Public Transportation: Transit Agencies' Actions to Address Increased Ridership Demand and Options to Help Meet Future Demand
Published: 2010-11-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Demand for public transportation in the United States reached record highs in 2008 and rose in the decade prior to 2008. Increased demand for public transportation can create opportunities and challenges for communities working to meet demand, improve service, and maintain transit systems, while operating within budgetary constraints. Transit agencies rely on a variety of funding sources, including federal, state, and local entities, and other sources, such as fares. The U.S. Department of Transportation's (DOT) Federal Transit Administration administers federal grant programs transit agencies can use to help meet ridership demand, such as for purchasing buses and modernizing rail systems. As requested, this report addresses (1) trends in transit ridership and services from 1998 through 2008, (2) challenges, if any, transit agencies faced during this period to address increased ridership and actions they took in response, and (3) factors that might affect future ridership demand and the ability of transit agencies to meet that demand. GAO analyzed data from the National Transit Database on transit ridership (i.e., passenger miles traveled), service (i.e., vehicle revenue miles), costs, and revenues; conducted interviews with 15 transit agencies operating heavy rail, light rail, and bus; interviewed federal officials and others; and reviewed prior GAO recommendations. DOT generally agreed with the report and provided technical comments.
section_title: What GAO Found
paragraphs: From 1998 through 2008, the most recent year for which complete data are available, transit ridership grew at a faster rate than transit service. Heavy rail experienced the greatest difference between growth in ridership and service compared with light rail or bus--heavy rail ridership outpaced the provision of service by about 18 percentage points during this period. Transit agency costs and revenues also increased overall from 1998 through 2008, but the relative shares of revenue sources changed. The share of federal funding remained steady while increases in state and local funding shares offset declines in the share of funding from other sources, such as passenger fares. In addition, in 1998 the federal government was the largest source of capital investment in transit; by 2008 local government provided the largest share. From 1998 through 2008, transit agencies faced challenges and took actions to address increased ridership demand. Specifically, agencies faced capacity constraints, including limitations of their vehicles (e.g., too few rail cars and buses) and their system infrastructure (e.g., platforms that were too short to accommodate longer trains). Transit agencies took steps to respond to increased demand, including: adjusting their service by modifying routes, fares, and hours of service; making new system investments, such as expanding fleets and extending platforms; and maintaining and updating existing infrastructure and vehicles. For example, New York City transit officials improved the signaling in their heavy rail system to increase frequency of service. Agencies experienced varying degrees of success in responding to increases in demand--some reported accommodating increases in ridership while others' success was limited. For example, a light rail agency reported that its service area did not keep pace with real estate development, and a bus agency turned away riders. Population growth and other factors are likely to increase future ridership demand, but cost increases and fiscal uncertainties could limit transit agencies' ability to meet this demand. Transit agency officials expressed concern about meeting future increases in ridership due to increased costs of expanding transit systems and maintaining aging infrastructure. Also, transit agencies' funding has been strained since 2008, as state and local funding has decreased with the economic downturn. This is significant because transit agencies previously relied on increases in state and local funding shares to offset decreases in other sources. Given this environment, along with fiscal difficulties facing the nation, it will be a challenge to effectively focus limited resources to maximize the positive effect on transit agencies' services. GAO and others have made recommendations to DOT, Congress, and others on options that could more effectively deliver federal surface transportation programs and help transit agencies address growing ridership. These options are under consideration and include: focusing resources on state of good repair, streamlining the delivery of federal grant programs, and incorporating performance accountability measures to maximize the impact of investments.

section_title: Letter
paragraphs: Demand for public transportation in the United States reached record  highs in 2008 and rose in the decade prior to 2008. From 1998 through  2008, the growth in public transportation ridership exceeded overall  population growth and outpaced the growth of vehicle miles traveled on  the nation’s highways. While transit ridership has decreased since 2008, in  part because of high unemployment and other factors related to the  recession, population and demographic trends indicate that demand for  public transit will grow in the years to come. Increased demand for public  transportation can create opportunities and challenges for communities  working to accommodate demand, improve services, and properly  maintain their systems within budgetary constraints.
As demand for transit services has grown over time, so has the federal  government’s overall investment in public transportation. Transit agencies  rely on federal funding to meet a substantial amount of their capital  investment and other needs. A variety of other funding sources also  support the provision of transit services, including assistance from state  and local entities, and sources such as passenger fares. To assist transit  agencies, the Federal Transit Administration (FTA) within the Department  of Transportation (DOT) administers a variety of federal grant programs  that can be used to help meet ridership demand, such as grants for  purchasing buses and modernizing rail systems. The funding for these  programs is currently authorized by an extension to the Safe, Accountable,  Flexible, Efficient Transportation Equity Act: A Legacy for Users  (SAFETEA-LU), which expired in September 2009 and is due to be  reauthorized. In preparation for reauthorization, you asked us to review  how transit agencies are responding to increased passenger demand.  Accordingly, this report addresses (1) trends in transit ridership and  services from 1998 through 2008; (2) challenges, if any, that transit  agencies faced during this period to address increased ridership and  actions they took in response; and (3) factors that might affect future  ridership demand and the ability of transit agencies to meet that demand.  Unless otherwise noted, for the purposes of this review, we have focused  on transit agencies that operate heavy rail, light rail, and bus services.  These modes represent approximately 92 percent of the overall public  transit market.
To describe the trends in the transit industry’s ridership, services, costs,  and revenues from 1998 through 2008, we examined data from FTA’s  National Transit Database (NTD). We examined NTD data for all  reporting agencies from 1998 through 2008 and conducted more detailed  analyses by mode (for agencies operating heavy rail, light rail, and bus  services). We used NTD data to determine trends in the transit indust ridership (measured by passenger miles traveled (PMT)—or the  cumulative sum of the distances ridden by each passenger), supply of  services (measured by vehicle revenue miles (VRM)—that is, miles a  transit vehicle travels while carrying passengers), costs, and revenues. We  chose to analyze NTD data from 1998 through 2008 because they prov ided  a comprehensive and detailed dataset containing the variables we included in the analysis. Data from 2008 were the most current available data on  these variables when we conducted our review. In reviewing NTD data, we  determined that they were reliable for our purposes. Appendix I cont ains a  more detailed discussion of our data reliability assessment. To identify  ry’s  challenges transit agencies faced and actions they took to address  increased ridership, we conducted semistructured interviews with off from 15 selected transit agencies in urbanized areas. selection of these transit agencies on the type of transportation services provided (heavy rail, light rail, or bus), growth in passenger trips from  1998 through 2008, geographic dispersion, and size. Of the 15 selected  transit agencies, we visited three (one with each type of service—heavy  rail, light rail, and bus) to conduct in-person interviews with  representatives of the transit agencies, local governments, metropolitan planning organizations, the business community, advocacy groups, and  others. We conducted in-depth telephone interviews with officials of the  remaining 12 transit agencies. To identify what factors might affect future ridership demand and the ability of transit agencies to meet that demand, we reviewed relevant literature and interviewed transit agency an officials, transportation researchers, and industry and advocacy groups Appendix I contains a more detailed discussion of our objectives, scop and methodology.  d FTA  .  e,  We conducted this performance audit from December 2009 through  November 2010 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform th audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. W believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: contain 50,000 or more people. time in 28 years, in part, due to the downturn in the economy and high gasoline prices, before beginning to grow again in 2009.
A variety of factors can affect the demand for public transit services,  including:    Population and demographics. According to the U.S. Census Bureau,  from 2000 through 2009, the U.S. population grew by an estimated 9  percent, reaching more than 300 million. Longer life spans, a stable f rate, and immigration are among the contributing factors to this growth.  The population aged 65 and over is estimated to have reached 40 million  this year and this number is expected to continue growing as “baby  boomers” age. During the past decade, the total fertility rate has rem stable, while the foreign-born population has increased due to  immigration. In addition, in the past century, metropolitan areas, including central cities and suburbs, have experienced significant growth in  population, with city suburbs growing more rapidly than central cities. In2009, an estimated 84 percent of the U.S. population lived in metropolitan  areas as population, including increases in the population aged 65 and over, can  increase the need for transportation options, including demand for public  transit.   compared with only 69 percent in 1970. Increases in the U.S.
Employment and the economy. Similarly, employment rates and the stat of the economy can affect the travel choices of Americans and their public transit. During the past decade, there were two economic  recessions beginning in 2001 and 2007, respectively. The 2007 recession  was accompanied by high levels of unemployment and subsequent  decreases in transit ridership. For example, according to the U.S. Bureauof Labor Statistics, during the 2007 recession, unemployment rose from 5  percent in January 2008 to 10.1 percent in October 2009, and has only  edged down slightly to 9.6 p unemployment has been accompanied by a decrease in transit ridership,  with ridership decreasing by about 4 percent in 2009 and about 3 percent  in the first quarter of 2010.  ercent by September 2010. This increase in    Gasoline prices. The public’s reaction to increases in gasoline prices can  also affect the demand for public transit. During the last decade, gasoline  prices increased dramatically before falling again. After the average price  of gasoline peaked at more than $4 per gallon in June and July of 2008, t he  price began to rapidly drop. The average price of gasoline for 2009 was  $2.35 per gallon as compared with $3.27 for 2008. Following the increa gasoline prices in 2008, transi t ridership reached record highs, before  eventually declining in 2009.
Federal, state, and local investment in transit has grown over the year resulting in the expansion of the nation’s public transit systems. FTA  works in partnership with states and local grant recipients, such as transit  agencies, to administer federal transit programs, and to provide financial,  technical, and other assistance. Transit agencies also rely on a variety of  other funding sources to help provide service, including assistance from  state and local entities, and other sources such as passenger fares. State  and local governments are ultimately responsible for executing most  federal transit programs by matching and distributing federal funding and  by planning, selecting, and supervising infrastructure projects in  accordance with federal requirements. In addition, in some cases, financial  assistance programs administered by the Federal Highway Administration  (FHWA), or jointly administered by FHWA and FTA, can also be used to  support transit agencies. For example, the Congestion Mitigation and Air  Quality Improvement Program (CMAQ), which is jointly administered by  FHWA and FTA, provides assistance to states for eligible transportation  projects or programs that improve air quality and reduce congestion.  States also have flexibility to transfer a limited amount of funds from other  highway programs to assist transit programs, as in the case of CMAQ  funds. The funding for these programs is authorized by SAFETEA-LU,  which was enacted in August 2005 and expired in September 2009. Wh ile  it has yet to be reauthorized, SAFETEA-LU has been extended seve times and the most recent extension will expire on December 31, 2010.  Table 1 summarizes select federal transit and transit-related grant  programs.
section_title: Transit Ri Grew at a Faster Rate Than Service and Funding Sources Changed
subsections: section_title: Transit Ridership Grew at a Faster Rate Than Service from 1998 through 2008
paragraphs: From 1998 through 2008, transit ridership for agencies offering heavy rai light rail, and bus services grew more than 28 percent. During the same  period, transit service grew approximately 20 percent.
subsections: section_title: Transit Ridership Increased by Over 28 Percent
paragraphs: Transit ridership increased overall by over 28 percent from 1998 through  2008, as measured by passenger miles traveled (PMT).  By mode, light rail  ridership grew at a faster rate than heavy rail or bus. The high ridership  growth for light rail may reflect the increase in the number of light rail  systems in operation during the time period. As shown in figure 1, light rail  ridership increased by nearly 87 percent (from 1.12 billion to 2.08 billion  passenger miles), heavy rail ridership increased by about 37 percent (from  12.3 billion to 16.8 billion passenger miles), and bus ridership increased by  about 19 percent (from 17.9 billion to 21.2 billion passenger miles).
According to officials at the transit agencies we contacted, a number of  factors contributed to ridership increases from 1998 through 2008,  including population increases, periods of growth in employment, and  increases in gasoline and parking prices. In addition, some agency officials  reported taking actions they believe attracted new riders, such as  expanding and enhancing their systems, adding new service, forming local  partnerships, and launching marketing campaigns to increase ridership.  For example, the Ann Arbor Transportation Authority, which provides bus  service to Ann Arbor, Michigan, and surrounding areas, entered into  partnerships with employers, including the University of Michigan, to  subsidize students’ and employees’ transit costs. According to officials  from the Ann Arbor Transportation Authority, the University of Michigan,  and representatives from the business community, these partnerships  helped to generate significant ridership growth in the city of Ann Arbor.
section_title: Transit Service Increased by About 20 Percent
paragraphs: The availability of transit service also increased steadily for heavy rail,  light rail, and bus agencies, with vehicle revenue miles (VRM) increasing  by approximately 20 percent from 1998 through 2008. Consistent with  trends in ridership by mode, the supply of light rail service grew faster  than heavy rail or bus services, which may reflect, in part, the increase in  the number of light rail systems during the time period. As shown in figure  2, VRMs increased by 104 percent for light rail (from 42 million to 86  million miles), as compared with about 19 percent for heavy rail (from 549  million to 655 million miles) and 18 percent for agencies providing bus  ing bus  services (from 1.652 billion to 1.956 billion miles).  services (from 1.652 billion to 1.956 billion miles).
The relationship between transit ridership and service varied by mode. For  example, heavy rail experienced the greatest discrepancy in ridership and  supply of services from 1998 through 2008 compared with light rail or bus.
Ridership outpaced the provision of heavy rail service by about 18  percentage points (specifically, ridership for heavy rail increased by about  37 percent while the provision of heavy rail service increased by about 19  percent). For agencies offering bus services, ridership generally seemed to  keep pace with the supply of services during the same period (19 percent  as compared with 18 percent growth). Transit agency officials with whom  we spoke noted that bus systems can typically respond more quickly to  increases in ridership demand, while heavy rail agencies face more  challenges due to the capital-intensive nature of their systems and the  financial investment required to increase heavy rail service. However, the  availability of light rail service actually grew faster than ridership demand,  partly due to light rail systems expanding during this time period.  Specifically, light rail service grew by over 100 percent while ridership  grew by about 87 percent from 1998 through 2008.
For passengers, the disparity between ridership growth and service points  to several potential effects. Passengers using transit systems with enough  capacity to accommodate increases in ridership may experience a better  utilized system. However, they may also experience a system that, while  better utilized, has become more crowded. For passengers using transit  systems without the capacity to accommodate increases in ridership, they  may have experienced an overcrowded system that left passengers on the  platform or curb during periods of high demand. According to officials at  the transit agencies we contacted, agencies experienced varying degrees  of success in responding to ridership growth from 1998 through 2008.
section_title: Transit Agencies’ Costs and Revenues Increased from 1998 through 2008, and the Share of Funding Sources Changed
paragraphs: While providing additional service, transit agency costs, including  operating and capital expenses, increased from 1998 through 2008, as did  transit agency revenues. However, while revenues increased overall, the  share of funding sources changed; the share of federal funding remained  steady while increases in state and local funding shares essentially offset  declines in the share of funding from other sources, such as passenger  fares.
subsections: section_title: Costs and Revenues
paragraphs: Increases in ridership and service from 1998 through 2008 were  accompanied by increases in overall costs to provide transit service. Total  costs, which include operating and capital expenses, for transit agencies  offering heavy rail, light rail, and bus services increased by about 46  percent. While both capital and operating expenses grew, capital expenses  grew at a faster rate than operating expenses for agencies during this  period. Specifically, capital expenses grew by about 68 percent while  operating expenses increased by over 36 percent from 1998 to 2008. The  increase in capital expenses reflects, in part, the financial investment in  heavy rail and light rail systems. The increase in operating costs was most  noticeable for light rail systems likely due, in part, to increases in light rail  service over the time period studied.
Similarly, transit agency revenues increased by more than 48 percent  from 1998 through 2008. Revenue sources include federal, state, local,  and other funding sources, such as passenger fares. While overall transit  revenues increased, the share of funding sources changed. As shown in  figure 3, as a percentage of total revenues, the share of federal funding  remained steady at about 17 percent. The shares of state and local funding  increased (from about 18 to 22 percent and 32 to 35 percent, respectively),  while the share of funds from other sources, such as passenger fares,  decreased (from 34 percent to 26 percent). Increases in the share of state  and local funding essentially offset declines in the share of funding from  other nonfederal funding sources, such as passenger fares, from 1998  through 2008. For example, those transit systems that had to add service  to accommodate growing ridership during this period, and finance the  associated costs, likely used state and local funding to supplement  decreases in other funding sources, including passenger fares. Since fares  collected from passengers typically do not cover the full cost of their  transit trips, these agencies essentially experienced a widening gap  between passenger fare revenue and costs as ridership increased. This gap  can significantly limit the ability of transit agencies to increase transit  service in response to rising demand. In almost all cases, expanding transit  service would require securing additional funding to bridge this gap.
Upon closer examination of the components of transit funding sources,  the shares of revenue sources for operating and capital funding differ  slightly from the shares for total revenues mentioned previously. For  example:    Operating funding. Fare revenues were the largest source of operating  funding in 1998 and 2008; however, as shown in figure 4, the share of fare  revenues decreased considerably as a percentage of operating funding  during this time period (from about 38 percent to 31 percent). At the same  time, as a percentage of operating funding, local government contributions  for operating expenses remained relatively steady (from about 29 percent  to 30 percent), contributions of federal and state funding increased (from  4 to 7 percent and 20 to 26 percent, respectively), and other funding  sources, such as subsidies from other sectors of operations, decreased  (from 9 percent to 6 percent). According to transit agency officials at a  heavy rail agency with whom we spoke, because public transit riders do  not pay for the full cost of their rides through passenger fares and  revenues have not kept pace with operating costs, increased ridership has  strained their transit system’s operating budget.
Capital funding. In 1998 the federal government was the largest source of  capital investment in transit, but by 2008 this was no longer the case.  Instead, local government replaced the federal government as the largest  source. As shown in figure 5, from 1998 through 2008, as a percentage of  capital funding, the contribution of the federal government fell (from  about 50 percent to 40 percent) while the contributions of state  governments remained relatively stable (at about 12 percent), and local  government funding increased (from 39 percent to 47 percent).
section_title: Agencies Faced Challenges and Responded by Adjusting Service, Making New System Investments, and Maintaining Their Existing Systems
subsections: section_title: Agencies Faced Capacity Constraints and Other Challenges Related to Their Vehicles and Infrastructure
paragraphs: From 1998 through 2008, transit agencies faced challenges when  addressing increased ridership demand. More specifically, agencies faced  capacity constraints related to limitations of their vehicles (e.g., too few  rail cars and buses) and system infrastructure (e.g., platforms that were  too short to accommodate longer trains). In particular, several of the  heavy rail, light rail, and bus agencies we interviewed experienced  capacity constraints within existing vehicles as well as shortages of rail  cars and buses. For example, an official with the Ann Arbor  Transportation Authority said the agency did not always have the bus  capacity to accommodate increased demand, sometimes resulting in  overcrowding on buses. In San Francisco, the heavy rail system’s  serviceable rail cars were in such high demand that they did not always  have enough time to undergo sufficient maintenance, which officials said  led to problems with vehicle reliability and a shortage of vehicles. TriMet,  which provides light rail services to the metropolitan area of Portland,  Oregon, was sometimes unable to meet demand for its services due to  vehicle shortages, such as prior to opening a new rail line and new rail  cars becoming available. Agency officials said that long lead times for  vehicle procurements limited their ability to respond to growing demand  in a timely manner, but that they eventually were able to procure  additional rail cars to satisfy passenger demand on the new line. Rail car  procurements generally take years to complete. We have reported that  time frames of 3 to 4 years are considered quick for complete rail car  procurements, and many take much longer.
In addition to vehicle capacity constraints, transit agencies also faced  infrastructure-related capacity challenges when addressing increased  ridership demand from 1998 through 2008. Most of the agencies that  reported infrastructure-related challenges from 1998 through 2008  provided heavy or light rail services. Infrastructure constraints, such as  those related to stations, tracks, and other facilities, posed challenges to  transit agencies. For example, from 1998 through 2008:    Chicago’s heavy rail system faced challenges related to its platform  capacity. Due to the platform limitations of certain heavy rail stations,  Chicago Transit Authority officials could only operate six-car trains where  eight-car trains would have reduced congestion. These stations’ platforms  were not long enough to accommodate passengers loading and unloading  from eight-car trains. As a result of capacity constraints at these stations,  the agency could not always meet passenger demand or allow all  passengers to board.
Los Angeles County’s heavy rail system ran out of parking spaces  immediately after opening parking lots at the northern end of one of its rail  lines. Difficulty securing additional funds for parking structures has  limited the agency’s ability to meet parking demand.
Although Washington, D.C.’s, heavy rail stations were designed to  accommodate eight-car trains, associated power systems initially were  only equipped to handle four- and six-car trains. Therefore, upgrading the  power system components so they could accommodate eight-car trains  was a significant challenge that agency officials addressed during the 10- year period in which they worked to expand the system’s overall capacity.
Table 2 summarizes these and other examples of infrastructure-related  challenges that heavy rail and light rail agencies faced when addressing  increased passenger demand from 1998 through 2008.
During this time period, agencies also faced challenges related to  maintaining aging infrastructure. Heavy rail agencies in particular have  faced challenges related to aging infrastructure because their aging assets  have increasingly needed capital reinvestments, even as ridership has  grown. For example, officials from the Washington Metropolitan Area  Transit Authority said the agency needed to shift its focus from new  construction to maintenance during this time period, yet securing funds to  maintain existing assets proved more difficult than securing funds for new  projects. In addition, balancing scheduled maintenance with expanding  hours of service also proved challenging. Light rail officials, such as those  at Portland’s TriMet, said they recognize that managing aging  infrastructure will take significantly more effort in the future. Currently,  the oldest section of TriMet’s system is only 24 years old, which is  relatively new in comparison with some of the nation’s oldest systems;  however, agency officials have already begun capacity planning in  preparation for the challenges to come during the next 20 years.
Many of the transit agencies we interviewed faced budget and funding  constraints. In some cases, these constraints limited their ability to  increase services to accommodate additional riders. For example, from  1998 through 2008:    Balancing a constrained operating budget with increased demand for  services posed a challenge for Chicago’s heavy rail system. During this  time period, the agency’s funding sources—including state capital bonds  and general revenues—did not grow enough to fully cover the agency’s  maintenance needs and personnel costs, according to transit officials.  Because public transit riders typically do not pay for the full cost of their  rides, increasing ridership further stressed the Chicago system’s operating  budget, according to agency officials. In response, agency officials said  they deferred maintenance, which in turn affected the system’s ability to  meet demand due to service delays and other maintenance-related  problems.
Merced County Transit, which provides bus services to Merced County in  California’s Central Valley, tried to improve service frequencies so that  buses could run every 15 minutes instead of every hour. However, agency  officials found it very difficult to improve their services and they struggled  to retain local transit funds amidst competing funding needs elsewhere in  the county. Agency officials ultimately compromised on their goal of  increasing service to every 15 minutes and increased service instead to  every 30 minutes. Since 2008, available funds have decreased as sales tax  revenues and real estate values have plunged, causing transit officials to  reduce or eliminate routes and reduce staff positions.
Dallas Area Rapid Transit, which provides light rail services to the greater  Dallas, Texas, area, is funded by a 1-cent local sales tax, which generates  revenues annually. From 2001 through 2004, these sales tax revenues  declined substantially, according to transit agency officials, requiring the  agency to reduce its capital expansion program, use reserve funds to cover  budget short falls, and make operational adjustments.
As a result of transit agencies’ challenges meeting ridership demand from  1998 through 2008, some transit agencies faced the added challenge of  customer dissatisfaction. For example, as a result of increased crowding  on trains, customers developed less favorable opinions of Chicago’s heavy  rail system and customer complaints increased, according to transit  agency officials. In Ann Arbor, Michigan, transit riders were not always  able to board buses during peak ridership periods and ridership studies  showed that people continue to want more frequent service on some  routes.
section_title: Agencies Addressed Increased Ridership Demand by Adjusting Service, Making New System Investments, and Maintaining Their Existing Systems
paragraphs: To meet increased ridership demand from 1998 through 2008, transit  agencies took various steps to increase the capacity and efficiency of their  existing systems. These actions included making service adjustments and  new system investments, in addition to maintaining their existing systems.  For example, from 1998 through 2008:    Service adjustments, such as extending service hours and adjusting routes,  helped agencies make better use of available resources and target areas of  high demand. For example, the light rail agency in Sacramento, California,  extended service hours during a period of high demand in 2008 when an  interstate highway in the area was under construction. During this time  period, which coincided with an increase in gas prices, there was standing  room only on the line that serviced that particular area and some riders  could not get onto a train. In response, transit officials ran longer trains  and extended service hours, thereby creating additional capacity and  accommodating the increase in demand.
New system investments, such as expanding vehicle fleets, extending  platforms, building new stations, and adding parking, allowed agencies to  accommodate more riders and improve their operations and customer  service. For example, in response to challenges posed by limited space at  maintenance facilities, San Francisco’s heavy rail agency expanded its  maintenance facilities, which allowed the transit agency to increase its  maintenance operations and, ultimately, increase the availability of  serviceable rail cars.
Maintaining existing systems, including vehicles and infrastructure,  allowed agencies to accommodate more riders, increase the frequency of  their service, and come into compliance with laws and regulations, such as  the Americans with Disabilities Act of 1990, as amended. For example,  transit officials at the MTA in New York City, New York, said the agency  improved the heavy rail system’s signaling systems in order to sustain  current levels of service and also enable the agency to increase frequency  of service. Officials explained that the improved signaling system will  increase capacity by allowing trains to be spaced more closely.
Table 3 summarizes other examples of actions that heavy rail, light rail,  and bus agencies took to address growing ridership demand from 1998  through 2008.
section_title: Agencies Experienced Varying Degrees of Success in Meeting Increased Ridership Demand
paragraphs: Transit agencies experienced varying degrees of success in meeting  increased ridership demand from 1998 through 2008. Most heavy rail  agency officials we spoke with said they generally met growing demand,  and one reported partial success in meeting demand. For example, transit  agency officials in Washington, D.C., reported that although heavy rail  services generally met rising demand, the agency faced challenges  accommodating high demand while working to expand its system and  maintain its aging assets. Community and business groups added they  would like to see the city’s heavy rail capacity increased to help relieve  congestion in the system and increase the reliability of service.
Light rail agency officials with whom we spoke were divided about the  extent to which their agencies successfully met ridership demand from  1998 through 2008. Several said they were generally successful in meeting  growing demand. However, two said they either barely or inadequately  met demand. For example, Sacramento’s light rail service provider  reported that the agency’s service area did not keep up with the area’s  growing population and housing boom from 1998 through 2008. Officials  from a local agency and community group said the transit agency met  demand within the city of Sacramento fairly well, and the system had  enough capacity to meet those riders’ needs. However, they added that as  the area developed housing and employment centers outside the  downtown area, the agency was not always able to meet the needs of  commuters from outlying or newer-growth areas. Nor was the agency  always able to meet the needs of potential riders who chose to drive rather  than use public transit due to inconvenient transfers or a shortage of  transit services, according to the community group official.
All five bus agencies we interviewed had limited success in meeting  ridership demand. Some agencies could not add the services needed to  accommodate increasing demand. Others had to turn away riders, while  others reported that their ability to expand to meet the needs of emerging  markets was limited. For example, a transit official from Ann Arbor’s bus  agency said the agency was generally successful in meeting demand within  the city of Ann Arbor, but was not as successful in surrounding  communities due to funding constraints. Representatives of a local  community group and intergovernmental agency added that the agency  turned away riders during periods of high demand and service on many  routes was too infrequent. However, local officials, as well as community  and business groups, acknowledged the efforts the agency has made to  respond to increased ridership demand amidst funding and resource  challenges.
section_title: Demographic Changes Point to Future Increases in Ridership Demand, but Cost Increases and Fiscal Uncertainties May Limit Agencies’ Ability to Meet Demand
subsections: section_title: Population Increases and Other Demographic Trends May Increase Future Demand
paragraphs: Estimates for future population growth and other demographic trends  point to potential increases in future ridership demand. According to U.S.  Census Bureau projections, the U.S. population will increase by 20.4  percent from 2010 to 2030. Demographic changes point to increases in  future demand as well.
Trends in growing redevelopment and increased densities in the urban  core, as well as continued growth of housing and employment centers  near outlying suburban transit hubs, are expected to contribute to future  increases in ridership demand. Additionally, increased focus on transit- oriented development around transit stations in both urban and suburban  areas may also increase future ridership demand. For example, the  regional planning agency in the San Francisco Bay Area anticipates a  substantial amount of continued growth and redevelopment of San  Francisco’s urban core. Transit agency officials also noted that while San  Francisco used to be the principal destination for employers, areas outside  of the city, such as Walnut Creek, Dublin, Pleasanton, and San Jose, are  increasingly attracting employment centers, which has increased traffic on  reverse commute routes. Furthermore, the transit agency is collaborating  with others to encourage transit-oriented developments near transit  stations. Property values have held steady near transit stations as  compared with declines in property values in other areas. For example,  according to transit agency officials, to date, property values in the city of  San Francisco were barely impacted by the housing downturn, whereas  areas further out with less access to transit were impacted more greatly,  indicating that people are starting to see the value of living near public  transit.
Increases in the transportation-disadvantaged populations—those who  must rely on public transit for their travel—may also increase future  ridership demand. For example, according to the U.S. Census Bureau, in  2030, baby boomers aged 65 and older will comprise nearly 20 percent of  all U.S. residents. Transit officials that we spoke with said that individuals  may become increasingly transit-dependent as they age. Transit officials in  Ithaca, New York, anticipate a peak in their senior population starting  around 2020 and expect that as people retire, they may stop driving  personal vehicles, which may contribute to increases in transit ridership.  Also, according to transit officials in Portland, Oregon, the prominence of  the aging demographic will become more noticeable as the baby boomers  age “in place” (i.e., remain in the Portland metropolitan area). Over time,  officials said that accommodating the aging population on bus and light  rail services and providing transit services that are accessible,  comfortable, and safe will be challenging but critical. However, officials  added that accommodating the expected increase in seniors is an  important consideration for transit agencies, especially because  complementary paratransit service, the alternative for individuals unable  to use fixed-route transit service, is more expensive to provide per rider.  We previously reported that it is difficult for transit agencies to balance  providing complementary paratransit service with the increased cost of  accommodating a growing ridership. Additionally, increased densities in  urban areas may increase transit-dependent populations, where transit is a  mode of necessity for many city residents. In Dallas, Texas, and  Frederick, Maryland, transit agency officials also noted increases in the  low-income population, who rely upon transit to get to their jobs primarily  within the service sector, which they anticipate will increase transit  ridership demand in these areas.
Transit agency officials and others with whom we spoke also identified an  expectation that discretionary riders will impact future increases in  ridership demand. Specifically, they expect that a younger demographic  will migrate into cities and increasingly use transit, consistent with their  quality-of-life preferences and environmental concerns. For example, Ann  Arbor business community representatives told us that an increasingly  younger workforce commutes from nearby communities where housing is  cheaper and prefers to take transit. According to transit agency officials in  Portland, Oregon, there is a growing younger population with certain  lifestyle expectations, including the ability to walk, bike, or take transit to  meet most of their transportation needs.
Although transit agency officials anticipate future ridership increases, the  extent of this increase is sometimes difficult to determine. We previously  reported that some metropolitan planning organizations face challenges in  travel demand forecasting, including a lack of technical capacity and data  necessary to conduct complex transportation modeling required to meet  their planning needs. Some transit agency officials with whom we spoke  also noted that a lack of technical expertise and resources needed to  accurately forecast future ridership growth is a challenge. According to  FTA officials, difficulties transit agencies may have in assessing the  demand for existing or new services could affect their ability to meet  future demand. Specifically, if future ridership demand is not accurately  projected, transit agencies may not make the best investment of their  resources.
section_title: Agencies’ Increased Costs and Fiscal Uncertainties May Limit Their Ability to Meet Future Increases in Ridership Demand
paragraphs: Transit agency officials expressed concern about their agencies’ abilities  to meet future increases in ridership demand for two principal reasons:  increased costs and various fiscal uncertainties.
subsections: section_title: Increased Costs
paragraphs: Future costs for transit agencies will increase because agencies must  continue to support system expansions and add capacity to accommodate  for increases in ridership demand, as well as address additional expenses  associated with maintaining a state of good repair for aging infrastructure.  According to FTA, aging capital assets drive increasing maintenance costs  and limit the ability to expand system capacity at a time of high demand.  FTA has also reported that roughly one-third (29 percent) of all transit  assets are in poor or marginal condition, implying that these assets are  near or have already exceeded their expected useful life and need  significant capital reinvestment for rehabilitation or replacement. Based  on FTA’s most recent estimates, $77.7 billion is needed to bring all the  nation’s transit systems into a state of good repair. In addition, an annual  average of $14.4 billion would be required to maintain the systems.
Officials from heavy rail and light rail agencies with whom we spoke in  particular said they anticipate facing increasingly difficult challenges  related to maintaining a state of good repair and operating their systems as  they continue to age. For example, in Chicago, increasing ridership on the  heavy rail transit system placed a significant amount of stress on the  agency’s operating budget. As a result, the agency deferred maintenance,  which in turn impacted its ability to meet demand due to service delays  and other maintenance-related problems on the aging system. Since 2008,  challenges related to the agency’s operating budget have persisted, and,  starting in February 2010, the agency had to implement $100 million in  service cuts to help balance its budget. Also, officials from the heavy rail  agency in Washington, D.C., said the challenge of maintaining and  repairing their aging system increased from 1998 through 2008, and they  expect this trend to continue. Washington, D.C., transit officials said that  before 1998 the agency focused on constructing and expanding a new  system. In 1998, the system’s 103 miles of track had not been completely  built, but the oldest part of the system was only 22 years old. However, by  2008, the oldest portion of the system was 32 years old and officials said  they needed to devote significant resources to maintaining the system.
As compared with the majority of the large heavy rail systems, the  infrastructures of light rail systems are relatively newer. For example, the  oldest section of Portland, Oregon’s, light rail system is 24 years old, as  compared with the heavy rail systems in Chicago and New York which are  over 100 years old. However, although officials at Portland’s transit agency  said they have a robust capital maintenance program, they also said that  without an influx of American Recovery and Reinvestment Act of 2009  (Recovery Act) funding in 2009, which the agency specifically targeted to  help reduce a backlog of systems and vehicle maintenance, the transit  agency would have fallen further behind in its maintenance needs. For NJ  Transit, the light rail extension of the Newark line was financially  challenging because of the line’s aging infrastructure. In order to extend  the line, the agency had to upgrade the entire track and signaling system,  while undergoing other maintenance-related expenses such as the  maintenance and rehabilitation of transit stations and vehicles, as well as  maintaining a general state of good repair of the system as a whole.
Further, transit agency officials anticipated that increases in the costs  associated with providing paratransit services necessitated by projected  demographic changes, such as increases in the transit-dependent  population, would be a challenge looking ahead.
section_title: Fiscal Uncertainties
paragraphs: Due to operating deficits that states and localities currently face, state and  local governments may not be able to continue their past level of support  which may ultimately limit transit agencies’ ability to meet future  increases in ridership demand. Officials from the agencies with whom we  spoke said that since 2008, the economic downturn has put a strain on all  sources of funding for transit agencies, particularly state and local sources  of funding. We have reported that states and localities face near-term  budget and long-term fiscal challenges that will grow over time. States’  revenue shortfalls have been cushioned by the temporary infusion of  Recovery Act funds. For example, we found that officials in local  governments used Recovery Act funds to maintain services, retain staff  positions, or begin infrastructure and public works projects that otherwise  would have been delayed or canceled. However, local government officials  also reported they experienced revenue declines and budget gaps even  after incorporating Recovery Act funds in their budgets. Officials at some  localities reported that while these funds have helped to preserve services,  they still faced budget deficits for the remainder of fiscal year 2010 and the  next fiscal year. We also previously reported that state and local  governments face increasing fiscal challenges in the next 50 years and  these pressures have implications for federal programs. For example,  estimates of the costs to repair, replace, or upgrade aging infrastructure so  that it can safely, efficiently, and reliably meet current demands, as well as  expand capacity to meet increasing demands, top hundreds of billions of  dollars. The nation’s transit infrastructure is owned, funded, and operated  by all levels of government. In this environment, all levels of government  will compete for resources to meet the demand for infrastructure  improvements, which may exceed what the nation can afford.
As previously discussed, from 1998 through 2008, while overall transit  revenues (including operating and capital funding) increased, increases in  the share of state and local government funding offset decreases in the  share of other nonfederal funding sources, such as passenger fares. In  addition, while in 1998 the federal government was the largest source of  capital investment in transit, by 2008 this was no longer the case. Instead,  local government replaced the federal government as the largest source.  However, as state and local governments are currently facing budget  shortfalls, transit agency officials raised concerns that fiscal uncertainties  may limit their agencies’ ability to meet future increases in ridership  demand. For example, the state of California eliminated all state transit  development assistance for state fiscal years 2009 and 2010 because of the  state’s fiscal situation, and it has only been partially restored for 2011.  Officials from Merced County Transit in California said the bus agency’s  biggest challenges will be insufficient operating funds due to the  elimination of state transit development assistance and a decrease in local  sales tax revenue, which will not allow for any bus service expansions.  Similarly, light rail officials from Sacramento Regional Transit, which also  operates in California, said the agency is struggling to survive the  economic downturn given a major cut in state transit assistance (which  was approximately $15 million to $16 million each year and nearly 10  percent of its total operating budget), declining local sales tax revenues,  and widespread state employee furloughs, which have impacted farebox  revenues. Additionally, according to transit agency officials we spoke  with, the uncertainty of federal funding levels with the pending surface  transportation reauthorization combined with anticipated decreases in  state and local funding poses challenges for long-term planning.
section_title: Options Exist to More Effectively Deliver Federal Surface Transportation Programs and Help Transit Agencies Meet Increased Ridership Demand
paragraphs: We and others have reported on ways to more effectively deliver federal  surface transportation programs that could help transit agencies address  growing ridership demand amid fiscal uncertainties. While officials from  all 15 transit agencies we spoke with said federal grant programs are  critical to maintaining and operating their transit systems, including  addressing growing ridership demand, most agency officials also said that  additional federal funding would help their agencies accommodate future  increases in ridership. However, the nation faces mounting fiscal  difficulties and although demand on transit systems is expected to grow,  increased federal financial support is not something transit agencies can  count on. Therefore, the challenge is to focus the resources that are  available to effectively maximize the impact on transit agencies’ services.  We and others have made recommendations to Congress and others about  how to restructure federal programs to better assist transit agencies and  the federal government in focusing scarce resources and addressing future  ridership demand, including:  focusing resources on maintaining the nation’s rail and bus systems in a  state of good repair;    streamlining the delivery of federal grant programs and projects; and  incorporating performance accountability into federal programs.
subsections: section_title: State of Good Repair
paragraphs: A critical component of addressing future ridership demand is the need for  the federal government and transit agencies to focus on transit systems’  state of good repair. When a system is not maintained in a state of good  repair and needed maintenance is deferred, it is difficult to address future  ridership demand because the system is not operating at optimal levels.  This could ultimately lead to a loss of riders due to resulting problems,  such as service delays and safety issues.
According to FTA, bringing the nation’s transit system to a state of good  repair, while at the same time planning for and implementing needed  service expansions to accommodate demand, will be a significant  challenge. Despite ongoing investment, many of the nation’s vehicles and  much of its infrastructure are deteriorating. For transit riders, this  deterioration eventually leads to declining service reliability. For transit  operators, aging capital assets drive increasing maintenance costs and  limit the ability to expand system capacity at a time of high demand. The  President’s fiscal year 2011 budget request included, for FTA, a new State  of Good Repair initiative for bus and rail transit agencies to bring  infrastructure into a state of good repair. The proposed initiative combines  two existing programs, namely the Fixed Guideway Modernization  Program (49 U.S.C. § 5309(b)(2)) and the Bus and Bus Facilities Program  (49 U.S.C. §§ 5309(b)(3), 5318), and would provide $2.9 billion for fiscal  year 2011, an 8 percent increase over the combined programs’ fiscal year  2010 level of funding. The President has submitted his budget request to  Congress. In addition, the Committee on Transportation and  Infrastructure of the U.S. House of Representatives issued A Blueprint for  Investment and Reform (Blueprint) in 2009, which is a summary of a  proposal for the pending reauthorization of the surface transportation  legislation. It focuses the majority of transit funding into four core  categories, one of which is to bring urban and rural public transit systems  to a state of good repair.
Officials from the majority of transit agencies with whom we spoke  emphasized the importance of maintaining a state of good repair in order  to meet future increases in ridership demand. However, agency officials  pointed out it is easier to procure additional federal funding to support  new transit capital projects than to obtain funding to help maintain their  existing vehicles and infrastructure. Transit agency officials explained that  their agencies rely on annual federal transit formula funds to address  ongoing needs, but additional federal funds available beyond those yearly  allocations are focused on new capital investments as opposed to  maintaining a state of good repair. Further, when asked how federal grants  could be improved to better help transit agencies address ridership  demand, agency officials reported that flexibility in how funding could be  used, either for capital or operating purposes based on an agency’s needs,  would be particularly helpful for efforts to maintain a state of good repair  and other core capacity issues. Transit agency officials also indicated that  if their systems’ state of good repair needs are not met and infrastructure  maintenance is deferred, they will not be able to efficiently and effectively  address future ridership demand.
Further, the National Surface Transportation Policy and Revenue Study  Commission, which was required by SAFETEA-LU to study and identify  key areas for federal focus for the nation’s surface transportation system,  concluded that the area of highest priority—and the foundation for all of  the report’s other recommendations—was to bring the nation’s  infrastructure, including transit assets, into a state of good repair.  Specifically, the Commission stated that states, local governments, and  other entities must develop, fund, and implement a program of asset  maintenance and support over the useful life of the asset in order to assure  the maximum effectiveness of federal capital support. According to FTA,  currently only a few transit agencies actively maintain transit asset  inventories for capital planning purposes and there is no federal reporting  requirement for transit assets except for vehicles. However, FTA officials  added that while some data on fixed infrastructure are collected in the  NTD, they are limited in scope. FTA also noted that a comprehensive and  effective asset management program could help transit agencies establish  organizational state of good repair objectives, assess the magnitude of the  issue, better coordinate agency planning and decision-making functions,  and ultimately help transit agencies prioritize their most critical needs,  especially with scarce funds for state of good repair and deferred  maintenance backlogs. Additionally, the Senate report accompanying the  fiscal year 2010 appropriations bill for the Department of Transportation  (DOT), directed FTA to take a leadership role in improving the use of asset  management practices among transit agencies. According to FTA  officials, in response to this congressional direction, FTA is undertaking a  new initiative to provide technical assistance and develop new data  resources to help transit agencies improve their asset management  practices. FTA officials added that this initiative is intended to promote a  better understanding of how the industry can achieve state of good repair  goals.
section_title: Streamlining the Delivery of Federal Grant Programs and Projects
paragraphs: We and others have recommended that the current federal grant approval  process for large transit capital projects be simplified and streamlined to  speed up project delivery and reduce costs. This includes streamlining the  delivery of federal transportation grant programs such as the New Starts  project planning and development approval process and the required  environmental reviews. The New Starts program is the primary federal  source for major transit capital investments for construction of new fixed  guideway systems or extensions to existing systems. Transit agency  officials indicated that New Starts funding helped their agencies address  increases in ridership demand. However, officials from nearly half of the  heavy and light rail transit agencies with whom we spoke also said it  would be helpful if the federal grant process were more streamlined and  efficient. Agency officials explained that the development and approval  process for large transit capital projects can be lengthy. Further, the  process can become more difficult as agencies are concurrently trying to  use the finite resources they have to accommodate growing demand.
In prior work, we recommended that DOT assess streamlining options,  such as combining project phases, for the New Starts program. We also  recommended that DOT seek legislative changes, if necessary, to  implement options to expedite the New Starts process. DOT agreed with  our recommendations noting that the options identified are consistent  with the options that FTA has been discussing with transit stakeholders  and congressional staff. However, while each option could help expedite  the process, each option has advantages and disadvantages to consider.  For example, each option would likely require certain trade-offs, namely,  potentially reducing the level of rigor in the evaluation process in  exchange for a more streamlined process. As we have previously  reported, the length of the New Starts process is due, at least in part, to the  rigorous and systematic evaluation and rating process required by law.  The rigor of the program is intended to help FTA hold transit agencies  accountable for results, maximize the benefits of each dollar invested, and  ensure that the federal obligation to the project is not affected by cost and  schedule overruns. Our previous work has also identified delays in the  New Starts project development process due to FTA’s project  management oversight. According to some project sponsors, in some  cases, addressing additional oversight requirements has increased the time  and resources required by the project sponsor which also increases total  project costs. However, finding the right balance between protecting  federal investments through project management oversight and advancing  large transit capital projects through the project development process is  difficult. In addition, transit agencies currently work within the statutory  and regulatory constraints of the New Starts program, and streamlining  can only be done within these confines or through legislative changes.
The Committee on Transportation and Infrastructure of the U.S. House of  Representatives’ Blueprint also proposes that the New Starts program be  restructured to speed project delivery, ensure all benefits of the proposed  projects are fully evaluated, and provide a level playing field for local  decision making. In addition, to reduce unnecessary delays in the delivery  of transit projects, it proposes that an office within FTA be created to  improve the process by eliminating duplication in documentation and  procedures and expediting the development of projects through the  environmental review process, design, and construction.
Furthermore, the National Surface Transportation Policy and Revenue  Study Commission notes that overall project delivery times and costs of  major transportation projects could be reduced by shortening the time to  complete environmental reviews in conjunction with other measures that  address conventional strategies for implementing projects once they clear  environmental review. Due to the rapid increase in construction costs in  recent years, delays in completing projects have become very expensive,  according to the Commission. The Commission identified two sources of  delay that should be addressed in the short term: redundancies in the  National Environmental Policy Act of 1969 (NEPA) process and delays  associated with obtaining permit approvals. We have previously reported  on the time taken to conduct environmental reviews of highway projects  and found that stakeholders identified various aspects of the  environmental review process they believed added more time than was  necessary. For example, some stakeholders said that federal agencies  lacked sufficient staff to handle their workloads and that meeting certain  statutory criteria are too time consuming.
section_title: Incorporating Performance Accountability Measures
paragraphs: Another way to focus scarce resources while addressing the challenges of  future ridership demand could be to incorporate greater performance and  accountability into federal programs to best achieve intended outcomes.  Most federal surface transportation programs lack a link between funding  and the performance of a transit system or grantee. We have previously  reported that federal transit grant programs—as well as highway and  safety grant programs—distribute funds through formulas that are  typically not linked to performance and, in many cases, have only an  indirect relationship to need. Furthermore, these programs generally are  not linked to the federal objectives they are intended to address, in part  due to the wide discretion granted to states and localities in using most  federal funds. To address these findings, we recommended that Congress  consider re-examining and refocusing surface transportation programs so  that they have goals with direct links to an identified federal interest and  role, making grantees more accountable through more performance-based  links between funding and program outcomes, among other things. In  some cases, the federal government and state and local grantees may have  different goals, and national priorities may not be considered by grantees  even when federal funding is involved. In prior work, we also  recommended that the Director of the Office of Management and Budget  work with agencies and Congress to encourage the use of performance  accountability mechanisms in grant design and implementation and  promote knowledge transfer among agencies and grantees.
As we have previously reported, performance measures should vary  according to program goals and there is no “one-size-fits-all” solution— careful consideration should be taken when implementing these  mechanisms. Nevertheless, we and other experts have identified key  criteria for developing performance measures that could be implemented,  for example, in transportation programs, including:    Develop a minimum set of performance measures that can be linked to a  limited number of high-level national goals and consistently applied across  state and local agencies.
Develop measures that demonstrate progress over time, rather than  measures tied to short-term targets.
Develop measures that emphasize incentives, training, and support, rather  than penalties, as a preferred way to advance performance.
However, some surface transportation programs are moving toward using  performance measures in distributing grants. For example, the National  Highway Traffic Safety Administration (NHTSA) administers the Section  408 grant program that provides funding for states’ traffic safety data  systems and improvements, which better allow states to measure  transportation performance. To measure performance, a state, as part of  its required strategic plan, must develop goals, or desired outcomes, by  which to determine program success.
We have recently reported that while some federal transit programs  distribute funds based partly on performance, opportunities to improve  grant recipients’ performance accountability remain. For example, in  November 2010 we reported that one of six formula-based FTA transit  grant programs we reviewed—the Urbanized Areas Formula Grant— allocated funding, in part, based on performance—accounting for less than  5 percent of the total funding distributed through the six programs.  Assuming, for example, that a federal goal was to reduce the backlog of  state of good repair needs nationwide and optimize the performance of  existing systems—actions which would help transit agencies meet  increased passenger demand—then tracking specific outcomes through  performance measures that are clearly linked to program goals could  provide a strong foundation for holding grant recipients responsible for  achieving federal goals. In addition, implementing links between transit  funding and performance through the use of financial performance  accountability mechanisms could help create incentives for transit  agencies to improve their performance, and provide the means for  measuring overall program performance. For example, the National  Transportation Policy Project, a project of the Bipartisan Policy Center,  has recommended that Congress create a Performance Bonus Program  that would provide additional funds to states and metropolitan regions  based on demonstrated progress toward meeting national performance  goals. This program would assess how well states and metropolitan  regions reduce their backlog of system preservation needs and optimize  the performance of existing transit systems based on proposed  performance measures. Recipients could then use Performance Bonus  Program funds for any transportation purpose with few restrictions. As a  corrective measure, poorly performing states and regions would be  subject to greater federal scrutiny and review in the planning process for  their formula funds. We recently recommended that FTA report to  Congress on options for adding performance accountability mechanisms  to transit grant programs to ensure efficient and effective federal transit  grant programs and that FTA further analyze and use transit agency data,  when applicable, for evaluating federal transit program performance.
section_title: Agency Comments
paragraphs: We provided DOT with a draft of this report for its review and comment.  In commenting on the draft, DOT generally agreed with the information  presented and provided technical comments, which we incorporated as  appropriate.
We are sending copies of this report to interested congressional  committees and the Secretary of Transportation. We also will make copies  available to others upon request. In addition, this report will be available  at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff has any questions about this report, please contact  David Wise at 202-512-5731 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 III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To address how transit agencies are responding to increased passenger  demand, we reviewed (1) trends in transit ridership and services from 1998  through 2008; (2) challenges, if any, that transit agencies faced during this  period to address increased ridership and actions they took in response;  and (3) factors that might affect future ridership demand and the ability of  transit agencies to meet that demand.
The NTD defines operating expenses as those expenses incurred by transit agencies that  are associated with operating mass transportation services (i.e., vehicle operations,  maintenance, and administration). According to the NTD, capital expenses include the  following categories: revenue vehicles, guideway, communication and information systems,  fare revenue collection equipment, maintenance facilities, passenger stations,  administration buildings, service (nonrevenue) vehicles, and other (including passenger  shelters, signs and amenities, and furniture and equipment that are not integral parts of  buildings and structures). The NTD also defines capital expenses as having a useful life of  greater than one year. for a detailed description of this analysis. In reviewing NTD data, we  determined they were reliable for our purposes, which were to provide  information on national trends in transit ridership, service, costs, and  revenues from 1998 through 2008 for transit agencies offering heavy rail,  light rail, and bus service.
To identify challenges, transit agencies faced and the actions they took to  address increased ridership, we conducted semistructured interviews with  officials from 15 selected transit agencies in urbanized areas. We based  our selection of these transit agencies on the type of transportation  services provided (heavy rail, light rail, or bus), rate of growth in UPTs  from 1998 through 2008, geographic dispersion, and size. While some of  the transit agencies we interviewed may provide other types of transit  services, our interviews focused on the type of transit service indicated in  tables 4 and 5 (either heavy rail, light rail, or bus). For 3 of the 15 transit  agencies, we visited the urbanized areas (one with each type of service— heavy rail, light rail, and bus) in which they were located and conducted  in-person interviews with representatives of the transit agencies, local  governments, metropolitan planning organizations, the business  community, advocacy groups, and others in these three areas. Table 4  provides more detailed information about our site visit interviews.
We conducted in-depth telephone interviews with officials from the  remaining 12 transit agencies, as outlined in table 5.
In addition, we reviewed relevant literature and agency-provided  documentation, met with officials from FTA, and interviewed  transportation researchers and industry and advocacy groups, including  the following:    National Association of City Transportation Officials  We also reviewed prior GAO, Congressional Research Service, and  Congressional Budget Office reports, as appropriate.
To identify what factors might affect future ridership demand and the  ability of transit agencies to meet that demand, we reviewed relevant  literature, interviewed FTA officials, and spoke with the transit agency  officials and stakeholders identified above. We also reviewed relevant  documentation provided by these sources and prior GAO reports.
We conducted this performance audit from December 2009 through  November 2010 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
section_title: Appendix II: Analyzing the Effect of New York City on National Transit Trends
paragraphs: We conducted an analysis to determine whether the heavy rail and bus  system in New York City, New York, is distorting national transit trends  because it comprised about one-third of unlinked passenger trips (UPT)  in the United States in 2008. We examined the size of various measures of  service use and output, expenses, and revenue sources. We found that,  with a few exceptions, the omission or inclusion of the New York City data  does not distort the national trends.
subsections: section_title: Methodology
section_title: Results of Analysis
subsections: section_title: Growth in Service Output and Service Use
subsections: section_title: General Comments
paragraphs: Whereas in 2008, New York City comprised over one-third of the nation’s  UPTs, results differ for its heavy rail and bus services.
New York City’s heavy rail system accounted for about 69 percent of  the nation’s heavy rail UPTs in 2008.
In contrast, New York City’s buses accounted for about 17 percent of  the nation’s bus UPTs in 2008.
Given the difference in relative share of these modes nationally, it is  unsurprising that including New York City makes a bigger difference to  calculations of service use or output for heavy rail than for buses.
section_title: Results—Heavy Rail and Bus Combined (New York City has no light rail service)
paragraphs: Growth in service output as measured by vehicle revenue miles (VRM)  and vehicle revenue hours (VRH) was similar when we compared total  values for the United States with total values for the United States  excluding New York City.
Total VRM grew by about 20 percent nationwide; it grew by about 22  percent for the United States excluding New York City.
Total VRH grew by about 23 percent nationwide; it grew by about 25  percent for the United States excluding New York City.
Growth in service use as measured by passenger miles traveled (PMT)  was similar when we compared total values for the United States with  total values for the United States excluding New York City. Total PMT  grew by about 28 percent nationwide and by about 25 percent for the  United States excluding New York City.
Growth in service use as measured by UPTs was somewhat different  when we compared total values for the United States with total values for  the United States excluding New York City. Total UPTs grew by about 27  percent nationwide, but only by about 18 percent for the United States  excluding New York City.
section_title: Results—Heavy Rail and Bus Separated
paragraphs: Service output—analyzing the data at the mode level (heavy rail and bus)  there were some differences between the United States and the United  States excluding New York City.
For heavy rail, both VRMs and VRHs grew much more slowly in New  York City as compared with the national trend. Because New York City  heavy rail comprised more than half the nation’s VRMs in 2008, this  disparity also showed up in the difference between heavy rail VRMs  nationwide. VRMs grew by about 19 percent nationwide, whereas  heavy rail in the United States excluding New York City grew by about  26 percent.
For heavy rail, VRHs exhibited a similar and even wider difference in  growth rates; nationwide, VRHs grew by about 21 percent. In the  United States excluding New York City, VRHs grew by about 31  percent.
For buses, the growth rate nationwide was similar to that of the United  States excluding New York City. For VRMs, the growth rates were  about 18 and 19 percent respectively; and for VRHs, the growth rates  were both about 22 percent.
Service use—analyzing the data at the mode level (heavy rail and bus)  there were some differences between the United States and the United  States excluding New York City, especially for UPTs.
For heavy rail, growth measured by PMT was similar when we  compared total values for the United States with total values for the  United States excluding New York City. Total PMT grew by about 37  percent nationwide and by about 39 percent for the United States  excluding New York City.
For heavy rail, growth measured by UPTs was quite different when we  compared total values for the United States with total values for the  United States excluding New York City. Heavy rail UPTs grew by about  48 percent nationwide and by about 31 percent for the United States  excluding New York City.
For buses, the growth rates of service were quite similar nationwide as  compared with the United States excluding New York City. For PMT,  total PMT grew by about 19 percent nationwide and by about 17  percent for the United States excluding New York City. However, for  UPTs, total UPTs grew by about 15 percent nationwide and by about 12  percent for the United States excluding New York City.
section_title: Growth in Operating Costs
paragraphs: In general, excluding New York City from our calculations made little  difference to growth rates of operating costs either in terms of mode or  function.
Total growth rates were close for the United States as compared with the  United States excluding New York. In the case of heavy rail, these rates  were about 28 percent as compared with 26 percent, respectively, and in  the case of bus these rates were about 37 percent and 35 percent,  respectively.
There were some differences in the vehicle maintenance category, which  made a difference for bus, and in the general administration category,  which made a difference for heavy rail.
section_title: Growth in Capital Costs
paragraphs: Capital costs may behave cyclically; for example, if rolling stock is of a  common age and needs to be replaced at the same time. As a result, if New  York City’s transit capital is at a different phase of its cycle (different age  or amount of use) as compared with the national average, one would  expect differences in trends.
Total capital cost growth for all modes combined were not too different  nationwide as compared with the United States excluding New York City;  about 68 percent as compared with 71 percent, respectively.
For heavy rail, whereas there were some differences in the growth of  capital cost components, the totals were generally similar for the United  States as compared with the United States excluding New York City; about  92 percent and 101 percent, respectively.
For buses there were differences in capital costs for the United States as  compared with the United States excluding New York City; about 5  percent and 13 percent, respectively. The primary driving factor of this  difference was the approximate 58 percent reduction in capital spending  for New York City.
section_title: Funding Sources
paragraphs: In general, there was little impact on our calculation of funding source  shares nationwide as compared with the United States excluding New  York City.
section_title: Data Tables
paragraphs: Tables 6 through 19 provide the data from which we derived our  observations about the impact New York City has on national transit  trends.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, other key contributors to this  report were Steve Cohen, Assistant Director; Lauren Calhoun; Jean Cook;  Colin Fallon; Elba Garcia; Brandon Haller; Michael Kendix; Catherine Kim;  Mary Koenen; and Joshua Ormond.