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###### Department of Transportation

###### Federal Transit Administration

          - [Docket No. FTA-2016-0009]

# AGENCY:

Federal Transit Administration (FTA), DOT.

# ACTION:

Notice; request for comments on updates to the USOA and changes to the NTD reporting requirements.

# SUMMARY:

The Federal Transit Administration is updating the Uniform System of Accounts (USOA). The proposed updates are prompted by the outdated nature of the 1995 USOA. FTA is seeking public comment on these proposed changes before releasing the updated USOA and implementing the associated changes to 49 U.S.C. 5335, National Transit Database.

# DATES:

Comments must be received by April 4, 2016. Any comments filed after this deadline will be considered to the extent practicable.

# ADDRESSES:

Please submit your comments by only one of the following methods, identifying your submission by Docket Number FTA-2016-0009
      -  Federal eRulemaking Portal:                          Submit electronic comments and other data to                          http://www.regulations.gov. 
      -  U.S. Mail:                          Send comments to Docket Operations; U.S. Department of Transportation, 1200 New Jersey Avenue SE., West Building Room W12-140, Washington, DC 20590-0001.                    
      -  Hand Delivery or Courier:                          Take comments to Docket Operations in Room W12-140 of the West Building, Ground Floor, at 1200 New Jersey Avenue SE., Washington, DC, between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays.                    
      -  Fax:                          Fax comments to Docket Operations, U.S. Department of Transportation, at (202) 493-2251.                    

*Instructions:*                         You must include the agency name (Federal Transit Administration) and Docket Number (FTA-2016-0009) for this notice, at the beginning of your comments. If sent by mail, submit two copies of your comments. Due to security procedures in effect since October 2001, mail received through the U.S. Postal Service may be subject to delays. Parties submitting comments should consider using an express mail firm to ensure their prompt filing of any submissions not filed electronically or by hand. If you wish to get confirmation that FTA received your comments, you must include a self-addressed stamped postcard. All comments received will be posted without change to                         *http://www.regulations.gov,*                         including any personal information provided. You may review U.S. DOT's complete Privacy Act Statement published in the                         **Federal Register**                         on April 11, 2000, at 65 FR 19476 or                         *http://DocketsInfo.dot.gov.*

# FOR FURTHER INFORMATION CONTACT:

                        Margaret Schilling, National Transit Database Program Manager, Office of Budget and Policy, (202) 366-2054, or email:                         *margaret.schilling@dot.gov.*                         Office hours are from 8:30 a.m. to 5:00 p.m., Monday through Friday, except Federal holidays.                    

# SUPPLEMENTARY INFORMATION:

## I. Introduction

                    The National Transit Database (NTD) is the Federal Transit Administration's (FTA) primary database for statistics on the transit industry. Congress established the NTD to “help meet the needs of . . . the public for information on which to base public transportation service planning . . .” (49 U.S.C 5335). Currently, 821 transit providers in urbanized areas report to the NTD through its online reporting system. Each year, performance data from these submissions are used to apportion over $7 billion of FTA funds for Urbanized Area Formula (section 5307) grants, Rural Area Formula (section 5311) grants, Tribal Transit Formula grants, Bus and Bus Facilities Formula (section 5339) grants, and State of Good Repair (section 5337) grants. The data is made available on the NTD Web site at                     *www.ntdprogram.gov*                     for the benefit of the public, transit systems, and all levels of government. The data is also used in the annual National Transit Summaries and Trends report, the biennial Conditions and Performance Report to Congress, and in meeting FTA's obligations under the Government Performance and Results Act. Reporting requirements are governed by a Uniform System of Accounts (USOA) and Reporting Manuals that are issued each year. The USOA is the chart of accounts and accounting manual that describes how transit agencies are to report to the NTD. The USOA was originally published in 1977 when NTD reporting began. While the NTD has undergone numerous and substantial changes in the past 38 years, the USOA was last updated for minor changes in 1995. This notice proposes updates to the USOA to better align with today's NTD and accounting practices and to address FTA data needs and common questions among NTD reporters.                

## II. Background

                    This notice proposes changes to the USOA that impact NTD reporting requirements. FTA proposes that changes A-J below take effect starting with the FY17 data reporting cycle. Change K below, the revised APC certification policy, would take effect when changes are proposed in the                     **Federal Register**                    . Following is a summary of proposed changes:                

A. Separation of “Passenger-Paid Fares” and “Organization-Paid Fares”

B. Separation of “Paid Absences” From “Fringe Benefits”

C. Consolidation of “Casualty and Liability Costs” Under General Administration Function

D. Expansion of Assets and Liabilities Object Classes (F-60)

E. Addition of “Voluntary Non-Exchange Transactions”

F. Addition of “Sales and Disposals of Assets”

G. Simplification of State Fund Reporting

H. Reorganization of B-30 Contractual Relationship

Additionally, this notice proposes the following changes to the NTD reporting requirements that are not directly addressed in the updated USOA:

I. Separation of Operators' and Non-Operators' Work Hours and Counts

J. Enhanced Auditor's Review

K. Revised APC Certification Policy

Finally, FTA seeks comments on the decision to not require a separate non-add item for police force expenses.

## III. Proposed Changes to the National Transit Database Reporting Requirements

### A. Separation of “Passenger-Paid Fares” and “Organization-Paid Fares”

                    Currently, the NTD category “Passenger Fares” includes both directly paid fares collected via standard methods such as a farebox or purchase of monthly passes and less direct fares—for example, where a university pays the transit agency to provide fare-free service to students. This combination of revenue sources has been confusing to some reporters.                           ( print page 5817)                        There are examples where guidance is ambiguous, including when another entity pays the transit agency for service but does not pay the full cost of the service.                

In order to address these issues and clarify reporting requirements, FTA proposes the separation of Passenger Fares into two categories: “Passenger-Paid Fares” and “Organization-Paid Fares.” Traditional fare revenue would be captured as “Passenger-Paid Fares”, while other “farelike” revenue would be “Organization-Paid Fares.” This proposed update provides additional insight into the sources of revenues and helps the reporters identify peers with similar operating models.

### B. Separation of “Paid Absences” From “Fringe Benefits”

                    Currently the NTD includes employees' paid absences,                     *e.g.,*                     vacation time, holidays, and sick leave, as “Fringe Benefits.” However, this differs from many reporters' internal accounts; many reporters classify these expenses as salaries and wages.                

In order to resolve this discrepancy, FTA proposes the creation of a new category “Paid Absences.” This category would be further divided between operators and non-operators, to align with the way salaries and wages are reported in NTD. FTA considered simply moving paid absences from “Fringe Benefits” to “Salaries and Wages,” but did not propose this change because it would produce a discontinuity in the data over time.

### C. Consolidation of “Casualty and Liability Costs” Under General Administration Function

Currently the NTD captures “Casualty and Liability Costs” expenses under three functions: Vehicle Maintenance, Non-Vehicle Maintenance, and General Administration. However, these expenses are reported under these functions inconsistently across reporters. Some reporters divide the expenses among the three functions according to the type of expense, while others report all “Casualty and Liability Costs” under General Administration.

Due to the intricacy and variety of expenses classified as “Casualty and Liability Costs,” it may be impractical to provide classifications for all possible “Casualty and Liability Costs” by function. Therefore, FTA proposes that reporters consolidate all “Casualty and Liability Costs” under the General Administration function. While this would produce a one-time discontinuity in the data for some reporters, it would improve comparability of data across reporters in the future and reduce reporting burden.

### D. Expansion of Assets and Liabilities Object Classes (F-60)

The current F-60 Statement of Finances form was instituted with the purpose of providing a transit agency's financial status at a glance. However the required fields in the current form do not provide a comprehensive insight into the agency's financial status. Its limited nature makes it only marginally useful for this purpose while creating confusion for reporters in determining what information to report.

FTA proposes expanding the form to resemble an agency's published balance sheet at the summary level. FTA initially considered requiring agencies to upload their published balanced sheets to NTD but decided against this because it would not provide uniform categories with which to facilitate fair peer comparisons and calculation of financial metrics. FTA proposes the following categories:
    - Assets

○ Current Assets

 Cash and Cash Equivalents

 Accounts Receivable

 Inventory

 Prepaid Expenses

 Current Investments and Current Portions of Long-Term Investments

 Other Current Assets

○ Noncurrent Assets

 Capital Assets

 Intangible Assets

 Capital Leases Receivable

 Pension Funds

 Special Funds

 Work in Process

 Investments
    - Liabilities

○ Current Liabilities

 Current Accounts Payable

 Short-Term Debt and Current Portions of Long-Term Debt

 Accrued Liabilities

 Other Current Liabilities

○ Noncurrent Liabilities

 Long-Term Debt

 Noncurrent Accounts Payable

 Capital Lease Obligations

 Long-Term Pension Liabilities

 Estimated Liabilities

 Other Noncurrent Liabilities

### E. Addition of “Voluntary Non-Exchange Transactions”

The existing USOA did not provide guidance on how agencies should report transaction in which an entity does not receive equal return for what it provides. For example, if one agency constructs a new fixed rail line and transfers ownership to another agency, this transaction is called a “Voluntary Non-Exchange Transaction.”

FTA proposes the addition of revenue and expense fields for “Voluntary Non-Exchange Transactions” on the F-10 Sources of Funds: Non-Added Revenue and F-40 Operating Expenses Summary and Reconciling Items forms. The reporter providing the asset or service would record the value of the asset as a reconciling item expense, while the receiving reporter would record its value as non-added revenue, which means it would not be included in the reporter's revenue total alongside cash revenues like fares, local funds, and federal grants. This would provide explanation for the sudden decrease/increase in assets.

### F. Addition of Sales and Disposals of Assets

                    Currently, the USOA includes funds received from selling or disposing capital assets in directly generated funds. In most cases this activity is not considered a revenue, since the agency is simply converting an asset from one form to another (                    *e.g.,*                     capital asset to cash) rather than increasing its total assets. FTA proposes to add an object class called “Sales and Disposals of Assets” under the category Non-Added Revenues on the F-10 Sources of Funds to capture funds earned from sales and disposals of capital assets. When the agency recognizes a gain on such a sale by selling the asset for more than its book value, the gain would be reported as revenue.                

### G. Simplification of State Fund Reporting

All State funding comes either from the General Fund or the Transportation Fund. Currently, the NTD requires transit agencies to report the Transportation Fund at the original dedicated sources of funds level such as fuel taxes, income taxes, and vehicle registration fees. However, it has proved impractical for reporters to separate their Transportation Funds into these categories, since the proportion of the Transportation Funds provided by each funding source changes from year to year, and in many cases, occurs before the funding ever reaches the transit agency.

                    FTA proposes to consolidate all Dedicated Funds and Other Funds under the State section on the F-10 Sources of Funds form into a single category called “State Transportation Funds.” Rather than gathering inaccurate or inconsistent data, NTD will simply collect whether state funding comes from the General Fund or the Transportation Fund.                          ( print page 5818)    

### H. Reorganization of B-30 Contractual Relationship

At present, the B-30 Contractual Relationship form requires agencies to perform counterintuitive calculations and report data in fields with names that are difficult to understand. As a result, agencies may report inaccurate and inconsistent data into the NTD and data users have difficulty interpreting NTD data.

FTA proposes to have three different versions of this form, customized based on whether the fare revenues are retained by the contractor or by the reporter, and whether the purchased transportation mode is Vanpool. The customized forms will reduce confusion regarding the calculation that must be performed to report data into the form.

In the new scheme, there would be separate versions of the form for the case where the contractor retains the fare revenue, and the case where the agency retains the fare revenue. The reporter would complete fields called “Purchased Transportation Fare Revenue,” “Direct Payment,” “Capital Leasing,” “Other Operating Expenses Incurred by the Buyer,” and “Other Reconciling Item Expenses Incurred by the Buyer.”

In addition, FTA proposes that Vanpool mode should have its own version of the B-30 form. This will reflect the ways Vanpool contracts usually differ from other purchased transportation contracts. Vanpool reporters would complete fields called “Passenger Fees,” “Passenger Out-of-Pocket Expenses,” “Agency Subsidy,” “Capital Leasing,” “Other Operating Expenses Incurred by the Buyer,” and “Other Reconciling Item Expenses Incurred by the Buyer.”

### I. Separation of Operators' and Non-Operators' Work Hours and Counts

On the F-30 Operating Expenses form, NTD collects data on salaries and wages for operators and non-operators separately. However, on the R-10 Employees form, NTD currently collects data on hours worked and employee counts for these categories combined.

FTA proposes that NTD collect data on hours worked and employee counts for operators and non-operators separately. This would allow calculation of separate wage rates and hours per employee for these two categories, which would be useful data to any user interested in labor costs. The data should be readily available in most agencies' payroll systems and thus a marginal increase in burden.

### J. Enhanced Auditor's Review

Currently FTA requires NTD reporters to undergo a one-time auditor's review at the commencement of reporting. The agency must file an Independent Auditor's Statement for Financial Data. The purpose of this review is to ensure that the reporter is equipped to report to the NTD according to FTA's requirements, using accrual accounting and the USOA. There is currently little guidance on when, if ever, an agency must obtain a new Auditor's Statement. In addition, Reduced Reporters (Small Systems) are not required to perform this review.

FTA proposes that Reduced Reporters be required to undergo this review, and further, that all NTD reporters be required to undergo a new review once every ten years. This would provide additional confidence that all reporters are conforming to FTA's reporting requirements. Due to the limited nature and infrequency of this review, this new requirement should not be overly burdensome to reporters.

### K. Revised APC Certification Policy

The NTD requires the reporting of ridership data, both unlinked passenger trips (UPT) and passenger miles traveled (PMT), by mode and type of service. These two data items are important measures of service consumed and are used by many analysts to assess the effectiveness of transit services. PMT is also used in the annual formula allocation of federal transit funds for the Urbanized Area Formula Program (§ 5307) and the Bus and Bus Facilities Grants (§ 5339).

Some transit agencies use automatic passenger counters (APCs) for collecting UPT and PMT. This requires prior FTA approval. If a transit agency fails to obtain FTA approval in advance, the NTD will not accept the reported APC-derived data.

In the current certification process FTA requires agencies to submit the following plans:
    - An APC benchmarking plan for the first year and,
    - AN APC maintenance plan for subsequent years.

The APC benchmarking plan must include a validation of the APC measuring process for UPT and PMT data against a separate manual sample covering a full year. The maintenance plan includes an annual checkup to insure that the APC system continues to function correctly.

We propose to revise the certification requirements for new APC systems and for maintenance testing of all APC systems. FTA believes that APC technologies have advanced to the point where they produce better data than sampling with manual counts and, as such, we no longer need the extensive comparisons we have required in the past. The goal of the new certification procedures proposed here is to insure that APC data collection systems are implemented correctly while reducing the time and effort required for reporters to demonstrate this.

We propose to revise the benchmarking test by eliminating the full year comparison of manual and APC counts on randomly-selected trips and replacing it with a more comprehensive comparison of a much smaller number of trips. Reporters with fewer than 30 APC-equipped vehicles would need to evaluate fifteen trips. Reporters with more than 30 APC-equipped vehicles would need to evaluate a number of trips equivalent to half their number of APC-equipped vehicles, up to a maximum of 50 trips. The trips selected for evaluation must meet the following requirements:
    - The trips must include some of the reporter's heaviest passenger loads,
    - The trips must be distributed over as much of the agency's fleet of APC-equipped vehicles as possible, and
    - Manual and APC data sets must be collected for each trip.

Trips do not have to be selected randomly. They can be spread over any convenient period of time. They no longer need to be distributed over an entire year.

Manual counts can be made using data collection staff or on-board cameras. To insure accurate counts we recommend using a data collector at each door on heavily-loaded trips. APC data should be processed to correct for anomalies as it would be in the reporter's normal data collection process. The objective is to compare manually-collected data with processed APC data and demonstrate that they are equivalent or that any differences are justifiable.

Reporters would be required to analyze the manual and APC data on a side-by-side basis to identify and explain inconsistencies. APC and manual counts of passengers getting on and off at each stop should be compared for each trip. FTA may ask to see this data as part of our certification review. A report on the results of the analysis must be submitted to FTA with the certification request. This report would include:
    - Description of the APC system(s) used,
    - Description of the benchmarking procedure,       ( print page 5819)      
    - Description of trips that were eliminated due to APC data that failed diagnostic tests,
    - Comparison of distances between stops used by the two methods,
    - Passenger count comparison (% difference),
    - Passenger miles comparison (% difference), and
    - Calculation of unbalanced error                      over all trips (sum of magnitude of differences in on and off counts at each stop as a percentage of the sum of manually counted on and offs).                

FTA would certify APC systems where the passenger count comparison, passenger mile comparison, and unbalanced error over all benchmark trips are each less than five percent (5%). Reporters that file a reduced report (formerly called a small systems waiver) do not need to meet the standards for passenger miles or unbalanced error.

We propose to eliminate the maintenance plan requirement and replace it with a repetition of the benchmarking test in every fiscal year that is evenly divisible by three. APC systems already approved for NTD reporting would need to be retested in the next fiscal year that is evenly divisible by three.

Transit agencies that collect this ridership data on all (>98 percent) of their vehicle trips may correct for missing trips using average values. However, if the vehicle trips with missing data exceed two percent (2%) of all trips, agencies would need to have a qualified statistician approve the correction (or expansion) method. This is consistent with our treatment of manual counting methods and does not represent a change in policy. Thus an agency that does not have a fleet that is fully-equipped with APCs could use APC data in any NTD-approved sampling plan.

## IV. Additional Comment Request

                    Additionally, FTA considered requiring transit systems to report their police force expense as a separate non-add item in the F-30 Operating Expenses form in addition to reporting it in the appropriate operating expense object classes (                    *e.g.,*                     Salaries and Wages and Fringe Benefits). This change would have enabled a transit system with its own independent police force to subtract the police force expense from total operating expenses in order to perform a fair peer evaluation against another entity without its own police force. However, FTA decided against this change, as there are other types of police or security force arrangements that are not included in this consideration (                    *e.g.,*                     municipal police force). Additionally, employing an independent police force is an operational decision and the related expenses are justifiable operating cost. FTA suggests that data users consider security arrangements when selecting peer groups for comparison in order to control for differences in operating cost. FTA seeks comment from transit systems on this decision.                

FTA thanks our stakeholders in advance for providing comment on the above proposed changes to the NTD reporting requirement.

Therese W. McMillan, 

Acting Administrator.

[FR Doc. 2016-01941 Filed 2-2-16; 8:45 am]

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