Sub-allocating FTA Section 5307 Funding Among Multiple Recipients in Metropolitan Areas (2014)

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.

33 • Most of the agencies in the survey were either transit operators (41%) or MPOs (39%). A much smaller per- centage were either state DOTs (16%) or “other” (8%). • Geographically, the survey respondents came from 23 states throughout the United States, with concentra- tions in the Northeast, Midwest, and Far West. • The majority of respondents that sub-allocate (63%) use the exact FTA formula to sub-allocate Section 5307 funds. • Transit operators were more likely to use the exact FTA formula (81%) and MPOs are more likely to use a local approach (55%). • Less than half of the respondents (45%) considered planning guidelines in sub-allocation decisions, with MPO respondents considering planning guidelines more often (60%) than transit operators (38%). • The availability of local match does not play a big role in sub-allocation decisions, as only 27% of the respon- dents considered local match in such decisions. Tran- sit operator respondents considered local match more (38%) than MPOs (20%). • The average number of recipients that receive FTA Section 5307 funds in the UZAs that responded to the survey is 5.2 recipients per UZA. UZAs of MPO respon- dents were far more likely to have more recipients (6.6) than UZAs of transit operator respondents (3.9). • The factors most used in locally developed methodologies/ approaches when sub-allocating Section 5307 funds were “projects promoting efficient public transportation ser- vices” and “projects preserving existing public transpor- tation service” (both 73%), while factors least considered include “projects that support economic vitality” (35%) and “projects that enhance the environment” (39%). • As a result, FTA formula funds may be sub-allocated for projects that do not meet FTA objectives such as improving the environment or increasing public trans- portation efficiency, or funds may be allocated for proj- ects for which local match is not available to carry out the project in a timely manner. • For those respondents that did not use the FTA for- mula (37%) a range of sub-allocation approaches and methodologies were used. Many used a locally devel- oped formula that was based solely on population and population density or based solely on public transpor- tation service and ridership alone, or some combina- tion, but different from the FTA formula. Others used ratios, such as 90%, to the largest public transportation CONCLUSIONS This synthesis documents the methodologies and practices of public transportation operators, state departments of transporta- tion (DOTs), and metropolitan planning organizations (MPOs) in the sub-allocation of FTA Section 5307 Formula Funds in urbanized areas (UZAs) with multiple recipients. This study effort and the results are timely, as data from the 2010 U.S. Census has resulted in many new or reconfigured UZAs that could affect sub-allocation for recipients of FTA Section 5307. The synthesis required initial review to determine which UZAs sub-allocate Section 5307 funds. Although National Transit Database (NTD) data identify the number of pub- lic transportation operators within a UZA that report public transportation operating and financial data, these operators are not always eligible recipients of Section 5307 funds. There- fore, the study team conducted considerable outreach and doc- umentation review to identify and confirm those UZAs that sub-allocate among multiple recipients. Of the 179 UZAs with populations of 200,000 and more that are apportioned Section 5307 funds, approximately one- third (62 UZAs) sub-allocate the funds to multiple recipients. Sub-allocation is more prevalent in UZAs of more than 1 mil- lion, where 74% of the UZAs in this category sub-allocate, while only 23% of the UZAs between 200,000 to 1 million sub-allocate. This review did not examine the sub-allocation practices of UZAs with populations below 200,000. A web-based survey was sent to 62 agencies (representing the 62 UZAs that sub-allocate Section 5307 funds) by e-mail, and 51 agencies successfully responded, for a response rate of 82%. There were several key conclusions of the survey: • Of the 51 respondents to the survey, 50 (98%) indicated that more than one agency received FTA Section 5307 funds. The one respondent that said “no” indicated that more than one agency received Section 5307 funds up to 2012 and that as a result of census changes in the UZA currently only one agency receives Section 5307 funds. • The vast majority of the respondents to the survey (85%) were the agencies responsible for calculating the sub- allocation of Section 5307 funds. Of those that did not, all were involved in the process to some significant extent. chapter five CONCLUSIONS

34 operator, with the 10% shared by other operators, with no specific rationale for the split. A number of respon- dents based their sub-allocation decisions on the capi- tal needs of the UZA with no reliance on a formula. These respondents reported that this approach provided a better opportunity for projects to be funded when the recipient was ready to proceed, including having the local match available. The case examples provided an “inside look” at the range of locally developed approaches to sub-allocating FTA Sec- tion 5307 funds. Interviews were conducted with both the agencies responsible for administering the sub-allocation methodology and the other public transportation operators who rely on the sub-allocation to support their public trans- portation systems. The study revealed that the method of sub-allocation appeared to have an impact on how the funds are used. Two of the UZAs in the case examples (Metropolitan Transit Commission and Connecticut DOT) used a needs- based approach for sub-allocating. In those UZAs that relied exclusively on a capital needs-based approach, the funds were used primarily for vehicle replacement. Smaller public transportation operators in those UZAs might not receive any FTA Section 5307 funds in a given year if they do not have a vehicle or equipment acquisition programmed for that year. They also may not be able to use funds for FTA-eligible purposes such as preventive maintenance or non-revenue equipment purchases. On the other hand, when these smaller public transportation operators do need vehi- cles and have the local match to make the purchase they can make larger vehicle purchases than they might otherwise be able to do, if they received their funds annually, using the FTA formula. Two of the UZAs in the case examples used a formula or ratio primarily based on population. In both of these examples, there were only two eligible recipients of FTA Section 5307 funds in the UZA, which may make sub- allocating the FTA Section 5307 funds easier than when multiple recipients are in competition for funds. These agencies used the FTA Section 5307 funds for preventive maintenance, ADA paratransit service, vehicle purchases, and other eligible capital projects. One of the case examples (Milwaukee) described an approach for sub-allocating FTA Section 5307 funds that has evolved from using the exact FTA formula to using a needs- based approach to the current approach of a formula based exclusively on measures of public transportation service provided within the UZA. In this UZA, the largest pub- lic transportation operator receives the bulk of the FTA Section 5307 funds and also provides the bulk of the public transportation service. If this UZA relied on the FTA formula, the largest public transportation operator would receive a smaller share of the FTA Section 5307 funds. The rationale for this approach is that each public transportation passenger within the UZA receives the same FTA subsidy amount. In this example, the smaller public transportation operators use their FTA Section 5307 funds primarily for capital purchases because the state of Wisconsin provides operating subsidies to smaller public transportation operators. The remaining case example (Massachusetts Bay Trans- portation Authority) is reflective of a situation faced in many large urban areas, where the historical public transportation operator that at one time received all of the FTA Section 5307 funds in its UZA is now required to share the funding with generally smaller operators that may provide public trans- portation service in areas that have been added to the UZA through changes to U.S. Census designations. In this case, the historical public transportation operator receives the larg- est share of the funding and the other operators work out a sub-allocation formula that is agreeable to all parties. With the use of a split ratio, each operator can decide how to use its funds on any eligible project. The synthesis revealed that the agencies responsible for determining the methodology and calculating the sub- allocations were reflective of the historical role that the agency played in public transportation in the UZA. For example, in the western United States, MPOs, such as the Southern Cali- fornia Association of Governments and the MTC function as the sole designated recipients for FTA formula funds in their respective regions. They tend to manage the sub-allocation and can have a significant influence on the outcomes. In other areas, such as in the eastern United States, state agencies such as the MBTA and Connecticut DOT control the sub- allocation process. These agencies have historically been the major providers of public transportation in the large UZAs. Often they interpret sub-allocation as sharing funds that tra- ditionally went exclusively to their agencies. A final finding is that once a sub-allocation methodology is agreed to by all parties within a UZA it is very difficult, if not impossible, to change. Public transportation opera- tors tend to want to co-exist amicably with their neighbor- ing agencies. They recognize that if one agency gets more funding through a change to a sub-allocation approach, then another agency or agencies will lose money. As a result, it was found that some agencies continue to use a formula or split ratio that relied on out-of-date census or ridership data. FURTHER RESEARCH During the course of this study and during discussions with the project panel, a number of gaps in information were iden- tified that could be explored by further research: • The impact of different sub-allocation methodologies on the outcomes for the UZAs and public transporta- tion customers; for example, how are the funds used

35 • The impact of MAP-21 on the sub-allocation process, to include such issues as performance-based planning and the new 100 bus rule for operating assistance. • Synthesis on current practices for sub-allocating the Governor’s Section 5307 apportionments in areas of between 50,000 and 199,999 in population. • Synthesis on current practices of state DOTs in sub- allocating Section 5311 funds in rural areas. • Further refining and categorizing the general types of sub-allocation approaches that are used (e.g., collabora- tive, fixed, and unified) and extracting some key aspects that new UZAs might consider. in needs-based approaches as compared with formula- based approaches? • More focused survey of recipients in UZAs that sub- allocate to more fully understand the public transportation operators’ perspectives. • What is considered “equity” in the sub-allocation of funds? • Do sub-allocation outcomes meet FTA guidance in that the MPO and designated recipient could be able to dem- onstrate that whatever sub-allocation system they use “adequately represents” the current needs of the various agencies.