Public Transportation: Federal Role Key to Rural and Tribal Transit
Published: 2014-06-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Public transportation in rural areas can be critical to connecting people to jobs, shopping, and health services. FTA awarded approximately $600 million in grants in both fiscal year 2013 and 2014 to support rural transit, including tribal transit. The current surface transportation authorization, enacted in 2012, increased funding for tribal transit from about $15 to $30 million per year and changed how these funds are allocated.
The committee asked GAO to review FTA's rural transit program. This report examines (1) FTA's funding, oversight, and other support for the rural transit program; (2) changes in services, ridership, and costs since 2009; and (3) challenges that rural and tribal transit providers face and possible actions to address them. To address these topics, GAO reviewed program documentation and conducted about 50 interviews with FTA officials, national groups that have a relationship with rural transit providers, state transportation officials, and officials from rural and tribal transit providers. GAO selected state officials and providers based on grant amounts, the types of services offered, the size of transit systems, and geography, among other factors. Results are not generalizable to all states and providers. Additionally, GAO analyzed FTA data on transit services, ridership, and costs from 2009 through 2012, the latest year data were available. This report contains no recommendations. GAO provided a draft of this report to the Secretary of Transportation for review and comment. The Department of Transportation did not have any comments on the report.
section_title: What GAO Found
paragraphs: The Federal Transit Administration's (FTA) Formula Grants for Rural Areas Program (rural transit program) is FTA's only dedicated grant program for rural and tribal transit. FTA apportions nearly all program funds to states. State transportation agencies then allocate funding to rural and tribal transit providers as sub-grantees. The remainder of program funds—$30 million annually—supports the Tribal Transit Program through direct apportionments to tribes based on a new statutory formula ($25 million) used for the first time in fiscal year 2013, or through discretionary grants ($5 million). Twenty-two of the 30 selected rural and tribal transit providers GAO spoke with indicated that rural transit program funds are essential to sustaining transit in their communities, noting that without these funds, transit service in their area would be reduced or, in some cases, eliminated. FTA's oversight activities focus on state transportation agencies that oversee providers. FTA also offers support to providers, such as for training on safety, and providers generally agreed that this support is useful.
From 2009 through 2012, the types of services offered by rural and tribal transit providers have remained about the same. Demand-response service, in which riders call in advance to schedule their trips, and fixed- or deviated-fixed-route service, in which a bus will deviate from an established route, are most typical in rural areas (see fig.). In this period, ridership increased 4 percent, and operating costs increased 19 percent, according to FTA national data.
Selected rural and tribal transit providers identified an array of operational and funding challenges. For example, 24 of the 30 providers GAO interviewed said that it was difficult to hire and retain qualified drivers, and 16 said that it was hard to secure local or state funds to meet the rural transit program's funding-match requirements. Some providers GAO interviewed addressed these respective challenges by offering training and through dedicated local tax funding. GAO also found that the new Tribal Transit Program's statutory formula—which emphasizes miles driven in providing transit services—resulted in some tribes receiving grant amounts that varied significantly from previous levels, with increases and decreases of 50 percent or more common. According to FTA officials, larger tribal transit systems tended to receive increased awards, while smaller systems tended to receive reduced awards. FTA officials also indicated they anticipated that when implementing the formula for the first time that it would result in very different funding levels for some tribal transit providers. Accordingly, FTA conducted outreach and meetings with providers to educate them about these likely changes. Selected tribal transit providers and FTA have considered strategies to mitigate declines in Tribal Transit Program funding and are still in the process of adjusting to new funding levels.

section_title: Letter
paragraphs: In rural areas, public transportation—typically some type of bus service— can be critical to connecting people to jobs, education, shopping, and  health services. Rural transit systems operate in various environments.  Their service areas may span thousands of square miles in remote areas,  be located in more developed rural areas surrounding major cities, or be  in smaller urban areas with populations under 50,000. Regardless,  compared to large urban transit systems, rural transit systems generally  have low budgets, few employees, and small vehicle fleets. The  approximately 1,400 rural transit providers in the country may face an  array of challenges in their efforts to provide safe, cost-effective public  transportation. Seventy-five million people live in rural America; for those  who cannot drive, these transit systems provide vital mobility and  connections to essential services and community activities.
Since 1978, the federal government has supported rural and tribal transit  service through the Formula Grants for Rural Areas Program (rural transit  program), administered by the Federal Transit Administration (FTA).  Since 2005, a portion of rural transit program funds have been specifically  targeted to rural transit services for federally recognized tribes through  the Tribal Transit Program. The current surface transportation  authorization act—Moving Ahead for Progress in the 21st Century (MAP- 21)—authorized about $600 million annually for fiscal year 2013 and 2014  for the rural transit program for operating assistance and capital projects,  among other purposes, and made several programmatic changes. For  example, the legislation increased funding targeted to tribal transit to $30  million per year from about $15 million per year and changed the  allocation for $25 of the $30 million from the previous discretionary  approach to a formula based largely on the number of miles traveled by  transit systems. In addition to administering these rural transit program  grants, FTA provides oversight of and support to grantees. You asked  that we review the rural transit program and the provision of transit  service in rural and tribal areas. This report examines (1) how FTA funds,  oversees, and otherwise supports rural and tribal transit services in the  rural transit program; (2) what is known about how services, ridership,  and costs for rural and tribal transit have changed since 2009; and (3)  what challenges rural and tribal transit providers face in providing transit  service, and what actions could address these challenges.
To determine how FTA’s rural grant program funds, oversees, and  otherwise supports rural and tribal transit services, we reviewed FTA  circulars, training, and guidance materials; reviewed state transportation  agency program documentation; and interviewed FTA officials. To  determine what is known about how rural transit services, ridership, and  costs have changed since 2009, we analyzed data from FTA’s rural  National Transit Database (rural NTD) for fiscal years 2009 through 2012,  the most recent available year of national data. After determining that the  data were sufficiently reliable at the national level for our purposes by  independently assessing the data and interviewing FTA officials on  validation procedures, we analyzed specific data elements in the rural  NTD including: fleet size, type of transit service provided, passenger trips  taken, and expenditures. Our review included both annual analyses for  each year as well as assessing changes from fiscal years 2009 through  2012. To determine the challenges that rural and tribal providers face and  identify any potential actions that could address these challenges, we  reviewed relevant literature and interviewed 2 national stakeholder groups  that work closely with rural and tribal providers and state transportation  agencies. Literature and interviewees identified some solutions to  challenges faced, which we summarized. To provide additional  information for all of these questions, we interviewed 15 state  transportation agencies and 30 rural transit providers, including 8 tribal  transit providers. We nonstatistically selected the state transportation  agencies to provide a range of rural or tribal transit providers, grant  amounts, and FTA regions. We selected rural and tribal transit providers  to interview in selected states using data from the fiscal year 2011 rural  NTD such as total operational expenditures and transit service provided.  Additionally, we interviewed officials with 2 tribal transit providers not in  selected states based on changes in funding these tribes received  following MAP-21 reforms. The views and information obtained from  these interviews are not generalizable to all states or rural and tribal  transit providers. Finally, to assess challenges related to Tribal Transit  Program funding, after determining data were sufficiently reliable for our  purposes, we analyzed FTA award data from 2009 through 2014 to  calculate changes in funding levels experienced by tribal transit providers.  Appendix I contains a more detailed discussion of our objectives, scope,  and methodology.
We conducted this performance audit from June 2013 to June 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Rural and tribal transit agencies are diverse and may operate only one or  two vehicles, a few dozen, or, for a few agencies, fleets with hundreds of  vehicles. Transit systems in rural areas may cover large areas with low  population densities, which means that trips may be long, and that there  may be only a few riders at any given time. To operate transit services,  rural and tribal transit providers typically use cutaway vehicles (a transit  vehicle built on a van or truck chassis), buses, and vans. Figure 1 below  shows a typical cutaway vehicle and a rural transit bus.
Rural and tribal transit providers operate a variety of transit services,  including demand response, which is scheduled in response to calls from  passengers; fixed routes, which are buses operating according to a set  schedule; and deviated-fixed routes, which are fixed routes that allow for  minor route deviations in response to passenger calls. Figure 2 below  summarizes typical rural transit services operated.
FTA’s rural transit program has provided federal support of public  transportation in rural areas since 1978 by providing formula grants to  states that, in turn, distribute funds to rural transit providers through state  transportation agencies. The program defines rural areas as those areas  with fewer than 50,000 people, as defined by the U.S. Census Bureau.MAP-21 authorized $600 million annually for the rural transit program and  changed some aspects of the rural transit program, which are discussed  below. In addition to the rural transit program, rural and tribal transit  providers have been able to receive funding—particularly for capital  assistance—from other FTA grant programs that are not specific to rural  transit, although some of these other grant programs changed or were  eliminated by MAP-21. For example, a portion of one FTA discretionary  grant program that provided capital funding to transit providers for bus  and bus facilities was eliminated and replaced by a new formula  program. Also, the largest source of capital funding for transit providers  in 2009 and 2010 was the American Recovery and Reinvestment Act of  2009 (Recovery Act). With Recovery Act funds, FTA distributed  approximately $820 million in stimulus funds nationwide through various  established FTA grant programs, including the rural transit program, for  rural and tribal transit providers for capital assistance for transit vehicle  purchases and rehabilitations, for example. Recovery Act grantees had to  obligate Recovery Act funds by September 30, 2010. Table 1 below  summarizes FTA programs other than the rural transit program that  provided operating and capital funding to rural and tribal transit providers  and their status after MAP-21.
FTA, a relatively small agency with just over 500 employees and an  annual budget of just under $11 billion in fiscal year 2014 sets policies,  develops guidance, and produces training materials for the rural transit  program, among other programs. FTA’s 10 regional offices assist in  implementing the program by working with state transportation agencies  on grants and other activities.
section_title: FTA Funds Rural and Tribal Transit Programs Largely Through Formula Grants and Oversees and Provides Assistance to Grantees
subsections: section_title: For Most Selected Providers, FTA’s Rural Transit Program is a Key Source of Funding
paragraphs: The rural transit program is FTA’s only dedicated funding program for  rural and tribal transit. FTA apportions nearly all rural transit program  funds to states through a formula based on various factors, including rural  land area and the number of “vehicle revenue miles” that rural transit  systems in their state drove. State transportation agencies then allocate  funding to transit provider sub-grantees, who provide public transit  services in their communities. Sub-grantees can be regional or local  governments, non-profit organizations, or federally recognized tribes.FTA also awards rural transit program grants directly to federally  recognized tribes through the Tribal Transit Program within the rural  transit program.
To receive rural transit program grants, state and tribal grantees must  meet certain federal compliance, funding match, and reporting  requirements. Per FTA requirements, states develop a State  Management Plan that delineates how they will distribute funds to sub- grantees and administer the program. Additionally, state transportation  agencies oversee their sub-grantees and ensure compliance with federal  requirements. Grants may cover up to 50 percent of net operating costs  of a project, for expenses such as fuel and wages, and 20 percent of the  net costs of a capital project, for assets such as vehicles and facilities.The remainder, or match, must be made up from either the state  transportation agency or local funding resources.
Recent legislation has changed some aspects of the rural transit program.  Enacted in 2012, MAP-21 increased funding for the rural transit program,  from about $500 million to about $600 million annually, made planning  activities an eligible activity for the first time, and added low income  population as a factor in the formula that allocates grant funds to states. MAP-21 also doubled the funding level for the Tribal Transit Program  from about $15 million to about $30 million annually. The Tribal Transit  Program also changed from an entirely discretionary award program to a  split formula and discretionary program, with $25 million awarded by  formula and $5 million that tribes can apply for and are awarded based on  criteria established by FTA. Fifty percent of the formula funds for tribes  are based on vehicle revenue miles, or transit system miles driven, as  reported in the rural NTD; 25 percent of the formula is distributed equally  among tribes with 200,000 or more vehicle revenue miles; and 25 percent  is distributed to tribes with more than 1,000 low-income people. In  general, federal surface transportation dollars are apportioned by formula,  allowing recipients to select projects that reflect their priorities. FTA  expects the formula to provide tribal transit providers with a more stable  and reliable source of federal funding. Being a direct FTA grantee in the  Tribal Transit Program does not preclude a tribe from also being a sub- grantee of a state transportation agency through the rural transit program.
49 U.S.C. § 5311(b)(1)(A)(1), (3)(C)(iv).
According to officials with state transportation agencies and transit  providers we interviewed, this program is an important source of federal  funds for rural and tribal transit providers, though other funding sources  also are used. Specifically, officials with 11 of the 15 state transportation  agencies and 22 of the 30 rural or tribal transit providers that we  interviewed indicated the program was essential to sustaining transit in  their communities. Officials frequently indicated that without rural transit  program funds, transit service in their area would be reduced or, in some  cases, eliminated. For example, one provider in Oklahoma explained that  without the approximately $137,000 in rural transit program funds they  received in fiscal year 2013, they would not be able to finance the 200 to  300 rides per day they currently provide.
While most transit officials we met emphasized the central importance of  rural transit program funds, the program’s relative importance varied  across states, providers, and tribes depending on the availability of other  funding from state, local, and tribal governments. State officials in 4 of 15  states indicated that state funding for rural transit exceeded FTA grant  program funds. For example, the state of Michigan provided about one- third of the total operating expenditures in fiscal year 2012, according to  state transportation agencies officials. Conversely, according to state  transit officials in Georgia, the state of Georgia does not provide state  transportation funds for rural transit. This may be the result, in part, from a  provision in the Georgia Constitution that requires that all state motor fuel  taxes be appropriated for highway purposes. The availability of local  sources of funds also varies considerably. Local sources of funds used by  our selected transit providers included, for example, local general funds,  dedicated local sales taxes, contracts with social service agencies that  need transportation services for their clients, and fare box revenue.  Officials with 7 of the 30 providers we interviewed indicated that state and  local funds were adequate to support most of their operations. For  example, we spoke with 2 providers in mountain resort communities that  provide significant local funds to the transit system because affordable  transportation for resort workers was deemed essential to the local  economy. Conversely, officials from some other providers indicated that  local government support for transit is difficult to secure, particularly given  other budget priorities. In a few cases, transit providers we interviewed  said they held fundraisers or solicited donations. For example, one  provider in Missouri noted that proceeds from bake sales and quilt raffles  have helped them raise funds to purchase new vehicles. Among the tribal  transit providers we interviewed, the availability of rural transit program  funds to sub-recipients of the state transportation agency varied  depending on the nature of the tribe’s relationship with the state. For  example, some tribes reported a preference for working with their local  state government as a sub-recipient whereas others strongly preferred  working directly with the federal government because of strained tribe- state relations.
Following several MAP-21 reforms, the role of the rural grant program has   though according to FTA officials, it continues to be  changed somewhat,FTA’s most important funding program for rural and tribal transit.
The new Bus and Bus Facilities Program provides each state with  $1.25 million per year to distribute to any area within a state, including  rural areas. According to FTA officials, this program replaces the  previous Capital Investment Grant Program that provided  discretionary grants to states for rural transit buses. According to  some state transportation officials we interviewed, these changes  have potentially reduced federal funding available for rural transit  capital projects.
The Job Access and Reverse Commute (JARC) program—which  funded programs focused on transportation for low income people— was eliminated and, according to FTA documentation on MAP-21  changes, consolidated activities previously eligible for JARC funding  into the rural transit program. State and transit officials expressed  mixed views on the impact of this change. Officials in two states  indicated that the consolidation should provide greater flexibility in  service provision and reduce the number of federal grants they  administer.New York explained that the consolidation could leave some rural  transportation programs that provided service to low income people  funded with JARC grants, without a federal funding source in the rural  transit program because these programs do not offer transit services  to the general public, as required by the rural transit program. To  continue service, according to this official, some of these providers will  try to partner with other existing transit providers.
Conversely, a state transportation official in the state of
Funding increased for the Tribal Transit Program and changed from a  discretionary program to a largely formula-based program. Since the  enactment of MAP-21, FTA has awarded grants to more tribes than in  prior years. For example, in fiscal year 2012, the last year only  discretionary grants were awarded, FTA awarded grants totaling  approximately $15.5 million to 72 tribes. In fiscal years 2013 and 2014  since MAP-21, $25 million has been awarded in formula grants each  year to 83 tribes and 110 tribes, respectively. Additionally, in fiscal  year 2013, FTA also awarded discretionary grants totaling $5  million. Of these discretionary grants, 9 are for planning activities  that may lead either to new tribal transit systems or new services  provided by existing tribal transit systems. Further, FTA and tribal  transit officials whom we interviewed indicated that the number of  tribes receiving FTA grants may increase in the future.
section_title: FTA’s Rural Transit Oversight Focuses on State and Tribal Transportation Agencies
paragraphs: FTA oversees state transportation agencies and tribal transit program  grantees through a range of activities. Responsibility for oversight of sub- grantees (i.e., rural transit providers) is with state transportation agencies.  Regional FTA officials explained that their oversight focuses on the  activities of state transportation agencies, not rural providers. For  example, the 34 staff in FTA’s region IV office in Atlanta, GA, administers  and oversees the activities of eight states, Puerto Rico, and the U.S.  Virgin Islands. In turn, state transportation agencies oversee rural transit  providers who are their sub-grantees. This is consistent with the view of  rural transit providers we spoke with who indicated that their respective  state transportation agencies oversaw their operations and that they had  very little direct interaction with FTA in an oversight capacity. FTA’s  oversight activities begin with a review of how each state transportation  agency plans to implement the rural transit program, as documented in a  State Management Plan. After approved plans are in place, FTA’s  primary means of assuring that states comply with federal requirements  are State Management Reviews, which assess a state’s implementation  of the rural transit program. These reviews occur about every 3 years and   State Management Reviews include  are conducted by FTA contractors.an on-site visit with state transportation officials and document reviews to  determine the extent that state policies and procedures meet federal  requirements. These reviews address sub-grantee compliance indirectly.  For example, as part of a State Management Review, FTA’s contractors  may conduct a site visit to transit providers. Other FTA reviews may focus  on specific areas, such as financial management, civil rights, and drug  and alcohol testing of drivers, among others. FTA officials indicated that  they focus their reviews on areas that may need greater attention using  an internal risk-assessment tool that helps them identify areas of potential  weakness. The review may result in recommendations for changes to  state transportation agency practices that are determined to be  inconsistent with federal requirements. Additionally, FTA conducts formal  reviews on specific areas, such as procurement systems. FTA also helps  states comply with federal requirements through informal activities. For  example, FTA region X in the Pacific Northwest holds regular conference  calls with the state transportation agencies in its region to discuss the  implementation of their rural transit programs. FTA’s regional offices also  oversee tribal grantees within each region to ensure compliance with  federal requirements. Finally, states and tribes report annual operating  and expenditure data such as transit system miles driven into the rural  NTD, which FTA maintains. State transportation agencies collect this data  from rural transit providers and submit it on their behalf. Because tribes  can be either direct grantees of FTA or sub-grantees of the states, or  both, some tribes report directly to FTA while other tribes report their data  through their state transportation agency.
State and tribal transit officials we interviewed had mixed views on FTA’s  oversight approach. Some (5 of 15) state transportation agency officials  mentioned that the State Management Reviews have been beneficial in  that they identified opportunities to improve the state’s administration of  its rural transit program. For example, an official from one state  transportation agency commented that these reviews have helped the  state comply with changing federal requirements. Some (6 of 15) state  officials, however, indicated that the emphasis and quality of these  reviews can vary based on the region or contractor involved, be overly  focused on processes or details, or that the criteria used in the review can  be unclear. For example, officials in one state transportation agency  observed that FTA’s risk assessment approach brings greater attention to  higher-risk areas without a reduction in the time spent on low risk areas,  resulting in what the officials believed to be longer reviews than  necessary. Tribal transit officials also offered differing views on their  oversight relationship with FTA, depending on factors such as the nature  of the tribe’s relationship with the state transportation agency and the  quality of the support provided by FTA regions.
In 2012, we and the Department of Transportation Inspector General  reviewed aspects of FTA’s oversight approach that apply to the rural  transit program, as well as other FTA programs. We found that FTA’s  approach for selecting transit providers for Americans with Disabilities Act  of 1990 compliance reviews was not based on documented criteria, a  critical element of maintaining the thoroughness and consistency of these  reviews. Noting similar concerns, the Department of Transportation  inspector general issued a report in 2012 that recommended that FTA’s  oversight reviews—including State Management Reviews—be conducted  in a consistent manner to reduce regional differences, among other  improvements.FTA is currently taking steps to increase the consistency of its oversight  activities. For example, FTA officials explained to us that they have   In response to the inspector general’s recommendation,  instituted new national procedures to assess contractors’ performance in  conducting various oversight reviews.
section_title: Most Selected State Transportation Agencies and Rural and Tribal Transit Providers Said FTA’s Assistance Is Useful
paragraphs: FTA provides a range of training, guidance, and technical assistance to  state transportation agencies and rural and tribal transit providers.  According to FTA officials, the general focus of these activities is sharing  program information, such as grant management requirements, and  updates about FTA program changes. Specific training topics have  included bus accident investigation, crime prevention, and safety  management, among many others. Technical assistance, which may be  formal (e.g., in presentations) or informal (e.g., in one-on-one  conversations), is typically provided by FTA regional staff to state  transportation agencies. According to nearly all state transportation  agency officials and tribal transit officials we spoke with, FTA training has  been helpful. Additionally, officials in all 15 selected states told us that  they have a good working relationship with FTA regional staff and that  FTA staff are available for technical assistance when needed. Officials  with 6 of the 8 tribal transit providers we interviewed agreed that FTA is  generally helpful, particularly when there is strong regional staff support.  Two tribal transit officials, both for systems that received Tribal Transit  Program funds directly from FTA, however, indicated that more effective  FTA outreach is needed to keep tribes better informed of program  changes. Rural and tribal providers also generally agreed that FTA  offered beneficial training, though a few noted that FTA-sponsored  webinars were sometimes full or that a lack of local or state travel funding  prohibited participation in training. FTA also provides funds to state  transportation agencies to pay for rural transit training and technical  assistance through its Rural Transit Assistance Program. This program  provides a minimum of $65,000 to each state annually. State and transit  agency officials we met with told us that this funding has helped them  attend FTA and other industry-sponsored training events, especially given  limited state funds for such purposes.
section_title: Since 2009, Rural and Tribal Transit Providers’ Services Have Remained Generally the Same and Have Experienced Increased Ridership and Costs
subsections: section_title: Rural and Tribal Transit Providers Continue to Provide a Range of Transportation Services for Transit Dependent Groups
paragraphs: From 2009 through 2012, to meet the transportation needs of their  communities, rural and tribal transit providers offered similar types of  services based on their passenger demographics, population density, and  budget, among other factors. There are multiple ways to measure the  change in rural and tribal transit service between fiscal years 2009 and  2012; we examined national data on type of service, ridership, and miles  traveled. Each of these measures shows consistent levels of service  during this time. For example, reflecting the need for service flexibility in  low population density rural areas, demand response service remained  the most commonly offered form of rural transit service over the 4-year  period. Nationally, demand response accounts for about two-thirds of all  rural transit service provided in 2009 through 2012, according to the rural  NTD, as measured by rural transit-miles driven. For these trips, riders  typically must schedule their trip in advance so the transit agency can  match similar trips together in a vehicle for greater operational efficiency.  While demand response service has remained the most prevalent service  provided, ridership has been the highest on deviated-fixed and fixed route  services from 2009 through 2012. For example, these services accounted  for over half of all rural ridership in 2012, according to the rural NTD.  Figure 3 below summarizes the types of services rural and tribal providers  offered in 2012. Among the rural and tribal transit providers we  interviewed, service offerings varied. While 10 providers said they offered  only one type of service, 20 providers, particularly those serving larger  regions, said they offered multiple forms of transit service. For example,  an official from Marq-Tran, a rural transit provider in the upper peninsula  of Michigan, said it operates fixed routes or deviated fixed routes in the  town of Marquette and other communities—where concentrations of  people need to go to and from similar places—and demand response  service in more rural areas. This official also said that fixed route trips  accounted for the bulk of the system’s ridership.
Rural transit ridership nationwide has increased slightly since 2009.  Nationally, according to data from the rural NTD, ridership increased  about 4 percent from 2009 through 2012. According to officials from 8 of  our 15 selected state transportation agencies, 18 of our 30 selected rural  and tribal transit providers, as well as representatives from the American  Association of State Highway and Transportation Officials, ridership had  increased to some degree in recent years. Another 6 state transportation  agency officials and 5 rural and tribal transit provider officials said  ridership generally had remained steady in their service areas. Of the  officials we interviewed in areas experiencing an increase in ridership, 5  state transportation agencies and 4 rural and tribal transit providers  attributed at least part of the increase to the increasing proportion of  elderly persons in rural areas. According to these officials, the elderly may  be less able to drive personal vehicles or may have fewer nearby family  members able to drive them than in the past.
The rural NTD does not include information on rider demographics or trip  purposes, but national industry associations, 9 of 15 state transportation  agency officials, and 20 of 30 rural and tribal transit provider officials we  interviewed stated that rural transit riders tend to be from transit  dependent populations, which include the elderly, disabled, and low  income people. These three groups can overlap because some elderly  may also be disabled, low income, or both. According to providers we  interviewed, transit dependent populations often use public transportation  to travel to essential services and employment. Of the 30 transit provider  officials we interviewed, 20 identified medical transportation as a primary  trip purpose. For example, officials from the Heart of Texas Council of  Governments, a rural transit provider in Texas, said that a lot of the trips  taken are for medical appointments. Moreover, 11 transit provider officials  identified employment as a primary trip purpose. For example, Roaring  Fork Transit, a rural provider in Colorado, said that 68 percent of its riders  were commuters. These trip purposes are generally consistent with other  research on rural transit trip purposes.
Rural trip lengths can vary greatly because providers operate across  expansive, low population service areas as well as within small rural  towns. Rural and tribal transit providers we interviewed said that trip  lengths can vary from less than 2 miles to over 100 miles. For example,  while one provider in California only offers services within a small  municipality, another provider in South Dakota said that nonemergency  medical passengers may travel up to 3 hours each way to reach their  appointments.
section_title: Operating Costs Are Rising Even with a Newer, More Reliable Fleet
paragraphs: Since 2009, operating costs for providing rural transit have increased.  From 2009 through 2012, rural and tribal transit providers’ operating costs  increased on average by 19 percent in 2012 constant dollars, according  to rural NTD data. Additionally, the average cost per trip increased 15  percent (from $10.08 to $11.56) and cost per mile, by 11 percent (from  $2.31 to $2.57). Furthermore, 15 of 30 rural and tribal transit provider  officials and a national industry association also noted the national trend  of rising operating costs. Overall, 12 of 15 state transportation agency  officials and 26 of 30 rural and tribal transit provider officials we  interviewed identified fuel, wages, or maintenance costs among their  biggest operating cost categories.
Fuel price increases in recent years likely contributed to increases in  operating costs. Twelve of 30 rural and tribal transit provider officials  identified increasing fuel costs as a reason for increasing overall costs.  For example, the Southeast Missouri Transportation System, a regional  rural provider in Missouri, said that the agency’s fuel costs had doubled in  recent years due to rising fuel prices and providing more lengthy trips.  The price of diesel increased by 80 percent and the price of gasoline  more than doubled per gallon from 2009 through 2012, according to  national fuel price indexes (see fig. 4). In contrast to this increase in fuel  prices, 8 providers noted that wages have been fairly consistent or have  gone down in recent years. For example, Amador Transit, a rural transit  provider in California, said that wages had been frozen since 2009.
Operating costs have increased despite recent purchases of new  vehicles. In general, newer fleets have lower maintenance costs and  increased service reliability. According to data from the rural NTD, the  national average vehicle age decreased by almost 7 percent from 2009  through 2012, in part, because rural and tribal transit providers purchased  over 2,000 vehicles in fiscal year 2010 alone, largely with Recovery Act  funds. Specifically, Recovery Act funds accounted for about 60 percent of  rural and tribal transit providers’ capital expenditures and funded $263  million in capital expenditures in fiscal year 2010, the highest level of  capital expenditures in our 4-year review period. Additionally, 9 of 15  state transportation agency officials said that Recovery Act funds helped  them purchase new vehicles. For example, one state transportation  agency official said the agency was able to purchase 311 vehicles for  rural providers with Recovery Act funds. We have previously found that  federal agencies with vehicle fleets that own vehicles with maintenance  costs that exceed the resale value may incur higher overall maintenance  costs and require a larger fleet to accommodate ongoing repairs.  Recovery Act funds used to replace aging fleets may have helped lower  operating costs and increase service reliability for rural and tribal transit  providers as a result.
section_title: Demographic Trends Could Contribute to Future Unmet Need
paragraphs: Officials from roughly one-third of selected state transportation agencies  (5 of 15) and rural and tribal transit providers (11 of 30) stated that unmet  need existed within their service areas during times when transit was not  operating, such as on evenings and weekends. Unmet need may also  occur when transit providers have to deny a trip because, among other  reasons, they have reached their capacity limit. Unmet need in selected  areas may be the result of funding constraints, according to rural and  tribal transit providers we interviewed. For example, officials from  Chickasaw Nation Transportation Services, a tribal transit provider in  Oklahoma, said that some shift workers in their service area could not  use transit to commute to work because of a lack of evening service.  Furthermore, 12 of 30 transit provider officials said that funding levels  make it difficult to meet needs within their service areas. For example,  officials from OATS, a large regional provider in Missouri, said that  funding levels dictate how many demand response trips it can provide,  and the agency has had to turn people away when there is no room in the  schedule for an additional rider. Additionally, one state transportation  agency official said that on average, demand response service is only  available with the state about 2 days a week, in part, because rural transit  agencies cannot afford to provide more.
Looking forward, an aging rural population and efforts to support “aging in  place,” which occurs when elderly persons remain in their communities as  they age, could increase demand for rural transit. National groups have  reported that the average age of rural communities has increased  because the elderly have remained in their homes, while the younger  population has left the area in search of employment. For example, a  provider in North Carolina said that the community’s older adult  population is growing because people are living longer, which has, in turn,  increased their need for assistance. As stated above, the elderly are  already an important rural transit rider group, and these ongoing  demographic changes could increase demand for services. Officials from  2 state transportation agencies and 4 rural transit providers stated that  they expected this growing demand for rural transit services to continue to  increase in the future. For example, a state transportation agency official  in Maine said that the aging population in the state will be a huge  challenge in the future, and the state has had to develop a new statewide  transportation plan to address this need. In 2011, we found that the  transportation needs of older Americans may go unmet, particularly in  rural areas. Furthermore, in 2012 we raised state and local providers’  concerns about how to meet the growing demand for transit dependent  populations in the future given limited available funding.Americans and other transit dependent populations in rural areas have  essential transportation needs, such as a need to get to medical  appointments and shopping, but without funding to cover increasing  service costs, some transit providers indicated they may not be able to  meet all their transportation needs. For example, Butte Silver Bow, a  provider in Montana said that although there is growing need for rural  transit for the elderly, the provider did not have enough resources to offer  sufficient services.
section_title: Selected Providers Face Operational and Funding Challenges and Tribal Transit Funding Changes Have Created Some Uncertainty
subsections: section_title: Providers Identified Operational and Funding Challenges and Suggested Solutions
paragraphs: In providing transit services in rural and tribal areas, rural and tribal transit  providers face an array of challenges. To identify and understand these  challenges, we conducted over 50 interviews with officials from FTA, state  transportation agencies, and rural and tribal transit providers. We  summarized challenges that were consistently identified into two general  categories—operations and funding. While these challenges were  consistently identified in our interviews, the results of our interviews are  not generalizable to all rural and tribal transit providers. Some officials  offered their ideas about possible ways to address some of these  challenges, including actions that providers or FTA could take.
subsections: section_title: Operations
paragraphs: Nearly all rural and tribal transit providers identified challenges related to  their operating environment, coordination with other transportation  services, or activities to comply with federal requirements.
Operating environment: Rural operating environments can create a  wide range of difficulties for rural and tribal transit providers. Table 2  below summarizes the challenges we frequently heard related to  operating in these environments as well as solutions transit providers  have taken to address these challenges.
Coordination: Officials from the majority of state transportation  agencies (12 of 15) and some providers (11 of 30) identified  coordinating transit services as a challenge despite the potential to  enhance their services. In 2012, we found that state and local efforts  to coordinate transportation services—such as coordinating councils,  call centers, and regional planning—can be hindered due to  challenges such as insufficient federal leadership, changes to state  policies, and limited financial resources. In our interviews with rural  and tribal transit providers, officials cited related challenges. For  example, the Navajo Nation extends across parts of three states, but  the Navajo Nation Transit Service sometimes must only use buses  purchased with funds it receives through a state transportation agency  within that state’s boundaries, which creates route problems. In  another situation, three providers explained that their states’ switch to  state-wide brokerages for non-emergency medical transportation  services funded by Medicaid has made it harder to coordinate transit  services because, for example, regional transit systems that had  previously coordinated service directly with one another now must  work through the third party brokerage. Alternatively, one provider in  Washington State explained that coordination was easier because the  state determined that fully funding regional cross-county connectors  with state dollars was a good investment, and these funds helped the  transit providers coordinate with each other. By linking their respective  systems, ridership has exceeded forecasts and helped overcome  service area boundary challenges. Other providers noted that  establishing personal relationships and communication with the  people at other transit providers nearby improved coordination.
Compliance: While the majority of providers we interviewed said  compliance with federal requirements related to operations was not  especially challenging (17 of 30), a number of providers also said  federal requirements or associated FTA oversight reviews could be  streamlined to help reduce the resources that providers must devote  to compliance activities (12 of 30). Additionally, some providers (11 of  30) indicated that collective procurement contracts, in which multiple  transit providers purchase vehicles on the same contract, have made  compliance with federal procurement rules easier and, potentially,  save money. Also, FTA is currently developing final rules related to its  transit asset management (e.g., requiring FTA grantees to develop a  plan and report on the condition of capital assets such as buses) and  public transportation safety programs, following a public comment  period that ended in January 2014.transit providers either were unfamiliar with these pending changes or  indicated that it was too soon to know the likely impact of these new  rules on their operations. Officials for nine state transportation  agencies or providers, however, expressed concern about whether  FTA’s final rules will be scalable for smaller transit systems that may  not have the financial or technical resources to meet elaborate  requirements.
section_title: Funding
paragraphs: Many rural transit providers identified some type of funding challenge.  Broadly, 20 of 30 rural and tribal transit providers we interviewed  indicated that funding was one of their most daunting challenges. Specific  funding challenges included the following.
Availability of capital funding: Eleven of 30 rural and tribal transit  providers identified capital funding as a challenge. These providers  expressed concerns over their ability to afford future vehicle  replacements. As noted above, the Recovery Act helped rural and  tribal transit providers to make substantial vehicle replacements in the  last few years and helped reduce the average age of vehicles in the  national rural and tribal transit vehicle fleet. However, as these  vehicles age—the useful life of rural transit vehicles typically ranges  between 5 and 10 years—there could be a concentration of vehicles  needing replacement at about the same time, in roughly 2018 or so.  Some providers (9 of 30) said that the capital funding program  changes in MAP-21 could lead to less overall funding for rural transit,  particularly noting the changes in FTA’s other programs that fund bus  capital projects. However, recent expenditures on capital projects  from different funding programs suggest that a similar amount may be  available in the current programs. The new Bus and Bus Facilities  program provided about $65 million in both fiscal years 2013 and  2014 to states for rural transit capital needs. In fiscal year 2012, about  $58 million from FTA’s now discontinued capital program was  expended by rural and tribal transit providers.
Obtaining state or local funding: Eighteen of 30 rural and tribal  transit providers emphasized that securing enough state or local  funding for transit can be challenging. As previously discussed, rural  and tribal transit may compete with other needs within a community,  such as public safety, for funding. Constrained state and local budgets  can make securing these funds difficult. Among the providers we  interviewed, approximately half of rural and tribal providers (16 of 30)  said that they face challenges in raising enough state or local funding  to meet FTA local match requirements. Some (7 of 15) of the states  we included in our review provide limited or no state funds for rural  transit, which increases the pressure on rural providers to secure local  funds. Several providers indicated that the match requirement helped  encourage local investments in transit, but noted that it was still  difficult to secure local funds. One provider in North Carolina told us  that securing sufficient local funds to cover increasing or volatile costs  can be difficult since federal and state grants have not increased  commensurately with operating costs. By contrast, some communities  and providers have assured local funding through dedicated  sources—such as dedicated property or fuel taxes—for transit.
Uncertain federal funding: Short-term federal transportation  authorizations and short-term appropriations acts create uncertainty  that can be a challenge for long-term planning and managing cash- flow for states and rural and tribal transit providers. For example,  several rural and tribal transit providers noted that they were hesitant  to expand services or their fleet because of uncertainty in the level of  future federal funding, which, as noted above, is critically important to  many providers. Similarly, officials from the Georgia state  transportation agency noted that partial year appropriations are more  difficult to manage than full-year appropriations because they must  distribute partial year funding to providers multiple times throughout  the year. In our 2013 High Risk update on financing the surface  transportation program, we concluded that Congress and the  administration need to agree on a long-term plan for funding surface  transportation.authorization of MAP-21 poses a challenge for rural and tribal transit  providers.
section_title: The Consequences of Different Funding Levels under MAP-21 for Tribal Transit Program Grantees Are Unclear, but May Include Some Disruptions in Transit Services
paragraphs: The Tribal Transit Program was changed to a largely formula-based  allocation of funds, and FTA expected this change to increase the stability  and reliability of funding for tribal transit providers and thereby to provide  better support for public transportation in tribal areas, the goal of the  program. From fiscal years 2006 through 2012, funds were distributed on  a competitive, discretionary basis to tribal transit providers that applied for  funds. During this period, FTA awarded about 70 grants per year to nearly  200 total tribal transit systems. In any given year, a provider that applied,  and had previously received funds, might or might not have been  awarded funds or the amount awarded might not have been for the  amount requested. According to national stakeholders, FTA officials, and  some tribal transit officials we interviewed, the prior award process  sometimes caused unpredictable funding levels for recipients. As  previously discussed, since the MAP-21 reforms were enacted, program  funding increased to $30 million total, with $25 million to be distributed  through a new formula ($5 million remained for a new discretionary  program). As established by MAP-21, the formula allocates 75 percent of  funds based on vehicle revenue miles. FTA officials explained that the  formula should provide a more predictable source of federal funding  because vehicle revenue miles are a straightforward means to provide  funding in direct proportion to services. Likewise, 4 of 8 tribal transit  officials we spoke with indicated the change to a formula could result in  more stable and predictable funding that better sustains and supports  tribal transit systems.
The change to a largely formula-based program in the Tribal Transit  Program has dramatically altered funding levels for tribal transit providers.  Under the new formula some tribal transit providers received much more  funding and some received much less than they received in previous  years, with increases or decreases of more than 50 percent common. We  analyzed FTA discretionary grant awards from fiscal year 2009 through  2012 and formula grant awards in fiscal year 2013 and 2014. We found  that 83 tribes received at least one grant in each of these two time  frames. Of those 83, 30 tribes’ formula-funding awards were at least 50  percent greater than their prior average discretionary awards. Two tribes  received increases of over 1,000 percent.award reductions of 50 percent or more in average annual funding  compared with what they had received previously in discretionary awards.  According to FTA officials, tribal transit systems that received increased  grant awards generally tended to be larger tribal transit systems, while  those that received decreased grant awards generally were smaller tribal  transit systems. This outcome, in part, reflects the formula’s emphasis on  vehicle revenue miles, which varies significantly given the different size  and scope of services provided by tribal transit systems. For example,  Lummi Transit, a relatively small system in Washington State, provided  about 100,000 vehicle revenue miles of service and was awarded a  discretionary grant of $315,000 in fiscal year 2012. It was awarded about  $70,000 by formula for fiscal year 2014. Under the formula some tribal  systems received very small awards, with two fiscal year 2014 awards of   By contrast, 32 received grant  less than $1,000.received $186 in fiscal year 2014 funding. Conversely, the Chickasaw  Nation Transportation Service, a relatively large system in Oklahoma,  provided about 1.1 million vehicle revenue miles of service and was  award $300,000 in 2012. In fiscal year 2014, it was awarded  approximately $1.2 million by formula. Smaller systems may provide  relatively limited services aimed at essential transportation needs  whereas larger systems may offer more developed and extensive  services. Figure 5 below shows the percentage change in funding levels  tribes received between the two programs by comparing average  discretionary awards received from fiscal years 2009 through 2012 with  average formula awards from fiscal years 2013 through 2014. About half  the tribal transit providers we interviewed indicated they were surprised  by the change in funding their system received under the new formula  and were making adjustments and plans for the increased or decreased  funds.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Secretary of Transportation for  review and comment. The Department of Transportation did not have any  comments on the report.
We are sending copies of this report to the Administrator of FTA, the  Secretary of the Department of Transportation, and interested  Congressional Committees. In addition, the report is available at no  charge on the GAO website at http://www.gao.gov.
If you or any of your staff members have any questions about this report,  please contact me at (202) 512-2834 or wised@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this report. GAO staff who made major  contributions to this report are listed in appendix II.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report addresses the following three objectives:  1.  How does Federal Transit Administration (FTA) fund, oversee,  and otherwise support rural and tribal transit services in the rural  transit program?  2.  What is known about how services, ridership, and costs for rural  and tribal transit have changed since 2009?  3.  What challenges do rural and tribal transit providers face in  providing transit service and what actions could address these  challenges?
To determine how FTA funds, oversees, and otherwise supports rural and  tribal transit services through the rural transit program, we reviewed FTA  circulars, training, guidance materials, and legal decisions to determine its  policy for implementing its rural transit program. Moreover, we reviewed  State Management Plans, which state transportation agencies must  submit to FTA; FTA’s State Management Review workbook and related  materials; and state transportation agency level oversight guidance.  Finally, we interviewed FTA officials from Headquarters and FTA regional  offices in Georgia (IV), Texas (VI), California (IX), and Washington (X) to  discuss FTA’s rural transit program funding and oversight processes as  well as the federal role in rural transit. Regional offices were selected that  provide oversight of and guidance for state transportation agencies that  we visited (see below for details on these site visits).
To determine what is known about how rural transit services, ridership,  and costs have changed since 2009, we analyzed data from the rural  National Transit Database (rural NTD) for fiscal years 2009-2012. We  selected this time frame because 2009 is the first year the data were  sufficiently reliable for our purposes. To conduct this analysis, we first  assessed the appropriateness and sufficiency of the data by determining  the completeness of rural NTD reporting for each year and the  reasonableness of certain measures over the 4 year period as well as by  interviewing FTA officials on their data validation process and state  transportation agency officials on their data collection processes. After  determining that the data were sufficiently reliable at the national level for  our purposes, we analyzed specific measures including: fleet size and  age, type and amount of transit services provided, passenger trips taken,  and operating and capital expenditures by funding source. Our review  included both annual analyses for each year as well as assessing  changes over the 4-year period. We did not analyze NTD data at the  provider level or for tribal grantees specifically due to concerns over data  reliability within smaller subsets of transit provider groups.
To identify the challenges that rural transit providers face and any actions  that could address these challenges, we reviewed relevant academic  literature pertaining to rural and tribal transit in the U.S. and interviewed  two national stakeholder groups—the Community Transportation  Association of America (CTAA) and the American Association of State  Highway and Transportation Officials (AASHTO)—that, respectively, work  closely with rural and transit providers and state transportation agencies.  Literature and interviewees identified some solutions to challenges faced,  and we summarized these challenges. To assess challenges related to  Tribal Transit Program funding, after determining these data were  sufficiently reliable for our purposes, we analyzed FTA award data from  2009 through 2014 to calculate changes in funding levels experienced by  tribal transit providers.
To address all three of our objectives, we conducted interviews with 15  state transportation agencies as well as 30 rural transit providers, 8 of  which were tribal systems. Some of these interviews included site visits  and some were teleconferences. We nonstatistically selected state  transportation agencies to provide a range of the number of rural or tribal  transit providers in the state, total state grant amounts, and FTA regions.  Using these criteria, we selected state transportation agencies in Arizona,  California, Georgia, Oklahoma, Texas, and Washington for site visits and  state transportation agencies in Colorado, Maine, Michigan, Missouri,  Montana, New York, North Carolina, Pennsylvania, and South Dakota for  teleconferences. Once the states were chosen, we selected rural or tribal  transit providers within each state to interview using the following criteria  based on data found in the 2011 NTD: total operational expenditures,  fleet size, and the type of service provided. In addition, for the site visits,  we considered logistical feasibility given the long driving distances  between rural locations. Using these criteria, we selected 15 rural and  tribal providers for site visits and an additional 13 rural and tribal providers  for teleconferences. Finally, we interviewed officials with two tribal transit  providers not in selected states (Idaho and Alaska) based on changes in  funding these tribes received following the MAP-21 reforms. Because we  used a non-generalizable sample of transit providers, findings from these  interviews cannot be used to make inferences about other rural or tribal  transit providers. However, we determined that the selection of these  transit providers was appropriate for our design and objectives and that  the selection would generate valid and reliable evidence to support our  work.
We conducted this performance audit from June 2013 to June 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, the following individuals made  important contributions to this report: Heather MacLeod (Assistant  Director), Russ Burnett, Tom James, Bert Japikse, Delwen Jones, Sarah  Jones, Terence Lam, Jeff Malcolm, Grant Mallie, Josh Ormond, Steve  Rabinowitz, and John Stambaugh.