (personal communication with Deputy General Manager, SEPTA). Miles between failures averaged 751 in 1980, one-quarter of the industry average. A combination of new vehicle purchases and the introduction of a vehicle overhaul and preventive maintenance program increased bus performance more than fourfold to 3,266 miles between failures by 1986. Properties that upgrade maintenance programs should see a substantial payoff in terms of more reliable performance. The Southern California Rapid Transit District (SCRTD) is a good case in point. Nearly 5 years ago the SCRTD introduced a sophisticated MIS and preventive maintenance program. The district doubled its roadcall average between 1980 and 1983 and, accord- ing to the director of equipment and maintenance, saves approximately $6 million to $7 million of its maintenance budget annually through more efficient and reliable fleet operation. More buses are out on the street, which reduces the spare factor, fewer runs are missed, which improves customer service and maximizes personnel utilization; and maintenance needs are more closely monitored, which allows repair intervals to be extended. High Interest to Transit Operators In the past maintenance was not a high-priority area for research. Until quite recently UMTA's R&D program was focused heavily on technological inno- vations and hardware improvements and little emphasis was placed on operat- ing problems such as maintenance. Today, according to industry spokespersons, transit operators have recog- nized that maintenance is a critical problem that is getting worse nationwide (9, p. 3). Interest is high in research on maintenance issues. As UMTA Administrator Arthur Teele testified, "UMTA has continually been told at

121 various conferences that maintenance is the most critical area where research is needed" (4, p. 368). Renewed recognition of the importance of mainte- nance on the part of transit operators creates the opportunity for a major contribution from research. Achievable Results Now that many systems are attempting to address their maintenance problems, the time is ripe for practical research on effective solutions. The problem may be less one of developing solutions than of sharing experience. As one industry spokesperson puts it: "Somewhere among all the properties in the country almost every problem has been encountered and solved. The real problem is how to communicate and distribute this knowledge" (3, pp. 44-45). Opportunities for learning from other industries abound, particularly in the areas of human resources utilization and training. The airline industry may offer good models for successful practices to improve worker pmductivity, reliability, and morale. The transferability of these approaches to transit maintenance personnel is clearly a fertile area for research. Perhaps most important of all, maintenance has recently been given higher priority and visibility in transit management and policy decisions, and this should ensure a highly receptive audience for practical and usable research results. PROPOSED RESEARCH APPROACH2 At least three key areas for research on maintenance issues have been identi- fied by industry experts: maintenance labor, maintenance practices, and equip- ment improvements. Most transit operators would agree that improving human resources man- agement in maintenance promises a high payoff. Research on improved methods for recruiting and training industry maintenance personnel should help address problems associated with an inexperienced labor pool. More effective supervisory programs and development of performance standards should foster the establishment and implementation of reasonable guidelines for maintenance productivity levels. Research on state-of-the-art industry programs in these areas could facilitate their introduction in more properties. Alternatives to in-house provision of maintenance, such as private contracting of certain maintenance functions, could be studied to determine the circum- stances in which contracting may prove cost-effective.

122 Along with improved maintenance personnel practices, research on mainte- nance techniques, including computerized maintenance MISs, is needed to provide the necessary information base from which to develop and monitor effective maintenance programs. A good information system will enable transit properties to track vehicle performance, analyze different repair strat- egies, and ultimately optimize maintenance inspection and repair cycles. With the advent of minicomputers, many operators have recently introduced auto- mated MISs. A useful research endeavor would be to assess the costs, benefits, and applications of some of the most promising systems. Finally, research on equipment improvements could result in the introduc- tion of more maintenance-free products or, at a minimum, facilitate the identification and repair of equipment problems, a matter of increasing diffi- culty given the complexity of today's transit vehicles. Simplification of vehi- cle subsystems, such as air conditioning, electrical systems, and door control systems, could make them easier to maintain and troubleshoot. Longer lived, more durable equipment could reduce long-run maintenance costs. Where complexity cannot be reduced, improved methods of inspection, perhaps using diagnostic equipment, could simplify problem identification and suggest appropriate repair techniques. A project to explore opportunities for more extensive use of diagnostic equipment could help identify practical ways to reduce maintenance errors and costs. SUMMARY Research on maintenance issues promises a substantial payoff in cost savings and reliability improvements. Because maintenance represents nearly one-third of total operating ex- penses, reductions in maintenance spending or more cost-effective use of maintenance resources, resulting from better maintenance practices, can have a substantial financial impact. Research has indicated that nearly one-third of all bus repairs may be improperly done. If only a portion of these costs could be recouped through a better trained, more reliable maintenance work foite, the savings would be substantial. Maintenance improvements can also have a direct and demonstrably posi- tive impact on transit equipment reliability. Reducing unscheduled vehicle breakdowns should result in more timely service and overall improvement in system performance. More vehicles should be available for service and fewer runs should be missed, which would improve customer service and labor utilization. For these reasons interest is high in research on maintenance issues. There now appear to be consensus among transit operators on the need for a more

123 active research program and a receptive audience for practical and usable research results. NOTES Between 1979 and 1983, the latest year for which national data are available, maintenance expenses per vehicle mile and per vehicle revenue hour increased for all modes (6, pp. 75-76). This section draws heavily on research ideas proposed by members of the Transit STRS Committee and at a Transportation Research Board workshop on bus mainte- nance improvements held in April 1982 (3). REFERENCES Transit Fact Book. 1985 ed. American Public Transit Association, Washington, D.C., 1985. W. H. Kuiper. Three Case Studies: The Impact of Deferred Maintenance in Rail Transit. Report UMTA-IT-06-0242-85-1. Booz, Allen & Hamilton Inc., Bethesda, Md.; UMTA, U.S. Department of Transportation, July 1985. A. B. Haliman. Charge to the Workshop. In Special Report 198: Bus Maintenance Improvement, TRB, National Research Council, Washington, D.C., 1983, p. 12. Testimony of Kay Inaba, Chairman of the Board and Technical Director, XYZYX Information Corporation. in The Financial and Productivity Problems of Urban Public Transportation, Hearings before the Subcommittee on Investigations and Oversight of the Committee on Public Works and Transportation, U.S. House of Representatives, June 23, 1981. DOT Needs Better Assurance that Transit Systems are Maintaining Buses. General Accounting Office, March 25, 1983. D. Budin et al. Compendium of National Urban Mass Transportation Statistics: 1983 Report Year. Washington Consulting Group, Washington, D.C., July 1985. 1986 Transit Bus Maintenance Survey. Metropolitan, July—Aug. 1986. B. W. Kliem and D. L. Goeddel. Resource Paper. In Special Report 198: Bus Maintenance Improvement, TRB, National Research Council, Washington, D.C., 1983, pp. 25-34. Transit Industry's Advice to UMTA: A Survey of the Fourth R&D Conference. UMTA, U.S. Department of Transportation, Nov. 1981.

Appendix F Equipment Transit research and development programs have always been focused heavily on equipment This is not surprising because the industry purchases an estimated $4 billion each year of capital goods and services (1, p. 44). In the early 1970s the UMTA-sponsored R&D program was focused on the development of new-generation, advanced hardware systems, such as the Advanced Concept Train and Personal Rapid Transit systems. Today hard- ware research emphasizes a near-term, problem-solving approach, which reflects the industry's interest in improving the operating efficiency and effectiveness of existing transit facilities. Transit managers are concerned with ways to increase vehicle component life, methods for increasing energy efficiency and meeting EPA-mandated emissions standards, introduction of labor-saving automated equipment, and ways to improve procurement prac- tices to minimize the cost and maximize the reliability of equipment. These topics reflect transit managers' interest in curbing costs and improving service by reducing equipment failure rates and increasing its life expectancy. THE PROBLEM The longevity and reliability of transit equipment are of critical importance to transit systems because of both the high cost of capital purchases and the need for a high level of performance. According to the American Public Transit Association, the purchase price of a new transit bus is approximately $140,000 and that of a rail car is nearly $1 million. Moreover, the transit industry will face substantial capital replacement needs during the next 5 years. Based on the industry standard of a 12-year useful life, nearly one-quarter (22.8 percent) of the industry's 60,000 buses and vans are in immediate need of replacement, and by 1992 nearly 60 percent of the fleet will exceed this standard (2, p. 1). Thus vehicle longevity is a key concern if the industry is to protect its investment. 124

125 Despite the high costs of capital purchases, transit operators have experi- enced a decline in equipment performance and life and an accompanying increase in maintenance problems. Changes in vehicle design as well as proliferation of different vehicle models are largely responsible. As transit properties have become more sensitive to passenger needs and comfort, manufacturers have added such features as air conditioning, new-style eleciri- cal systems, turbocharged engines, wheelchair lifts on buses, and more sophis- ticated door control systems (3, p. 16). More complex equipment, however, has raised maintenance requirements, complicated the diagnosis of vehicle failures, and increased the complexity of the procurement process (4, p. 52). In addition, the introduction of new components and design changes has been accompanied by an alarming decline in the reliability and useful life of vehicle subsystems (3, p. 16). Transit operators have noted a greater frequency of transmission failures, a decline in brake lining life, and an increase in suspen- sion system failures. More sophisticated transit vehicles have also adversely affected energy efficiency and thereby driven up transit operating costs. The overall weight of the newer Advanced Design bus, for example, is 6,000 pounds greater than its earlier New Look counterpart as a result of improvements to enhance crash- worthiness and of such additions as wheelchair lifts and air conditioning (5, p. 54). Fuel performance, however, is inversely proportional to vehicle weight (6, p. 7). The cost of fuel now represents the single largest expenditure incurred in the operation and maintenance of transit buses over their useful life. (7, pp. 95-96). Fuel efficiency is of particular importance to transit managers because buses must meet the EPA's emissions standards by the 1991 deadline. If diesel remains the primary bus fuel, further loss of fuel efficiency, a by-product of complying with the standards, is likely to be experienced. The transit industry's equipment-related problems are further exacerbated by inexperienced maintenance personnel and inadequate information systems. As is discussed in Appendix E, trained maintenance personnel are in short supply at a time when the complexity of transit vehicles and equipment demands high skills. Although use of automated diagnostic systems and testing techniques, such as engine oil analysis, can help, maintenance staff training in the use of these tools is often inadequate (8, p. 12). Many smaller systems simply may not have the resources to use these techniques or the means to analyze the results were these tools available.' Information on vehicle maintenance histories and failure rates is critical for monitoring performance, pinpointing specific problems by type of vehicle or run, and developing reasonable specifications of reliability and maintainability in procurements. Although advances have been made in developing mainte- nance MISs, particularly with the advent of desk top computers, many transit agencies report that lack of standardized vehicle performance data or informa-

Pb1 lion on operating and maintenance costs has hampered monitoring activities and procurement methods that attempt to take into account life-cycle costs (9)2 in the short term, research can be instrumental in increasing transit opera- tors' awareness of techniques and practices, including diagnostic tests, train- ing programs, and information systems, that are available to improve trou- bleshooting of equipment problems, increase fuel efficiency, and strengthen transit's bargaining position in procurement. In the long run, research should be key in developing or modifying the underlying infrastructure—vehicle components, testing equipment, fuels—that ultimately determines system reliability and performance. EXPECTED IMPACT OF RESEARCH Research on equipment-related issues should be of interest to all transit operators. Bus systems, however, face the most urgent problems with respect to hardware modifications or alternative solutions demanded by the EPA's regulatory requirements. Despite the general interest in hardware issues, demonstrating tangible benefits from research is perhaps more difficult in this than in any of the other research areas. First, research on solutions to equipment problems typically is conducted over several years; a concept is formulated and prototypes are developed and tested, all before a new component or vehicle is released to the market. Second, much of the research that is being conducted is in the early testing and demonstration phases. Thus the research results have not yet seen practical application, or experience has not been sufficiently long to demon- strate cost-effectiveness. Nevertheless, in the long term, research can be expected to show substantial payoffs in the following areas. Cost Reduction Introduction of automated equipment represents one strategy for reducing costs. The benefits of automated fare collection equipment are discussed in Appendix D. The transit industry has borrowed advances in computerized motor vehicle diagnostic systems from the automotive industry for use in developing automated transit vehicle monitoring equipment. The objective of such research and development efforts is to reduce costly maintenance staff time and repair errors and to cut long-term maintenance and capital replace- ment costs by detecting and correcting vehicle malfunctions early. Automated vehicle diagnostic equipment is still in the early phases of testing and demonstration. An Automated Bus Diagnostic System (ABDS)

127 was used by the New York City Transit Authority (NYCTA) in a 1981 demonstration with 33 instrumented and 40 control buses. ABDS is a micro- processor-based test and diagnostic tool that permits rapid inspection of buses and identification of problems (10, p. ix). The demonstration project, which lasted only 6 months, unexpectedly showed greater total repair hours for the test group of buses than for the control group (10, p. 11). By the end of the test period, however, the situation was reversed, which suggests that the diagnos- tic equipment had performed its job of detecting defects that were subse- quently fixed (11, p. 90). Moreover, the test vehicles outperformed the control group on reliability measures (11, p. 90), a topic that is discussed subse- quently. No measurement was made of the labor time savings gained from using automated diagnostic techniques, and inadequate training of mainte- nance personnel prevented the equipment from always being used as intended (10, p. 12). Given the high initial costs of the prototype equipment ($35,000 for the main diagnostic unit and $6,000 to instrument each bus), the benefits of the experiment did not justify the costs (10, p. xvi). The potential for savings, however, demands further research.3 Simpler testing techniques, such as oil analysis, have been successfully introduced by many transit properties. Spectrochemical oil analysis of engine defects is based on a chemical analysis of an oil sample drawn from a diesel engine (11, p. 89). On the basis of the trace chemicals detected, the analysis can predict with a high degree of accuracy the probability and types of equipment failures. After introducing an oil analysis program by an independent testing labora- tory, the New York City Transit Authority experienced an increase in the percentage of "normal" oil conditions from an average of 35 percent to an average of 65 percent (12, p. 38). Moreover, savings of $1 million were achieved by lengthening the interval at which oil filters were changed (12, p. 38). Oil analysis not only brought maintenance savings but also re- sulted in early detection of equipment defects and provided documentation for warranty claims. Although the benefits of oil analysis have been documented, more dis- semination of information about this diagnostic technique is needed to encour- age widespread adoption. Because the test results require sophisticated anal- ysis, research on the potential for use of the technique by small systems should be of particular interest.4 Standardization of vehicle components offers another oppertunity for cost savings. Although UMTA-sponsored research during the 1970s to develop standardized vehicles, such as the state-of-the-art rail car and Transbus, was not successful, many industry experts believe that there is greater potential for standardization at the component level (13). Standardization offers clear payoffs in savings from joint purchasing, lower inventory levels, shorter

128 purchasing lead times, simpler procurement specifications, and reduced train- ing for maintenance personnel (13, pp. 2-3). To encourage greater research on subsystem or component standardization, a first step would be to identify candidate components for further study (13, p. 9). The upcoming 1991 deadline for meeting the EPA's bus emissions standards has sparked research on more cost-effective ways to improve environmental performance and fuel efficiency of engines. The two major alternatives under consideration are modifications to the existing heavy-duty diesel-powered engine and a new, cleaner burning methanol-driven engine. As is pointed out in Appendix D, the advantages of methanol lie in its obtainability from U.S. raw materials, which reduces dependence on foreign suppliers; its superior emission performance; and its ability to be used in existing, although modi- fied, engines. Diesel-powered engines, on the other hand, may require costly modifications to meet emissions standards, which will reduce fuel efficiency; diesel fuel availability and pricing also are more vulnerable to foreign control. The feasibility of developing methanol-powered buses for widespread indus- try use, however, is still in the testing and demonstration phase. Additional research should determine if methanol-fueled engines can yield the expected economies. Research on ways to improve procurement practices also can result in substantial savings for transit systems. From the transit operators' perspective, the objective of the procurement process is to minimize the total cost of a product while assuring its reliable performance. A significant area for im- provement is the development of better specifications for reliability and maintainability of vehicle subsystems, including new component prequalifica- tion procedures and better quality control measures (3, p. 17). Such efforts, however, require staff expertise and baseline data on vehicle operating condi- tions and performance from which guidelines can be developed. Research can identify effective MISs and vehicle performance standards that can be used as guidelines for developing procurement specifications. Another area for improvement is the development of adequate contractual requirements, such as warranty periods, progress payments, and the like, to cover equipment puithases. Research could help identify model contracts for different types and volumes of equipment purchases. Today transit operators can select from a smorgasbord of procurement methods that range from simple, competitive, low-bid arrangements to negoti- ated procurements (7, pp. 94-96). Some of the larger systems are engaging in negotiated procurements to increase the probability of meeting vehicle perfor- mance specifications at a reasonable cost. The time and staffing demands of this type of procurement, however, are substantial. The Massachusetts Bay Transportation Authority, for example, took 7 months to set the guidelines for and 5 months to complete the negotiation of a recent procurement of 200 new

129 Advanced Design buses (1, p. 50). Research can help identify the costs and benefits of various procurement methods with reference to staff expertise and resources of transit properties of various sizes. Improved Service Reliability and Safety One of the principal expected benefits of reseaith on transit hardware-related issues is more reliable and safer performance of equipment, which should improve service for riders. Automated vehicle diagnostic systems should facilitate early warning of vehicle repair needs and defects and provide a quality control mechanism to assure that malfunctions have been corrected (10, p. 1). During the NYCTA demonstration of a prototype Automated Bus Diagnostic System, it was found that roadcalls for the experimental buses were fewer than for the control group that received manual inspection, which suggests that more defects were detected by the diagnostic equipment and repaired (10, p. 11). Research on vehicle subsystems also holds promise for greater reliability and longevity of components. Use of retarders to extend brake lining life, methods for dissipating heat to reduce tire breakdown on transit buses, use of high-strength rail to mitigate rail weld separation problems, and methods for controlling rail corrugation (i.e., uneven rail surfaces) are examples of compo- nent problems the resolution of which could significantly improve subsystem performance (5, pp. 53-54; 14, p. 4). Greater Management Efficiencies Research on effective maintenance training programs to support the introduc- tion of state-of-the-art equipment-testing techniques and on maintenance MISs to facilitate vehicle monitoring should not only provide payoffs in terms of maintenance savings and improved vehicle performance, it should also lay the groundwork for more fundamental improvements in system management. For example, the immediate effect of training maintenance personnel should be to increase skills. In the long run, however, training efforts may result in a more motivated work force and a better work environment. Similarly, in the short run, maintenance MISs may provide the data support needed to monitor fleet performance, establish maintenance cycles, and develop better procure- ment specifications. When it has been established, this type of data base can provide input to a broad variety of activities, such as budgeting and vehicle scheduling.

130 PROPOSED RESEARCH APPROACH An industry-oriented research program on equipment-related issues should reflect the problem-solving focus of transit managers. One major area of interest is the development of more reliable, easier-to-test transit vehicles and equipment. Research projects focused on expanded testing of automated diagnostic equipment or practices, development of standardized vehicle com- ponents, and further demonstration of the feasibility of alternative energy systems all have high priority. Although adequate testing and demonstration programs may require the funding support of the federally sponsored transit research program, the operator-financed program recommended here can focus its efforts on interpreting the research results and disseminating them to a wide audience. A second and related topic of interest is procurement practices and policies. In view of the wide range of procurement methods, a research project to document the pros and cons of various approaches, taking into account system size, complexity of the purchase, and other similar factors, should be of great interest to transit managers. Because states have substantially increased their support of transit systems, another research project could address the impact of state statutes and regulations on transit procurement practices. A review of state-aid programs, which provide technical assistance to small systems on procurement practices, should help to disseminate information more widely on the most effective approaches (15, pp. 85-90). A final research area could cover the support systems that are key to the successful introduction of new equipment or equipment-related practices. Training programs in the use of vehicle diagnostic equipment (borrowing again perhaps from the experience of the automotive industry) could be identified and developed, and appropriate maintenance MISs for effective vehicle-monitoring and procurement purposes could be developed. SUMMARY Research on equipment-related issues should help address transit managers' concern with improving the operating efficiency and reliability of transit vehicles and equipment. Because research on solutions to hardware problems is often conducted over several years, however, the payoffs of such research may not be immediately evident. A major expected benefit of research is reduced costs. Automated vehicle diagnostic equipment, for example, can cut maintenance staff time and repair errors and save long-run maintenance and capital replacement costs by timely and accurate detection of vehicle repair problems. Although a brief demon-

131 stration of an Automated Bus Diagnostic System at the NYCTA did not prove cost-effective, the savings potential warrants further research. Standardization of vehicle components offers another opportunity for cost savings through joint purchasing, reduced inventoiy levels, shorter purchasing lead times, simpler procurement specifications, and reduced training for main- tenance personnel. Because research has not progressed far in this area, the first task should be to identify candidate components for further study. Finally, research on ways to improve procurement practices, such as de- veloping adequate contractual requirements and better specification of re- liability and maintainability for vehicle subsystems, can result in substantial savings for transit operators. Another likely outcome of research on equipment issues is improved reliability and safety of transit vehicles and equipment. The Automated Bus Diagnostic System, although only a prototype, proved its ability to facilitate early warning of vehicle repair needs and increase vehicle reliability, mea- sured by the number of roadcalls, over the short, 6-month, period of the demonstration project. Research on ways to increase the useful life of major system components also could result in significantly improved system perfor- mance. A final benefit of research on transit equipment is the potential for more fundamental improvements in system management. Development of mainte- nance training programs to accompany the introduction of state-of-the-art testing equipment may not only improve maintenance skills, it may also produce a more motivated and productive work force. Similarly, maintenance MISs can be used for multipurpose activities, including vehicle scheduling and budgeting as well as monitoring vehicle performance and developing more effective procurement specifications. NOTES This problem was noted by the President and General Manager of the Metropolitan Bus Authority. Commonwealth of Puerto Rico, in a research proposal dated March 1, 1985. Life-cycle costs refer to the total costs of operating a vehicle over its lifetime, including operating and maintenance costs as well as the initial purchase price. This method of analyzing costs is different from an approach that considers only the initial purchase price. According to UMTA, improved diagnostic equipment will be tested at four other transit systems (10, p. 1). Contracting out the analysis may be an option (12, p. 38).

132 REFERENCES The Changing Face of Transit Procurements. Metropolitan, March—April 1985. Fleet Trends of the Eighties. Passenger Transport, Vol. 44, No. 49, Dec. 8, 1986. Summary of Findings and Suggested Strategies. In Special Report 198: Bus Maintenance Improvement, TRB, National Research Council, Washington, D.C., 1983, pp. 14-19. Special Report 198: Bus Maintenance Improvement. TRB, National Research Council, Washington, D.C., 1983, 59 pp. S. Learning Better Maintenance Techniques. Metropolitan, Nov.—Dec. 1986. A. M. Riviera and J. Silies. Report 1: Transit Bus Energy Efficiency and Produc- tivity. NCTRP, TRB, National Research Council, Washington, D.C., July 1982, 55 pp. M. J. Obert. Procurement in Transit. Metropolitan, Sept.—Oct. 1985. Automated Bus Diagnostic System. Technical Assistance Briefs, Vol. 3, No. 2. UMTA, U.S. Department of Transportation. Spring 1984. Cost Effectiveness of Life-Cycle Process in Buying Transit Vehicles Questionable. Report GAO/RCED-83-184. General Accounting Office, Sept. 1, 1983, 44 pp. R. F. Casey. The Automated Bus Diagnostic System Demonstration in New York City. Transportation Systems Center, U.S. Department of Transportation, Cambridge, Mass., Dec. 1983. P. Wood. A Knowledge-Based System for Transit Bus Maintenance. InTransporta- tion Research Record 1019, TRB, National Research Council, Washington, D.C., 1985, pp. 85-91. J. Fulier. NYCTA Strives for More Cost-Efficiency; Secures Big Maintenance Savings. Metropolitan, Jan.—Feb. 1984. F. J. Cihak. Transit Standardization Efforts. Presented at the American Public Transit Association Eastern Conference, Milwaukee, Wis., May 17, 1983. Minutes of Meeting. Track Construction and Maintenance Subcommittee, Ameri- can Public Transit Association, Washington, D.C., Nov. 6-7, 1986. J. Dumke, ed. UMTA Small Transit Vehicle Procurement Workshop Proceedings. UMTA, U.S. Department of Transportation. 1983.

Appendix G Innovative Financing For many of the nation's capital facilities, transit among them, capital invest- ment requirements have far outpaced revenues available to meet them. More- over, raising revenues has proved difficult in the current political climate. Local tax limitation measures have frequently precluded tax increases and, in the early 1980s, borrowing was limited by record-high municipal bond rates. In view of these circumstances, many local governments and transit au- thorities turned to so-called "innovative" financing techniques as revenue- raising measures. Innovative financing refers to the generation of new sources of revenue or to innovative applications of existing revenue (1, p. i). The line between innovative and existing financing techniques is frequently blurred. A technique may not itself be new, but its application to transit may be recent and thus considered innovative (2, pp. 1-2). 1'pically, innovative financing techniques for public transportation cover a broad range of alternative financ- ing options—user fees, charges on properties directly benefiting from transit (e.g., special benefit assessments, tax increment financing districts), borrow- ing strategies to reduce interest costs, and joint ventures with the private sector (e.g., joint development, safe harbor leasing) (3, pp. 10, 15, 16-19, 144). Because the institutional aspects of private participation in transit are covered in Appendix C, the discussion here will be focused on the financing techniques themselves; the role of the private sector in the transportation planning process, an important prerequisite to successful joint financing ar- rangements, will also be considered. The seaith for innovative local financing techniques has been accelerated by recent reductions in federal assistance for transit. Thus there is a wealth of experience to draw on to identify the relative payoffs of various financing techniques and the circumstances under which they can be most successfully introduced. THE PROBLEM The transit industry faces substantial capital investment requirements. Many older properties, which deferred maintenance and capital investments during 133

134 periods of fiscal stress in the 1970s, now face enormous backlogs of renova- lion needs that require long-term financial support. All transit systems face annual investments to replace rolling stock and repair existing facilities. In addition, many areas are considering rail extensions to link growing suburban locations with older central-city systems and new rail systems for markets now unserved by transit. According to the Congressional Budget Office, total annual requirements for transit repair, modernization, replacement, and addi- tional capacity could range between $3.6 billion and $5.5 billion per year through 1990 (4, p. 47). The transit industry's ability to meet capital investment requirements from traditional funding sources is constrained. Federal aid for transit has decreased from $4.5 billion in FY 1983 to $3.5 billion in FY 1986 (5, Introduction). Borrowing and pay-as-you-go financing techniques have been limited until recently by high interest rates and by inadequate local revenues to pledge for capital financing. Passenger fares, transit's primary local funding source, cannot be raised indefinitely without adversely affecting ndership.' Competi- tion from other local governments frequently limits transit managers' attempts to tap other local revenue sources, such as the sales tax or gasoline tax. Finally, transit's own growing operating expenses reduce the amount of funding that is available from existing revenues for capital spending. Given the constraints on traditional funding strategies that are heavily reliant on public subsidies, many transit managers have attempted to identify alternative funding sources to meet investment requirements. Basically, this search has taken two forms. First, innovative public-financing techniques have been explored to reduce borrowing costs (i.e., revenue bonding, variable rate bonds, grant anticipation financing) or to increase charges on properties that benefit from transit (i.e., special benefit assessments, tax increment financing). Second, options for joint ventures with the private sector have been examined with an eye to using tax advantages for public transit (i.e., safe harbor leasing2) and sharing more of the benefits that accrue directly to private businesses and local residents from transit development (i.e., increased prop- erty values near transit stations). Transit managers are often unable to use these techniques because they lack authorizing legislation, have limited staff expertise on financing issues, or face other limitations resulting from the financing tools themselves (many of which are only appropriate for new rail systems or rail extensions3) or from recent changes in the U.S. tax code. Moreover, although creative public-private partnerships have been initiated to further cost-sharing efforts, a clear concept of an appropriate role for the private sector in transit planning and financing decisions has only begun to emerge. Research cannot create new funding sources or ensure that new revenues are tapped. Nevertheless, research can be instrumental in identifying the

135 financing techniques that have the greatest potential to fill current revenue gaps and in examining the chief obstacles to their adoption. Research can also identify the most successful processes for engaging the private sector early and productively in transit planning and financing decisions. EXPECTED IMPACT OF RESEARCH In this era of fiscal constraints, nearly all transit properties—large and small, urban and rural, bus and rail—are concerned with ways to increase revenues, broaden their revenue base, and generally strengthen support for transit. Research on innovative financing techniques should provide an indication to transit properties of the opportunities available to help further each of these objectives. Revenue Growth and Diversification Studies of innovative financing techniques suggest that their funding potential, measured against that of traditional revenue sources, tends to be modest (29 p. 1-4). An assessment of financing techniques involving taxation and development of property in areas affected by rail transit construction, for example, estimated that these innovative financing techniques could defray between 5 and 15 percent of the capital costs associated with certain fixed- guideway facilities.4 Although hardly of the magnitude of traditional funding sources, innovative financing mechanisms can provide a significant portion of the local share of capital improvement projects. Greater use of alternative revenue sources can also broaden the funding base for many transit systems and reduce dependence on public subsidies. With the decline in federal assistance and limitations on increasing farebox revenues, diversification of revenue sources can limit dependence on any single funding source. Opportunities for revenue growth and diversification, however, are affected by the environment in which they are utilized. Innovative financing oppor- tunities vary with the type of service provided (1, pp. iv—v). For example, opportunities for joint development projects and special taxing districts are associated with heavy rail corridor transit development. These funding mea- sures would not be appropriate for low-density corridors or bus service. Even in a rail setting, the payoff from real estate—related financing methods depends on the strength of the local real estate market and the leadership of the private sector. The Washington Metropolitan Area Transit Authority (WMATA) is an example of a transit authority that has enjoyed significant returns from joint development projects at transit stations. By mid-1988, WMATA will have spent about $5.2 million in staff and consulting costs for

136 its station area development program to achieve a recapture of from $32 million to $42 million, a benefit-to-cost ratio of from 6:1 to 8:1.5 How well this strategy can be transferred to other communities will depend on local market conditions. The revenue potential of innovative financing techniques may also be affected by the method of financing itself. To be equitable and politically acceptable, benefit-sharing techniques that are levied on properties in the immediate vicinity of a transit facility typically require use of the funds within the specific area in which the fees are collected rather than for systemwide capital or operating costs (9, p. 3). Moreover, the timing of revenue flows is such that the funds are unlikely to be available at the early 'stages of transit construction (9, p. 4). Finally, recent revisions in the tax code have limited some of the incentives for use of transit-related innovative financing techniques. For example, al- though leasing of transit vehicles to take advantage of depreciation write-offs is still permissible, write-off periods have been lengthened, which reduces the attractiveness of the tax benefits (10). Tax-exempt borrowing through indus- trial revenue bonds by private investors is now subject to state volume caps, which may reduce incentives for private participation in joint development projects. Research on innovative financing techniques can assist transit managers in assessing the likely financial payoffs of various funding measures. More important, it can help identify the circumstances under which these funding options are most likely to succeed. Broadened Support Base Examining alternative revenue sources not only may yield opportunities for cost sharing with the private sector and other governmental entities, such as state governments, it may also provide an opportunity to involve these parties more broadly in addressing local transportation problems and seeking solu- tions. Los Angeles provides a good example of a productive partnership of public and business interests to further public transportation in that region. The private sector was a strong advocate of the ½ percent sales tax increase, passed in 1980, to support Metro Rail construction as well as other transit projects and has also agreed to provide 5 percent of the local share of Metro construction costs, or $170 million, through benefit assessment districts around transit stations (11, p. 9). This partnership of corporate and public interests has been formalized by the creation of the Los Angeles Transporta- tion Task Force to mobilize community support and political action for transit. As federal funding levels have declined, states have increased support of local transit activities.6 That innovative arrangements, such as state-facilitated

137 pooled purchasing of transit vehicles as well as more basic state assistance for general operations, have become more commonplace assures a permanent state role in transit financing. Research can help identify examples of effective partnerships between transit authorities and states or the private sector as models for other commu- nities. Reducing Barriers to Change Successful introduction of innovative financing measures can be impeded not only by unfavorable market conditions but also by legislative and organiza- tional bathers. For example, when safe harbor leasing was first authorized, many states prohibited leasing of any public facilities and thereby prevented transit authorities from taking advantage of this cost-saving financing method. Subsequent dissemination of information on legal requirements for leasing as well as examples of successful leasing arrangements resulted in legislative changes in many states to allow local transit authorities to capture the benefits of this financing tool. Organizational capability can also affect the ability of transit systems to adopt innovative financing techniques. Many smaller transit properties do not have in-house technical expertise or ready access to the investment com- munity to obtain advice on whethet and how to use alternative funding sources. States could provide technical assistance on financing arrangements to small systems as part of their funding package for local transportation. Now that the new tax bill has passed, most transit managers will need to know how the legislation will affect local financing options. Research can help pinpoint barriers, particularly legislative obstacles, to successful introduction of various financing techniques. It can also provide guidance to transit managers on the most cost-effective ways of seeking advice on financing methods and provide a synthesis of local practice from those properties that have successful financial advisory arrangements. PROPOSED RESEARCH APPROACH Two broad areas for research on innovative financing have been proposed. The first is the financing techniques themselves, and the second is innovative partnerships that can foster broad support, including funding, for public transit. Research could illuminate the information currently available on the payoffs of various innovative financing techniques. Much of the information on the financial benefits of joint development is projected and not based on actual experience (8, p. 335). Now that more projects are under way, research

138 can identify and monitor the actual benefits attributable to joint development projects. This kind of information should be important to other properties contemplating similar projects, particularly in their lease negotiations with the private sector. Another research topic could be the potential for transferring various innovative financing mechanisms; such research would identify the factors that are critical to the successful introduction of innovative financing mecha- nisms. Some techniques, such as safe harbor leasing, may only be appropriate for large property or pooled vehicle purchases, given the administrative costs of organizing the leasing arrangements. Other financing methods, such as transit revenue bonds secured by transit fares, may only be possible in a transit-dependent city like New York where, if a substantial fare increase were required to meet debt service payments, a significant decline in ridership would not be likely (12, p. 39). These financing mechanisms could be ana- lyzed, and the factors that are key to successful implementation could be highlighted. The impact of recent federal tax legislation on innovative financing for transit in general could also be reviewed. Although many tax incentives, such as tax-exempt borrowing and safe harbor leasing, were retained for mass transit, other measures, such as elimination of the deductability of the sales tax—a major local revenue source for transit—may require transit properties to rethink long-term financing strategie0 Finally, appropriate roles for the private sector in public-private part- nerships could be defined. A review of these arrangements found that most research has focused on methods and techniques for private provision of, or participation in, public transportation services (13, p. 133). Less attention has been paid to examining an appropriate role for the private sector in public transportation planning and financing decisions. Because 97 percent of the metropolitan planning organizations (MPOs) that responded to a survey of the National Association of Regional Councils (168 of 320 MPOs) indicated that they included the private sector regularly in their planning process, consider- able experience on which to draw should be available (14, p. 17). Various private-sector roles—sponsorship of studies, advocacy, financing, manage- ment assistance.—could be cataloged, and successful examples of each could be provided. SUMMARY As traditional revenue sources have dwindled, transit managers have looked to alternative financing measures to bridge revenue gaps. Although innovative financing techniques may not offer the revenue potential of traditional funding sources, they can provide an important additional revenue source at the

139 margin. Studies have estimated that joint development projects involving property development in new rail corridors can provide between 5 and 15 percent of rail construction costs, a significant part of the local share of a major capital improvement project. Use of alternative funding sources can also diversify and broaden the revenue base for transit; this is an important consideration because many of transit's major funding sources—federal aid, farebox revenues—have limited growth potential. Research can help identify the probable financial payoffs of various funding options and the circumstances under which they can be most successfully introduced. Examining new revenue sources, particularly the private sector or other governmental entities such as states, also can provide an opportunity to involve these parties more broadly in addressing and seeking solutions to local transportation problems. Research can help identify examples of effective partnerships as models for other communities. Legislative and organizational barriers are frequently the chief obstacles to greater use of innovative financing techniques by transit systems. State en- abling legislation, authorizing certain funding mechanisms, may not be in place, or transit properties, particularly small operators, may not have the expertise to identify financing options appropriate for their size, type of system, and local market conditions. Research can help pinpoint these barriers and provide guidance to transit managers on the most promising innovative financing strategies. NOTES Passenger fares account for 36.4 percent of all transit revenues (6, Table 2.01.2, p. 2-20). Type of lease authorized by the Economic Recovery Tax Act of 1981 that permits governments without tax liabilities to sell and lease back depreciable property (in this case, mass commuting vehicles) to businesses with tax liabilities. The benefit of the tax shelter is reflected in reduced lease payments by transit authorities or local governments. Many innovative financing techniques, such as tax increment financing, special benefit assessments, and lease or sale of air rights, have as their common denomina- tor real estate development around transit facilities or stations (7). These estimates were based primarily on projected revenues from land-leasing programs in a few selected communities (2, p. 1-5). The ratio would be lower if inflation were taken into account, but the savings are still significant relative to the costs (8, p. 340). State aid for public transportation increased from $2.7 billion in FY 1983 to $3.5 billion in FY 1986 (5). Local revenues dedicated to transit constitute 10.2 percent of total transit revenues. Of this amount, 88 percent is provided by sales taxes (6, Tables 2.01.2 and 2.05.2, pp. 2-20. 2-28).

140 REFERENCES A Guide to Innovative Financing Mechanisms for Mass Transportation. Rice Center, Houston, Tex., Dec. 1982. Innovative Financing Techniques: A Catalog and Annotated Bibliography. Gladstone Associates, Washington, D.C., Jan. 1978. Inflation-Responsive Transit Financing. Public Technology Inc., Washington, D.C., June 1982. Public Works Infrastructure: Policy Considerations for the 1980s. Congressional Budget Office, April 1983. 1986 Survey of State Involvement in Public Transportation. American Association of State Highway and Transportation Officials, Washington, D.C., 1986. National Urban Mass Transportation Statistics, FY 1983. Section 15 Annual Report UMTA-MA-06-0107-85-1. Transportation Systems Center, U.S Depart- ment of Transportation, Cambridge, Mass., Dec. 1984. Innovative Transit Financing. UMTA, U.S. Department of Transportation, Feb. 1979, Summary of Conclusions. L. E. Keefer. Joint Development at Transit Stations in the United States. Transpor- tation, Vol. 12, No. 4, May 1985. J. A. Howard, G. Rivkin, S. Brecher, and L. Heder. Report 12: Strategies to Implement Benefit-Sharing for Fixed Transit Facilities. NCTRP, TRB, National Research Council, Washington, D.C., July 1985, 214 pp. Summary of Principal Transit-Related Provisions of Federal Tax Reform. Ameri- can Public Transit Association, Washington, D.C., Sept. 4, 1986. R. W. Rood. Corporate Responsibility and Public Transportation. In Transporta- tion Research Circular 290: Co,!,ference on Transportation Partnerships: Improv- ing Urban Mobility Through Public-Private Partnerships, TRB, National Research Council, Washington, D.C., March 1985, pp. 7-10. J. A. Parker. Maximizing the Use of Private Credit Markets for Transit Invest- ments. In Transportation Research Record 967, TRB, National Research Council, Washington, D.C., 1984, pp. 37-42. S. Gordon and M. D. Meyer. Emerging Public-Private Partnerships in Urban Transportation. In Transportation Research Record 877, TRB, National Research Council, Washington, D.C., 1982, pp. 132-139. C.K. Steinman. Public/Private Partnerships in Transit. Handbook. UMTA, U.S. Department of Transportation, Vol. 1, April 1985.

Study Committee Biographical Information WILLIAM W. MILLAR, Chairman, is the Executive Director of the Port Authority of Allegheny County (PAT). Before his appointment to this position in 1984, he served as PAT's Director of Administration, Manager of Grants and Government Relations, Acting Manager of Planning and Government Relations, and Special Assistant to the Executive Director during which time he planned, implemented, and supervised the ACCESS Paratransit System for elderly and handicapped persons among other activities. A graduate of North- western University, Mr. Millar received a master's degree in Urban Transpor- tation Planning and Policy Analysis from the University of Iowa. Before coming to PAT in 1977, he served for four years as the Developer and Chief of the Free Transit Program for Senior Citizens for the Pennsylvania Department of Transportation. He is a member of the Executive Committee of the Trans- portation Research Board and cofounder and secretary of the Transportation Research Board's Committee on Transportation for the Transportation Disad- vantaged. He is also a director of the American Public Transit Association (APTA), chairs the APTA Task Force on Transit Research, and serves on the Board of Directors of the Pennsylvania Association of Municipal Transporta- tion Authorities. He received the Jesse L. Haugh award from APTA in 1987 as transit manager of the year. LAWRENCE D. DAHMS is the Executive Director of the Metropolitan Trans- portation Commission of the California Bay Area. A graduate of San Diego State University, he received his M.B.A. from Sacramento State University. Before assuming his current position in 1977, he was Deputy Director of the California Department of Transportation and held several positions at the San Francisco Bay Area Transportation Authority: Director of Planning and Mar- keting, Assistant General Manager of Operations, and Acting General Man- ager. He is a member of the TRB Committee on Intergovernmental Relations and Policy Processes, and the Committee on Taxation, Finance and Pricing as 141

142 well as a former chairman of the TRB Executive Committee and the APTA board of Directors. Jo D. FEDERSPIEL is the General Manager of the Metropolitan Transit Authority of Nashville, Tennessee, and Vice President of ATE Management. She received a bachelor's degree from Winthrop College and a master's in management from Vanderbilt University. Ms. Federspiel formerly served as the Administrative Officer of the Nashville Veterans Administration Medical Center. She is a Regional Director of APTA and a member of the Board of Directors of the Tennessee Public Transportation Association. MARTIN FLUSBERG is the President and Chief Executive Officer of Multi- systems, Inc. of Cambridge, Massachusetts. Before being appointed to his current position, he served in several capacities at Multisystems: Vice Presi- dent and Director, Vice President of the Transportation Systems Division, and Senior Transportation Analyst. Mr. Flusberg graduated with a bachelor's in electrical engineering from City College of New York and received a master of science in civil engineering from the Massachusetts Institute of Technol- ogy. He has served on the TRB Committees on Transit Service Characteristics and Transit Management and Performance and is active in many professional societies. JACK R. GILSTRAP is the Executive Vice President of the American Public Transit Association. He received his bachelor of arts in education from Sacramento State University and a master's in public administration from the University of Southern California. Before he became the Executive Vice President of APTA in 1980, Mr. Gilstrap served as the General Manager of the Southern California Rapid Transit District of Los Angeles, California. He is a retired captain of the United States Naval Reserve, a former member of the TRB Executive Committee, and an active participant in many professional associations. DAVID G. HAMMOND is Vice President of Transportation Systems at Daniel, Mann, Johnson, & Mendenhall (DMJM) of Los Angeles, California. A gradu- ate in civil engineering from Pennsylvania State University, he received his master of science in civil engineering from Cornell University. Before he assumed his current position with DMJM, Mr. Hammond was the Assistant General Manager of the San Francisco Bay Area Rapid Transit District and a Colonel with the U.S. Army Corps of Engineers. He is a member of the National Academy of Engineering, the American Public Transit Association, the American Public Works Association, the Amercian Society of Civil Engineers, the National Society of Professional Engineers, and the Society of

143 American Military Engineers. He was elected to the Transit Hall of Fame in 1986. Louis L. HElL is President of McDonald Transit Associates, Inc., a transit management and consulting firm headquarterd in Fort Worth, Texas. He has been with the company since its founding in 1972 and has served as Manager of Marketing, Assistant General Manager, Deputy General Manager, General Manager, and Executive Director of Fort Worth's transit system, CITRAN. Mr. Heil holds a bachelor of science degree from the University of Kansas. He is on the Board of Directors of the University Center for Transit Research and Management Development of Texas Southern University, the immediate past president of the Southwest Transit Association, and an active member of the American Public Transit Association. ALAN F. KIEPPER became General Manager of the Metropolitan Transit Authority of Harris County (Houston, Texas) in 1982 after having served for 10 years as General Manager of the Metropolitan. Atlanta Rapid Transit Authority (MARTA). Before his association with MARTA, he served as City Manager of Richmond, Virginia, and as County Manager of Fulton County, Georgia. He is a graduate of the University of New Hampshire and holds a master's degree in public administration from Wayne State University. He serves on the Board of APTA and is a former member of the Executive Committee of TRB. Mr. Kiepper received the Jesse Haugh Award from APTA in 1985 as the transit individual of the year and the national public service award from the American Society of Public Administration and the National Academy of Public Administration in 1986. DAVID D. KING became the Director of the Public Transportation Division of the North Carolina Department of Transportation after having held several positions of increasing responsibility within the department. He received a bachelor of arts in economics from Davidson College and an M.B.A. from the University of North Carolina, Chapel Hill. Mr. King is a member of the Standing Committee on Public Transportation of the American Association of State Highway and Transportation Officials, of the Competitive Service Board of UMTA and APTA, and of the Ridesharing Committee of TRB. He received the Administrator's Distinguished Service Award from UMTA in 1983. JACK KINSTLINGER is President of Kidde Consultants, Inc. A graduate of Rensselaer Polytechnic Institute, he received a master of science in civil engineering from the Massachusetts Institute of Technology. Mr. Kinstlinger has held positions as Vice President of Daniel, Mann, Johnson & Mendenhall, as Executive Director for the Colorado State Department of Highways, and as

144 Deputy Secretary for Planning for the Pennsylvania Department of Transpor- tation. He is active in many professional associations, including the American Society of Civil Engineers, the American Planning Association, and the National Society of Professional Engineers. ALFRED B. LAGASSE Ill is the Executive Vice-President of the International Taxicab Association (ITA). Before 1979 he was Associate Director of ITA and before that Account Executive with Executive Consultants, Inc. Mr. LaGasse received his bachelor of science in business administration from George Mason University. He is a member of the American Society of Associate Executives and of the Paratransit Committee of TRB. THoIts D. LARSON is Professor of Management and Government at the Institute for Policy Research and Evaluation at The Pennsylvania State Uni- versity. He received his bachelor's and master's degrees and a Ph.D. in civil engineering from Pennsylvania State University. Dr. Larson headed the com- mittee that organized the Pennsylvania Transportation Institute in 1967 and was appointed Director in 1968. He helped to organize the formation of the Pennsylvania Department of Transportation and served as its Secretary until 1987. He has served on numerous TRB committees and panels, including a term as chairman of the TRB Executive Committee, and as chairman of the Study Committee for the Strategic Transportation Research Study—High- ways. He is past president of the Association of State Highway and Transpor- tation Officials and a member of the National Academy of Engineering. ERNIE A. MILLER is the General Manager of the METRO Regional Transit Authority in Ohio and has held successive management positions in transit during the last 37 years in California, Indiana, Illinois, and Ohio. Mr. Miller studied at the University of Missouri, the University of Akron, and North- eastern University where he holds an affiliate professorship. He is a member of the Technical Steering Group of the National Cooperative Transit Research Program of TRB, on the Board of APTA, and Chairman of APTA's Bus Equipment and Maintenance Committee. DON S. MONROE 15 the Executive Director of Pierce Transit, Tacoma, Wash- ington. He holds a bachelor of science in business administation from Miami University of Ohio. Before assuming his current position in 1981, he was Director of the Mass Transit Division for Broward County, Florida, and General Manager of the Commuter Rail Division of the Illinois Central Gulf Railroad. Mr. Monroe is active in APTA and is an officer of the Washington State Transit Association.

145 WILLIAM W. PARKS recently retired from Vapor Corporation where he was President from 1983 through 1986. He joined Vapor Corporation in 1947, became Chief Research Engineer in 1953, and has since held progressively important positions. He received a bachelor's degree from the Illinois Institute of Technology and an M.B.A from the University of Chicago. Mr. Parks is a member of the American Society of Mechanical Engineers and of the Instru- ment Society of America. JAMES E. READING is Director of the Transportation Agency of Santa Clara County, California, and Assistant Executive Officer of the Santa Clara County Transit District. After 24 years in the newspaper business, Reading began his career in transit and served as General Manager of the Regional Transit Service in Rochester, New York, as Assistant Executive Director of the Transit District of Denver County, Colorado, and as General Manager of the Central Ohio Transit Authority. He is Vice President of Marketing at APTA, chairs TRB 's Specialized and Rural Transportation Services Section, and is a member of TRB 's Transportation Systems Planning and Administration Council. PHILIP J. RINGO is President of ATE Management and Service Company, Inc., a subsidiary of Ryder Truck Rental, Inc. He graduated cum laude from Princeton University and received an M.B.A from the Harvard Business School. Mr. Ringo joined ATE in 1971 as a Vice President and became the President and Chief Executive Officer in 1975. He served a term on the Executive Committee of TRB and is on the Board of Directors of several companies. He is a member of TRB 's Committee on Public Transportation Marketing and Fare Policy and of the American Public Transit Association. GEORGE M. SMERK is Professor of Transportation in the Graduate School of Business at Indiana University. He received his bachelor of science in busi- ness administration and an M.B.A from Bradley University and his D.B.A from Indiana University. Dr. Smerk is also the Director of the Indiana University Institute for Urban Transportation and is the author of numerous books and articles on urban mass transportation policy and management. He is active in TRB and serves on the Committee on Public Transportation Market- ing and Fare Policy and the Committe on Intercity Rail Passenger Systems. ROGER F. TEAL is Associate Professor in the Department of Civil Engineer- ing of the University of California, Irvine. He received his bachelor's degree in civil engineering from the Massachusetts Institute of Technology, his master's degree in civil engineering from the University of California, Berkeley, and his Ph.D. in political science from Tufts University. He is author

146 and coauthor of numerous articles and reports on transportation policy and public transportation. Dr. Teal is a member of the Paratransit Committee and the Task Force on Public-Private Sector Cooperation in Urban Transportation of TRB and of transportation advisory committees for the Southern California Association of Governments. CARMEN E. TURNER is General Manager of the Washington Metropolitan Area Transit Authority (WMATA). Before her appointment in 1983, she had been Assistant General Manager of WMATA for six years. Ms. Turner holds a bachelor's degree from Howard University and a master's in public admin- istration from American University. Before joining WMATA, Ms. Turner held several positions in the federal government: Chief of the Internal Programs Division and Deputy Director of Civil Rights for the Urban Mass Transporta- tion Administration and Acting Director of Civil Rights for the U.S. Depart- ment of Transportation. CHARLES H. WEINSTEIN 15 Manager of Electrical and Power Systems at Garrett AiResearch where he has held positions of increasing responsibility since coming to the firm in 1967. Mr. Weinstein received his bachelor's and master's degrees in mechanical engineering from Cooper Union and the University of California at Los Angeles, respectively. He is the author of several technical papers on propulsion systems engineering. NIGEL H. M. WILsON is Professor of Civil Engineering at the Massachusetts Institute of Technology and former head of the Transportation Systems Divi- sion. He received his bachelor's degree at Imperial College, University of London, and his master's degree and Ph.D. in Civil Engineering at the Massachusetts Institute of Technology where he has taught since 1969. Dr. Wilson has written more than 50 articles on public transportation. He is Chairman of the TRB Committee on Transit Management and Performance and winner of several awards in civil engineering and planning.

The Transportation Research Board is a unit of the National Research Council, which serves the National Academy of Sciences and the National Academy of Engineering. The Board's purpose is to stimulate research concerning the nature and performance of transportation systems, to disseminate the information produced by the research, and to encourage the application of appropriate research findings. The Board's program is carried out by more than 270 committees, task forces, and panels composed of more than 3,300 administrators, engineers, social scientists, attorneys, educators, and others concerned with transportation; they serve without compensation. The program is supported by state transportation and highway departments, the modal administrations of the U.S. Department of Transportation, the Association of American Railroads, the National Highway Traffic Safety Administration, and other organizations and individ- uals interested in the development of transportation. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science ahd technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical mauters. Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal govern- ment. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressio- nal charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel 0. Thier is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both the Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council.

Transportation Research Board National Research Council 2101 Constitution Avenue, N.W. Washington, D.C. 20418 NON-PROFIT ORG. U.S. POSTAGE PAm WASHDGTON, D.C. PERMiT NO. 8970 ADDRESS CORRECTION REQUESTED