Mass Transit: Preliminary Views on Options for Additional Fiscal Oversight of the Washington Metropolitan Area Transit Authority
Published: 2005-07-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In recent years, the Washington Metropolitan Area Transit Authority (WMATA) has faced serious financial and budgetary problems as well as continuing challenges related to the safety and reliability of its transit services. At the same time, ridership is at an all-time high, and WMATA continues to provide critical services and considerable benefits to the Washington region and to the federal government. This statement discusses (1) WMATA's responsibilities for serving the interests of the federal government, including the agency's role in transporting federal employees and visitors to the nation's capital and in supporting homeland security for the Washington metropolitan region; (2) the current funding challenges facing WMATA and the options proposed to address these challenges; (3) preliminary information on some of the entities that currently provide oversight of WMATA and the focus of their recent reviews; and (4) some considerations and options in instituting spending safeguards and oversight of any additional federal assistance provided to WMATA, should Congress decide to provide such assistance. GAO discussed this testimony with WMATA and FTA officials, who provided comments and additional information that GAO incorporated as appropriate.
section_title: What GAO Found
paragraphs: WMATA transports a substantial share of the federal workforce and provides an important means of transportation to special events that occur in Washington, D.C., as the nation's capital. WMATA's Metro Transit Police assists federal law enforcement agencies by providing expertise in civil disturbance management and explosives detection and by training first responders in emergency management techniques specific to transit environments. WMATA's Metrorail and Metrobus are the preferred means of transportation in an emergency scenario requiring evacuation, and both the regional and the District of Columbia emergency transportation plans rely heavily on them. A regional funding panel estimated WMATA's budgetary shortfall at $2.4 billion for fiscal years 2006 through 2015 if WMATA were to fund many of the projects in its 10-year capital improvement plan. This shortfall may be even greater because the panel's shortfall calculation did not include the costs of providing specialized transportation for persons with disabilities, as required under the Americans with Disabilities Act. To deal with WMATA's funding shortfall, the regional panel concluded that the region needs to develop a dedicated source of revenue for WMATA (e.g., local sales tax) and that the federal government needs to provide significant contributions because of the benefits it receives from WMATA. However, given the large federal budget deficit and competing claims on federal resources, GAO believes WMATA may also need to reexamine its own spending priorities. As part of its ongoing work on WMATA's oversight entities, GAO found that WMATA is subject to oversight from multiple entities that, since 2003, have issued hundreds of reports--which vary in scope--on a broad range of topics. These entities include WMATA's Auditor General, an independent external auditor, the Federal Transit Administration (FTA), and industry peer review panels. The entities have made recommendations to WMATA, which WMATA has generally implemented or plans to implement. As part of its ongoing work, GAO plans to analyze these reviews in more detail to determine if they comprehensively identify and address WMATA's overall management and operational challenges. GAO's ongoing work will also cover other FTA reviews and safety reviews of WMATA's operations. Congress, the administration, and GAO have long recognized the benefits of having spending safeguards and management oversight for entities that receive federal funding. If Congress decides to provide WMATA with additional federal funding, there needs to be reasonable assurance that the funds will be spent effectively. We identified several options for additional oversight that could be incorporated into legislation that provides additional federal funding to WMATA, including having WMATA officials periodically report to Congress on how the funding is being spent; specifying the types of projects for which federal funds could be used; and requiring that any additional federal funding be subject to FTA's oversight programs.

section_title: Letter
paragraphs: We are pleased to testify before you today on issues related to the  Washington Metropolitan Area Transit Authority (WMATA) and the federal  government. In recent years, WMATA has faced financial and budgetary  problems, as well as continuing challenges related to the safety and  reliability of its transit services. At the same time, ridership is at an all-time  high, and WMATA continues to provide critical services and considerable  benefits that support the Washington region’s economy and the federal  government. For example, WMATA operates a transit system that provides  an indispensable commuting option for hundreds of thousands of  Washington-area workers, including federal government employees,  tourists, and others who visit the region each day.
Our statement today is based on the interim results of our work on  WMATA. We will discuss    WMATA’s responsibilities for serving the interests of the federal  government, including the agency’s role in transporting federal employees  and visitors to the nation’s capital and in supporting homeland security for  the Washington metropolitan region;  the current funding challenges facing WMATA and the options proposed to  address these challenges;   preliminary information on some of the entities that currently provide  oversight of WMATA and the focus of their recent reviews; and   some considerations and options in providing spending safeguards and  oversight of any additional federal assistance provided to WMATA, should  Congress decide to provide such assistance.
Our work is based on our review of WMATA’s documentation of the  transit services it provides to federal employees and others; its budgetary  and other financial documentation; our analysis of reports on WMATA’s  financial problems that we and others have issued; and interviews with  officials at WMATA, the U.S. Department of Transportation (DOT), other  federal agencies that rely on WMATA’s services, and officials with  expertise in the transit industry, transportation planning, and  transportation finance. We reviewed selected reports issued by entities  that oversee WMATA—including WMATA’s Auditor General, an  independent external auditor, and the Federal Transit Administration  (FTA). We also reviewed prior GAO reports on various oversight issues  related to mass transit and other areas of surface transportation. We  conducted our work from March 2005 through July 2005 in accordance  with generally accepted government auditing standards. We obtained oral  comments on this statement from WMATA and DOT officials, who  generally agreed with the information and provided technical comments,  which we incorporated as appropriate. We also provided selected portions  of the statement to the District of Columbia Department of Transportation,  the General Services Administration, the Office of Personnel Management,  the National Capital Planning Commission, the U.S. Capitol Police, and the  U.S. Secret Service. Some of these agencies provided technical comments,  which we incorporated as appropriate. Details of our scope and  methodology are provided in appendix I.
WMATA transports a substantial share of the federal workforce and  provides an important means of transportation to the special events that  occur in Washington, D.C., as the nation’s capital and its “seat of  government.” WMATA’s Metro Transit Police also plays an important role  in assisting federal law enforcement agencies by providing expertise in  civil disturbance management and explosives detection and by making  Metrobuses available for perimeter security and for redirecting traffic at  high-security federal events. Additionally, WMATA trains first responders  in emergency management techniques specific to transit environments at  its tunnel facility in Landover, Maryland, and through its training course on  managing Metrorail emergencies. The Metrorail system is equipped with  chemical and radiological early warning systems to alert first responders  to potential hazardous materials incidents. In addition, both the regional  and the District of Columbia emergency transportation plans rely heavily  on Metrorail and Metrobus for transportation in an emergency scenario  requiring evacuation.
Over the years, WMATA has faced funding challenges, and the options  proposed to address those challenges generally include both a dedicated  revenue source and a federal contribution. A regional panel, convened in  September 2004, estimated that under its current revenue structure,  WMATA would have a total budgetary shortfall of $2.4 billion during fiscal  years 2006 through 2015 if it went forward with the projects remaining in  its 10-year capital improvement plan, except for those that involved  expanding the current system. We believe that WMATA’s anticipated  shortfall may be even greater because, in calculating the shortfall, the  panel did not include the costs of providing paratransit services as  required under the Americans with Disabilities Act (ADA). These costs are  significant; in fact, the panel estimated that these services could result in a  shortfall for WMATA of about $1.1 billion over the 10-year period from  fiscal year 2006 through fiscal year 2015, thus raising the total anticipated  shortfall to $3.5 billion for that period. In dealing with its funding  challenges, WMATA—unlike most other major transit systems—does not  have a dedicated source of revenue, such as a local sales tax whose  receipts are automatically directed to the transit authority. As a result, the  regional panel and others have concluded that the Washington region  needs to develop a dedicated source of revenue for WMATA. In addition,  the panel has concluded that the federal government needs to participate  “significantly” in addressing WMATA’s budgetary shortfall, particularly for  capital maintenance and system enhancement, because WMATA has  provided numerous benefits to the Washington region and the federal  government over the years. To the extent that the federal government  cannot provide significant additional support to WMATA because of  competing claims on federal resources, and WMATA’s current revenue  structure continues to be insufficient to support its planned capital  projects, WMATA may need to reexamine its spending priorities, including  how it will meet its ADA obligations.
As part of our preliminary review of WMATA’s oversight entities, we found  that WMATA is subject to oversight from multiple entities that, since 2003,  have issued hundreds of reports and made dozens of recommendations.  These entities include WMATA’s Office of Auditor General, which has  issued nearly 500 reports, including internal and investigative audits and  reviews of contracts and pricing proposals, and an independent external  auditor, which annually reviews WMATA’s financial statements and  related internal controls. Additionally, FTA oversees WMATA’s major  capital projects through the project management oversight program; FTA  has issued 125 monthly monitoring reports on seven of WMATA’s major  projects through this program since 2003. FTA also reviews WMATA’s  compliance with a wide range of administrative and statutory  requirements through its Triennial Review. In 2005, at WMATA’s request,  panels assembled by a transit industry association conducted peer reviews  of WMATA’s bus and rail operations. The peer review panels developed  recommendations to improve the effectiveness and efficiency of bus and  rail operations in multiple areas, including staffing, organization,  maintenance, and technology. WMATA has generally implemented or  plans to implement the recommendations resulting from the various  oversight reviews. As part of our ongoing work, we plan to analyze these  reviews in greater detail to determine whether, taken as a whole, they  identify systemic problems and are adequate to address WMATA’s overall  management and operational challenges. Our ongoing work will also  include FTA’s in-depth reviews of program or system compliance, as well  as safety reviews conducted by external and internal entities.
To control costs and ensure results—especially for high-cost  transportation infrastructure projects—Congress, the administration, and  GAO have long recognized the benefits of spending safeguards and  management oversight for the state and local governments and  transportation agencies that receive federal funding. For example, certain  federal laws have historically controlled the uses of federal transportation  funds, including instituting “matching” requirements to ensure the use of  some local funds for capital infrastructure projects and prohibiting the use  of these funds for operating expenses. Several ongoing, planned, and past  efforts illustrate the benefits of management oversight and the ways it can  be carried out. At the local level, in the 1980s, New York City’s ailing  Metropolitan Transit Authority was subject to increased oversight  legislated by the state. This oversight, along with increased revenue, was  followed by improvements in the performance of the authority’s subway  system. We have also reported that safeguards should accompany any  increased federal funds provided to the District of Columbia to address the  structural imbalance between its costs and revenue-raising capacity. At the  federal level, FTA’s project management oversight program is designed to  help ensure that grantees building major capital projects have the qualified  staff and procedures needed to successfully plan and carry out those  projects. Finally, the House and Senate versions of the surface  transportation reauthorization bill currently before Congress include  provisions that enhance management oversight for major capital projects  receiving federal funds. We have not fully analyzed the applicability of  these oversight options to WMATA or evaluated their relative merits.  However, we believe that should Congress decide to provide WMATA with  additional federal funding in recognition of its support of the federal  government, Congress should have reasonable assurances that the funds  would be spent efficiently and effectively. Accordingly, we identified  several options for writing safeguards into legislation that provides any  additional federal funding to WMATA. These options include having  WMATA officials periodically report to Congress on how the funding is  being spent; specifying the types of projects for which federal funds could  be used; and instituting additional oversight bodies for WMATA.
subsections: section_title: Background
paragraphs: WMATA was created in 1967 by an interstate compact that resulted from  the enactment of identical legislation by Virginia, Maryland, and the  District of Columbia, with the concurrence of the U.S. Congress. WMATA  began building its Metrorail system in 1969, acquired four regional bus  systems in 1973, and began the first phase of Metrorail operations in 1976.  In January 2001, WMATA completed the originally planned 103-mile  Metrorail system, which included 83 rail stations on five rail lines. The  transit system encompasses (1) the Metrorail subway system, which now  has 86 Metrorail stations on five rail lines and a fleet of about 946 rail cars;  (2) the Metrobus system, which has a fleet of about 1,447 buses serving  350 routes; and (3) the MetroAccess ADA complementary paratransit  system, which provides specialized transportation services, as required by  law, to persons with disabilities who are certified as being unable to  access WMATA’s fixed-route transit system.
Congress and the executive branch have supported considerable federal  funding for WMATA since its inception in the 1960s, citing several reasons  including (1) the federal government’s large presence in the area, (2) the  attraction of the nation’s capital for tourists, (3) the overlapping needs of  adjacent jurisdictions, and (4) the limitations faced in raising other  revenue for transit needs. This federal funding has taken several forms  over the years. First, WMATA relied on federal funding to pay for nearly  70 percent of the costs to build its Metrorail subway system. From 1969  through 1999, the federal government provided about $6.9 billion of the  approximately $10 billion that WMATA spent to construct the original 103- mile system, according to WMATA officials. Second, WMATA has also  relied on federal funding to cover more than 40 percent of its capital  improvement costs during the last 10 fiscal years. Of about $3.5 billion that  WMATA received from all sources for capital improvements during fiscal  years 1995 through 2005 (as of February 2005), about $1.5 billion, or about  43 percent, came from the federal government, with the remaining $2  billion, or about 57 percent, coming from the state and local jurisdictions  that WMATA serves and from other sources. Most of this federal funding  has come through grants administered by FTA. Finally, WMATA received  about $49.9 million for congressionally designated projects, including a  new Metrorail station at New York Avenue in the District of Columbia,  during fiscal years 1995 through 2005.
WMATA operates in a complex environment, with many organizations  influencing its decision-making and funding and providing oversight.  WMATA is governed by a board of directors—composed of individuals  appointed by each of the local jurisdictions WMATA serves—which sets  policies and oversees all of WMATA’s activities, including budgeting,  operations, development, expansion, safety, procurement, and other  activities. In addition, a number of local, regional, and federal  organizations affect WMATA’s decision-making, including (1) state and  local governments, which subject WMATA to a range of laws and  requirements; (2) the National Capital Region Transportation Planning  Board of the Metropolitan Washington Council of Governments, which  develops the short- and long-range plans and programs that guide  WMATA’s capital investments; (3) FTA, which provides oversight of  WMATA’s compliance with federal requirements; (4) the National  Transportation Safety Board, which investigates accidents on transit  systems as well as other transportation modes; and (5) the Tri-State  Oversight Committee, which oversees WMATA’s safety activities and  conducts safety reviews.
WMATA’s combined rail and bus ridership totaled about 343.8 million  passenger trips in fiscal year 2005. WMATA operates the second largest  heavy rail transit system and the fifth largest bus system in the United  States, based on passenger trips, according to WMATA. WMATA’s fiscal  year 2005 budget is $1.29 billion. Of the total amount, about 76 percent, or  $977.9 million, is for operations, including maintenance activities, and the  remaining 24 percent, or $314.1 million, is for capital improvements.  WMATA obtains its funding from a variety of sources, including the  federal, state (Virginia and Maryland), District of Columbia, and local  governments; passenger fares; and other sources. In general, WMATA  relies on passenger fares and subsidies from its member jurisdictions to  cover the majority of its operating costs. Its capital funds are obtained  from other sources, including the federal government and the state and  local jurisdictions that it serves. Of all WMATA’s funding, less than 2  percent is from a dedicated source.
section_title: WMATA Supports Federal Government Operations by Providing Transportation and Security and by Supporting Emergency Preparedness
paragraphs: As the major transit agency in the national capital area, WMATA provides  transportation to and from work for a substantial portion of the federal  workforce and is also integral to the smooth transportation of visitors to  the nation’s capital. WMATA also assists federal law enforcement agencies  by providing security for high-profile events and other security-related  expertise and services. Furthermore, the emergency transportation plans  of the District of Columbia and the Washington region both rely heavily on  Metrorail and Metrobus for transportation in an emergency scenario  requiring evacuation.
subsections: section_title: WMATA’s Transit Services Affect Daily Federal Government Operations
paragraphs: According to estimates prepared by WMATA, a substantial share of  Metrorail’s riders, particularly at peak commuting periods, are federal  employees. Using data from its 2002 passenger survey (the most recent  data available), WMATA estimates that approximately 35 percent of all  Metrorail riders were federal employees in 2002. WMATA’s estimates are  higher for peak period times, when the system faces capacity constraints:  according to the survey, approximately 41 percent of the morning peak  period riders and approximately 37 percent of the afternoon peak period  riders are federal employees. The federal employees who ride Metrorail to  and from work each day represent a substantial share of federal  employees in the Washington, D.C., region. Using an estimate based on its  2002 passenger survey data on the number of federal employees who are  Metrorail passengers, together with data from OPM on the number of  civilian federal employees in the Washington, D.C., region, WMATA  estimated that in 2002, approximately 40 percent of federal employees  used Metrorail.
WMATA’s operating status is an important factor in OPM’s decisions about  the day-to-day operations of the federal government. OPM officials told us  that WMATA is a key stakeholder in OPM’s decision to have an early  dismissal, late arrival, or closure of the federal government, since a  substantial portion of the federal workforce rides WMATA’s transit system  to and from work. Those officials said that they are aware of WMATA’s  operating constraints and take them into account when deciding to close  the federal government. However, the officials told us that OPM makes the  final decision and uses the safety of employees as the sole factor in its  decision. OPM officials further noted that the functioning of the federal  government is not dependent on WMATA’s operating status and that  employees have other options, such as flexible work schedules and  teleworking, available should they not be able to get to their usual  workplace.
section_title: Federal Guidance Provides Incentives for Federal Employees to Use Mass Transit
paragraphs: Executive Order 12072, issued on August 16, 1978, instructs federal  agencies to consider such factors as the availability of public  transportation and parking as well as accessibility to the public when  evaluating and selecting federal facilities. The General Services  Administration (GSA)—which has overall responsibility for reviewing and  approving the acquisition of federal facilities—created a Site Selection  Guide for federal agencies that implements the provisions of this  executive order, as well as other public laws and executive orders. Within  the National Capital Region, the National Capital Planning Commission  also has review and approval authority over federal building construction,  renovations, and transportation plans in the District of Columbia, and it  has review authority only over federal sites in the Virginia and Maryland  areas of the region. Both GSA and the commission instruct federal  agencies to locate their facilities near mass transit stops whenever  possible.
The Federal Employees Clean Air Incentives Act of 1993 also encourages  the federal use of mass transit, with specific provisions for the National  Capital Region. The purpose of this act was to authorize agencies to  create programs for federal employees to encourage their use of  alternatives to single-occupancy vehicles for commuting. Under the act,  the heads of agencies were authorized to establish programs for agency  employees that would provide, for example, transit passes, space for  bicycles, and nonmonetary incentives.
section_title: WMATA Provides Transportation to Special Events in the Nation’s Capital
paragraphs: WMATA’s services are integral to the smooth operation of the myriad of  special activities that occur in Washington, D.C., as the nation’s capital and  its “seat of government.” According to a visitor transportation survey  administered for the National Park Service, 61 percent of visitors used  Metrorail during their visit to Washington, D.C. In several instances,  ridership has been highest on days when events (1) were sponsored by the  federal government, such as the first and second inaugurations of  President George W. Bush and the grand opening of the National Museum  of the American Indian or (2) occurred in Washington because it is the  seat of government, such as political rallies. On June 6, 2004, the date of  former President Ronald Reagan’s state funeral ceremony, WMATA  marked its highest ridership day ever, with more than 850,000 riders.
The federal government also relies on WMATA to provide transportation  services outside its normal hours and routes. Some examples follow:  In May 2004, WMATA, along with other regional transit agencies, provided  buses to shuttle attendees from Metrorail stations to the World War II  dedication ceremony on the National Mall.
Metrobuses ran overnight between RFK Stadium and the U.S. Capitol for 2  nights in June 2004 to enable people to pay respects to former President  Ronald Reagan.
On Inauguration Day, in January 2005, WMATA opened Metro 2 hours  early and closed it 3 hours later than normal, at the request of the  Presidential Inaugural Committee.
section_title: WMATA Assists Federal Law Enforcement Agencies in Providing Security for High-Profile Government Events
paragraphs: WMATA’s Metro Transit Police supports the U.S. Secret Service by making  available its officers who have expertise in areas such as explosives  detection and civil disturbance management to help ensure a safe and  secure environment before and during events involving the President, the  Vice President, or high-level foreign dignitaries. For example, when events  are held in venues located above Metrorail stations, Metro Transit Police’s  explosive ordnance detection team inspects the stations to ensure they are  free from explosives. The Metro Transit Police deployed its civil  disturbance team at the 2005 presidential inaugural parade at the request  of the Secret Service, which had received specific intelligence that  protestors might attempt to breach the parade route. The Metro Transit  Police received $299,371 in Department of Homeland Security (DHS)  Urban Area Security Initiative (UASI) grants for overtime associated with  providing security for the 2005 presidential inauguration. In commenting  on the importance of the Metro Transit Police’s security expertise, Secret  Service officials told us that they consider the Metro Transit Police to be a  full law enforcement partner, along with the District of Columbia’s  Metropolitan Police Department, the U.S. Capitol Police, and the U.S. Park  Police.
The Metro Transit Police also provides enhanced security throughout the  Metrorail and Metrobus system when DHS raises the threat level, which is  communicated through the Homeland Security Advisory System. Since  DHS implemented the color-coded system in March 2002, the Metro  Transit Police has spent about $2.7 million on overtime related to  increased threat levels, for such activities as increasing patrols of  Metrorail stations, trains, and buses. WMATA received $632,356 through a  DHS UASI grant for overtime costs in 2004; this grant was WMATA’s first  reimbursement for costs associated with increased threat levels, according  to a Metro Transit Police official.
WMATA also supports federal law enforcement efforts by providing  Metrobuses to the U.S. Capitol Police to establish security perimeters,  block intersections, and reroute traffic for events that take place on the  grounds of the U.S. Capitol, such as presidential inaugurations and State of  the Union addresses, and at other locations where presidential and vice  presidential events occur. The Secret Service also uses Metrobuses  periodically to establish temporary security perimeters; for example, it did  so along the 2005 presidential inauguration parade route. The law  enforcement agencies that use Metrobuses are charged the same standard  charter rate that WMATA charges all parties to rent its Metrobuses for  special events.
section_title: WMATA Supports Emergency Preparedness by Providing First Responder Training, Early Warning Sensors, and Emergency Evacuation Infrastructure
paragraphs: WMATA supports homeland security efforts for the Washington region and  the federal government through a variety of efforts. It provides training for  local and federal first responders at its tunnel training facility and has  deployed early-warning systems to detect chemical and radioactive  contamination in some of its underground Metrorail stations. WMATA’s  infrastructure is key to emergency evacuation of the region, including the  evacuation of workers in federal buildings concentrated in downtown  Washington, D.C.
subsections: section_title: First Responder Training
paragraphs: WMATA’s emergency response training facility in Landover, Maryland,  provides a realistic setting for fire, police, emergency, and transit  personnel to learn how to respond to events such as collisions, fires, and  weapons of mass destruction incidents that occur in a transit or tunnel  environment. The facility includes a 260-foot tunnel that houses two  subway cars positioned to resemble a wreck, as well as simulated  electrified third rail, cabling, and lighting that appear identical to those in a  real tunnel. Emergency personnel from across the region train at the  center. The training center’s federal clients include the Federal Bureau of  Investigation’s Hostage Rescue Team, the Federal Protective Services, and  the U.S. Marines’ Chemical-Biological Incident Response Force.  Additionally, according to WMATA officials, FTA’s Transportation Safety  Institute plans to use the Emergency Response Training Facility as a host  site for the counterterrorism training it plans to provide to transit  agencies’ law enforcement and safety personnel. WMATA funds this  training facility entirely out of its regular operations budget.
WMATA is also introducing a training course on managing Metrorail  emergencies, which will address emergency management concepts,  techniques to respond to weapons of mass destruction attacks, and  emergency traffic control. The course, which WMATA is funding with a  $335,261 DHS UASI grant, will be available to first responders from the  region, transit agencies nationwide, and FTA.
section_title: Early Warning Sensor Systems
paragraphs: Metrorail is equipped with a permanent chemical detection system to help  detect hazardous substances in selected stations in the Metrorail system.  This system, known as the Program for Response Options and Technology  (PROTECT), acts as an early warning to safeguard first responders,  employees, and Metrorail customers and is installed in selected locations  in underground Metrorail stations. WMATA had assistance from the U.S.  Departments of Transportation, Energy, and Justice in developing the  sensor system. It received $15 million in federally appropriated funds in  fiscal year 2002 and $1.4 million in additional funds in fiscal year 2004  through a direct grant from DHS’s Office of Domestic Preparedness to pay  for the installation of the sensors.
Additionally, Metro Transit Police has distributed pager-sized devices to  about 100 officers to wear in the Metrorail system to detect radiation.  According to the Metro Transit Police, these pagers are worn mostly by  officers in the downtown core because this area is considered to be at  higher risk for attack. WMATA paid for about half of the radiological  pagers, and the Department of Energy furnished the remainder.
These early warning devices are important to the area’s first responders  because if a high reading of a chemical or radioactive substance is  detected, it is considered a potential hazardous materials or “hazmat”  incident. In such an event, the portion of the Metrorail system involved  could be temporarily closed, affecting traffic in the area, and local  emergency management agencies would be notified and become  responsible for coordinating any additional response.
section_title: Emergency Evacuation
paragraphs: The local emergency response officials we interviewed generally prefer  using Metrorail and Metrobus in an emergency scenario that requires  evacuation because mass transit can move large numbers of people  efficiently and help keep roadways clear for first responders and other  emergency vehicles. To assist in coordinating evacuation planning across  jurisdictions, the region’s metropolitan planning organization, the  Metropolitan Washington Council of Governments, has developed  guidance on emergency evacuation that includes the use of Metrorail and  regular Metrobus routes as well as Metrobuses on special evacuation  routes. The District of Columbia’s emergency evacuation plans also rely  heavily on WMATA. Additionally, because the federal presence in the  District is so large, the District Department of Transportation consulted  with federal agencies in developing its emergency transportation plans.
section_title: Options for Addressing Anticipated Future Funding Shortfall Would Likely Include both Local and Federal Contributions
paragraphs: Over the years, WMATA has faced funding challenges, and options have  been proposed to address them. Although WMATA has taken steps to  improve its management, such as prioritizing its planned capital  improvements, it lacks a dedicated funding source and must rely on  variable, sometimes insufficient contributions from local, regional, and  federal organizations to pay for its planned capital improvements. A report  published by a regional funding panel estimated that, over the next 10  years, under its current revenue structure, WMATA will face a $2.4 billion  budget shortfall, due largely to expenditures planned for capital  improvement projects—an estimate that may not fully reflect the  magnitude of the anticipated budget shortfall. Proposed options would  provide a dedicated funding source, such as a local sales tax, and would  increase federal funding for capital improvements.
subsections: section_title: Estimated Costs of WMATA’s Planned Capital Projects Exceed Anticipated Funding
paragraphs: WMATA and others have projected continuing shortfalls in its capital and,  to some extent, its operating budgets. For example, in 2001, we reported  that WMATA faced uncertainties in obtaining funding for planned capital  spending for two of its capital programs, discussed below, the  Infrastructure Renewal Program (IRP) and the System Access and  Capacity Program (SAP). At that time, WMATA anticipated a shortfall of  $3.7 billion in the funding for these programs over the 25-year period from  fiscal year 2001 through fiscal year 2025.
Since that time, in response to recommendations that we and others made,  WMATA created a strategic plan, which it issued in October 2002. In  November 2002, it documented and prioritized its planned capital projects  in a 10-year capital improvement plan that called for spending $12.2 billion  over the period from fiscal year 2004 through fiscal year 2013. Then, in  September 2003, WMATA launched a campaign called “Metro Matters” to  obtain $1.5 billion in capital funding over a 6-year period to avert what  WMATA believed was a crisis in its ability to sustain service levels and  system reliability and to meet future demands for service. In response,  WMATA and its member jurisdictions approved a $3.3 billion funding plan  for fiscal years 2005 through 2010 to help pay for WMATA’s most pressing  short-term capital investment priorities.
As concerns about WMATA’s anticipated funding shortfall grew, a regional  funding panel known as the Metro Funding Panel—cosponsored by the  Metropolitan Washington Council of Governments, the Greater  Washington Board of Trade, and the Federal City Council—was  convened in September 2004 to study the magnitude of the shortfall,  identify sources of funding, and evaluate options for generating additional  revenues to address that shortfall. The panel estimated that under its  current revenue structure, WMATA would have a total funding shortfall of  about $2.4 billion for fiscal years 2006 through 2015 for maintaining and  upgrading its existing system, assuming that Metro Matters was fully  funded. As shown in table 1, the panel attributed nearly 80 percent of the  total estimated shortfall of $2.4 billion to WMATA’s capital activities (IRP  and SAP) and the remainder to operations activities associated with future  capital projects as they are completed.
Funding for the following projects and activities is included in the shortfall  estimate:  IRP projects: The IRP projects occur in fiscal year 2011 through 2013, after  the Metro Matters funding agreement expires. These projects, which  provide ongoing maintenance and renewal of the Metrorail and Metrobus  systems, include replacing and rehabilitating buses and rail cars,  rehabilitating escalators and elevators, rehabilitating Metrorail stations  and parking lots, renovating rail car and bus maintenance facilities, and  rehabilitating electrical systems, among other things.
SAP projects: These projects, which are intended to increase the capacity  of the current Metrorail and Metrobus systems to handle increased  passenger levels, include the purchase of 130 new rail cars and 275 new  buses; a variety of improvements to four maintenance facilities, two  storage facilities, two new bus garages, and one replacement bus garage;  enhancements at Metro Center, Union Station, and Gallery Place Metrorail  stations; the construction of pedestrian connections between two pairs of  Metrorail stations (between Farragut North and Farragut West and  between Metro Center and Gallery Place); and 140 miles of bus corridor  improvements, such as signal priority for buses, route delineation  techniques using pavement materials and painted markings, and passenger  waiting area enhancements.
Operating activities: Finally, the panel included a relatively small portion  of WMATA’s operating budget in the shortfall estimate. This portion  consists of some additional operating costs associated with some of the  capital projects. According to WMATA, these are mostly preventative  maintenance projects, such as bus engine overhauls, bus tire  replacements, bus parts, rail parts, and labor costs.
Appropriately, the panel’s budgetary shortfall estimate did not include the  portion of WMATA’s capital improvement plan that involves expanding the  system—by adding new rail lines, for example. The projects in this portion  of the plan, known as the System Expansion Program, are estimated to  cost roughly $6 billion. WMATA officials told us that these projects would  be paid for by the local jurisdictions and businesses where they would be  built, as well as by federal grants for new transit expansion.
In preparing its estimate of WMATA’s budgetary shortfall, the panel did  not evaluate the need for, or priority of, individual projects in SAP and  IRP. Likewise, we did not independently assess the suitability of including  these projects, as a whole or individually, in the shortfall estimate.  However, when WMATA developed its 10-year capital improvement plan  in 2002, the projects were approved by its board of directors, which  includes representatives from all of WMATA’s member jurisdictions. In  addition, the IRP projects and some of the projects in SAP have been  incorporated into the region’s Constrained Long-Range Plan for  transportation improvements over the next 20 years by the Transportation  Planning Board of the Metropolitan Washington Council of Governments.
section_title: Estimates of the Magnitude of WMATA’s Funding Shortfall May Not Be Comprehensive
paragraphs: In estimating WMATA’s budgetary shortfall, the panel did not include a  major cost category and, thus, may have significantly underestimated the  shortfall. The panel did not include the costs of providing paratransit  services as required under ADA. Compliance with the act’s requirements  may result in significant costs over the next 10 years. The panel recognized  that including these costs, which are included in WMATA’s operating  budget, would result in a greater budgetary shortfall. In fact, the panel  estimated the shortfall from MetroAccess, WMATA’s paratransit system, at  about $1.1 billion over the 10-year period from 2006 through 2015, thus  raising the total anticipated shortfall to $3.5 billion for that period.  However, the panel stated that funding for these services should be  provided through a creative packaging of social service, medical, and  other nontransportation resources in the region, rather than by WMATA.  We believe that any estimate of WMATA’s funding shortfall should include  the costs associated with MetroAccess because WMATA is required by  ADA to provide paratransit services.
section_title: Options for Addressing WMATA’s Funding Challenges Would Generally Establish a Local Dedicated Revenue Source and Include a Federal Contribution
paragraphs: In our 2001 report and testimony, we noted that WMATA’s funding comes  from a variety of federal, state, and local sources, but that unlike most  other major transit systems, WMATA does not have a dedicated source of  nonfarebox revenue, such as a local sales tax, whose receipts are  automatically directed to the transit authority. As far back as April 1979,  we reported on concerns about the lack of a revenue source dedicated to  pay the costs of mass transportation for the Washington region. Concerns  about WMATA’s lack of dedicated revenues surfaced again in reports  issued by the Brookings Institution in June 2004 and by the Metro  Funding Panel in January 2005. According to the Brookings report,  WMATA’s lack of dedicated revenues makes WMATA’s core funding  uniquely vulnerable and at risk as WMATA’s member jurisdictions struggle  with their own fiscal difficulties. The Brookings report and the Metro  Funding panel report both state that the Washington region needs to  develop a dedicated source of revenue, and they evaluate the advantages  and disadvantages of a menu of revenue options that could support the  dedicated revenue source—specifically, gasoline taxes, sales taxes,  congestion charges, parking taxes, land-value capture, and payroll taxes.
Observing that WMATA has provided numerous benefits both to the  Washington region and the federal government over the years, the Metro  Funding Panel also concluded that WMATA will require a commitment of  new revenue sources to sustain those benefits. Accordingly, the panel  recommended, among other things, that (1) WMATA’s compact  jurisdictions of Virginia, Maryland, and the District of Columbia mutually  create and implement a single regional dedicated revenue source to  address WMATA’s budgetary shortfalls and (2) the federal government  participate “significantly” in addressing WMATA’s budgetary shortfalls,  particularly for capital maintenance and system enhancement.
In the current situation of large budget deficits, any additional federal  funding for WMATA would need to be considered along with the many  other competing claims for federal resources. To the extent that the  federal government cannot provide significant additional support to  WMATA, and WMATA’s current revenue structure continues to be  insufficient to support its planned capital projects, WMATA may need to  reassess its capital improvement plan to determine which projects could  be undertaken within a more constrained funding level. WMATA also may  need to consider how it will meet its obligations under ADA.
section_title: WMATA Is Subject to Oversight from Multiple Entities Whose Reviews Address a Wide Range of Issues
paragraphs: WMATA is subject to oversight from multiple entities that have issued  numerous reports on the agency since 2003. The scope of the reports  varies and includes compliance reviews of specific statutory requirements,  monthly assessments of major construction projects, and reviews of  WMATA’s overall bus and rail operations. Specifically, WMATA’s Office of  Auditor General has issued nearly 500 reports, including internal and  investigative audits and reviews of contracts and pricing proposals. In  addition, an independent external auditor, which reports to WMATA’s  board of directors, annually reviews WMATA’s financial statements and  related internal controls. FTA oversees WMATA’s major capital projects  through its project management oversight program and assesses its  compliance with a wide range of requirements through its Triennial  Review process. In 2005, at WMATA’s request, transit industry panels  conducted peer reviews of WMATA’s bus and rail operations. Details on  these entities and the types of oversight they provide are presented in  table 2. All of these entities included recommendations in their reports,  and, in general, WMATA implemented them or has plans to implement  them. As part of our ongoing work, we plan to analyze these reviews in  greater detail, together with other specialized FTA reviews and safety  reviews conducted by external and internal entities.
subsections: section_title: WMATA’s Auditor General
paragraphs: WMATA’s Auditor General is responsible for planning and implementing  operational, financial, and information system audits, as well as for  carrying out investigations to prevent or detect mismanagement, waste,  fraud, or abuse. The Office of Auditor General also conducts audits of  contracts to ensure they are being done in accordance with WMATA policy  and cost-effectively. The Auditor General reports directly to the General  Manager/Chief Executive Officer and briefs the audit committee of the  board of directors quarterly. The Auditor General prepares an annual audit  plan that covers most aspects of the agency.
When deficiencies in a program are found, the Office of Auditor General  makes recommendations for corrective actions to be taken and follows up  on the implementation status of recommendations with the executive  manager responsible for the program or office to which the  recommendations were directed. If the recommendations are not  implemented in a timely fashion, the Chief Executive’s office may  intervene to ensure that appropriate corrective action is taken. For the  most part, WMATA management implements these recommendations.
The following are examples of audit reports issued by the Office of  Auditor General in recent years:     Contract/Procurement Oversight. Since January 2004, the Office of  Auditor General has issued five internal audit reports on contracting  processes and the documentation of contracting activities.  Recommendations were made to improve the documentation process,  improve the administration of the cost-estimating process, and develop  procedures to document the cost-estimating process.
Information Technology (IT) Renewal Program. The IT Renewal Program  is a multiyear, multimillion-dollar initiative to renew WMATA’s IT systems  for the next generation of service. The Office of Auditor General has  issued six reports during the past 3 years on the implementation of this  program, with suggestions for improving communication and ensuring that  appropriate security measures are in place.
Audit of Cell Phone Usage. This review of employee cell phone plans and  usage made recommendations for more efficient and effective cell phone  use, which resulted in potential savings of approximately $300,000 per  year. Additional recommendations were made to improve the  administration of the cell phone program.
section_title: Single Audit Act
paragraphs: WMATA is subject to federal financial reporting requirements under the  Single Audit Act as amended. Under this act, nonfederal entities that  expend more than specified amounts of federal awards (currently  $500,000) are subject to either a single audit or a program-specific audit,  which must be performed by an independent external auditor in  accordance with generally accepted government auditing standards. The  purpose of the Single Audit Act was to streamline and improve the  effectiveness of audits of federal awards and to reduce the audit burden  on states, local governments, and nonprofit entities receiving federal  awards by replacing multiple grant audits with one audit of a recipient as a  whole (or, for entities receiving federal awards under one program, an  optional audit of that program only).
In conducting WMATA’s annual audits under the act’s requirements, an  independent auditor is required to (1) provide an opinion on WMATA’s  financial statements and the Schedule of Expenditures of Federal Awards,  (2) report on WMATA’s internal controls related to the financial  statements and major programs, and (3) report on WMATA’s compliance  with laws and regulations that could have a material effect on WMATA’s  financial statements and major federal programs.
For fiscal years 2003 and 2004, WMATA’s independent external auditor  found no reportable conditions or material weaknesses in WMATA’s  internal controls over financial reporting and the major programs  receiving federal assistance. The independent auditor’s reviews of  WMATA’s financial statements and internal controls did, however, note  several areas of noncompliance related to requirements for grants for both  years. When such areas of noncompliance are found, the auditor  recommends steps for WMATA to take to correct the noncompliance.  WMATA generally concurred with the auditor’s recommendations and  agreed to implement them. The following are examples of noncompliance  and recommendations for corrective action found at WMATA during fiscal  years 2003 and 2004:    Property records for equipment purchased with a federal grant did not  include serial numbers or prices for the equipment—as required by federal  law. The auditor recommended that WMATA revise the records to  include the required information, and WMATA agreed to do so.
WMATA did not correctly submit federal grant expenditure status reports.
The auditor recommended that WMATA revise and resubmit its financial  status reports to include total expenditures, which WMATA agreed to do.
section_title: FTA’s Project Management Oversight Program
paragraphs: FTA oversees the progress of WMATA’s major capital projects through the  project management oversight (PMO) program, which we discuss in  greater detail later in this statement. To receive financial assistance, FTA’s  grantees must develop and implement a project management plan that  address each project’s scheduling, budget, performance, and other issues.  FTA retains engineering firms to review and recommend approval of the  plans, monitor the progress of each project against its plan, and issue  monthly monitoring reports. The purpose of the monthly PMO monitoring  reports is to determine whether the projects are proceeding in accordance  with the terms of the federal grant agreements, including whether they are  meeting standard project management requirements, such as having a  project management plan and a quality assurance plan, meeting schedule  milestones, and being on budget.
WMATA’s major capital projects that are subject to PMO review  collectively represent a substantial portion of WMATA’s capital budget. We  reviewed PMO reports that were issued from January 2003 through May  2005. During that time, WMATA had seven capital infrastructure projects  that were subject to the requirements of the PMO program, including IRP,  which, as discussed earlier, provides ongoing maintenance and renewal of  the Metrorail and Metrobus systems; the rail car procurement program;  and the construction of the New York Avenue Metrorail station. The total  cost of the projects under review was about $5 billion, according to data  provided by WMATA.
The monthly PMO monitoring reports that we reviewed identified  concerns and recommended corrective actions for each of WMATA’s  major projects under review. The concerns most commonly cited in the  reports were related to schedules, project management plans, and quality  assurance activities. Details on these concerns—which WMATA has taken  steps to address—follow:    Schedules. The reports cited concerns pertaining to schedules for some of  the contracts within three of WMATA’s projects. For the New York Avenue  Metrorail station and the Largo Metrorail extension, the reports stated that  individual components of the projects were behind schedule; however, the  two projects—as a whole—were both completed ahead of schedule. The  PMO reports also found that components of the rail car procurement  program, including the rehabilitation of the 2000/3000 Series rail cars and  the delivery of new 5000 Series rail cars, were behind schedule.
Project management plans. The reports stated that WMATA needed to  submit or update project management plans for three of its projects—the  rail car procurement program, Metro Matters, and the Infrastructure  Renewal Program.
Quality assurance activities. The reports stated that procedures related  to quality assurance required updating for three projects: Dulles Corridor  rapid transit, the Largo Metrorail extension, and the Branch Avenue  storage and maintenance yard. Some examples of quality assurance  activities include having (1) written procedures that describe how to  conduct reviews of contractor’s quality programs and (2) quality control  coordination meetings with contractors.
section_title: FTA’s Triennial Review
paragraphs: At least every 3 years, FTA is required to review and evaluate transit  agencies receiving funds under its Urbanized Area Formula Grant  program. The reviews focus on compliance with statutory and  administrative requirements in 23 areas, and if grantees are found not to  be in compliance, their funding can be reduced or eliminated. In 2002,  FTA found that WMATA was deficient in the following three areas:    Technical. Grantees must implement the Urbanized Area Formula Grant  Program of Projects in accordance with the grant application master  agreement. WMATA had not been updating the milestones in its Milestone  Progress Reports, nor had WMATA been reporting all required information  for its Job Access and Reverse Commute grants.
Buy America. Certain products used in FTA-funded projects must be  produced in the United States. WMATA’s procurement files for buses and  rail cars did not include required certifications indicating that these  procurements complied with Buy America requirements.
Half-fare. Grantees must offer reduced fares to elderly or disabled riders  or to those who present a Medicare card. WMATA’s system maps specified  the base fare but did not indicate that a half-fare was available.
FTA made recommendations for addressing the specific areas of  noncompliance; WMATA implemented the recommendations, and the  findings were closed in 2004.
section_title: Transit Industry Association Peer Reviews
paragraphs: The American Public Transportation Association (APTA) offers peer  reviews as a service to transit agencies to help enhance the efficiency and  effectiveness of their operations. At the request of transit agencies, the  association convenes panels of experts from within the transit industry,  who travel to the transit agency under review to physically tour the  operations, meet with staff and senior management, and review  documentation in order to develop findings and recommendations on the  transit agency’s operations. Following the site visit, the peer review panel  issues a written report to the transit agency under review.
At WMATA’s own request, APTA conducted peer reviews on WMATA’s bus  and rail operations earlier this year, and WMATA is currently considering  its response to the recommendations made in the peer review reports.  The peer review panels developed recommendations to improve the  effectiveness and efficiency of bus and rail operations in multiple areas,  including staffing, organization, maintenance and technology. For  example:    Findings and recommendations in the rail peer review report focused on  the selection, training, and certification of employees, with  recommendations on improving training for track and train employees  and implementing a new reporting structure for the training  department;   operations, with recommendations on increasing reliance on line  supervisors in dealing with in-service problems and restructuring the  current organization to create distinct line ownership functions and  responsibilities; and track maintenance, with recommendations on recertifying track  walkers annually and increasing the number of track walkers to reduce  the daily inspection distance to industry standards.
Findings and recommendations of the bus peer review report focused on    operations and service, with recommendations for increased street  supervision and re-evaluation of bus route service; facility maintenance, with recommendations on consolidating bus shop  maintenance and improving follow-up procedures for bus defects;   staffing and training, with recommendations on eliminating high  vacancy rates and improving training; and    safety, with recommendations on adhering to basic safety programs  and enforcing personal protective equipment policies.
section_title: Additional GAO Work Remaining on WMATA’s Oversight
paragraphs: As part of our ongoing work, we plan to analyze these reviews in greater  detail to determine whether, taken as a whole, they point to any systemic  problems and are sufficiently comprehensive to identify and address  overall management and operational challenges. We will also broaden the  scope of our analysis to include additional oversight reviews; specifically,  we plan to analyze FTA’s in-depth reviews of program or system  compliance. These include, for example, financial management oversight  reviews, which assess grantees’ financial management systems and  internal controls; procurement system reviews, which evaluate grantees’  compliance with federal procurement requirements; and drug and alcohol  oversight reviews, which assess grantees’ compliance with FTA’s  regulations on substance abuse management programs and drug and  alcohol testing for transit employees. We also plan to review safety audits  of WMATA that were conducted by internal and external entities,  including the following:    WMATA’s Office of System Safety and Risk Protection. This office, which  reports to the Department of Audit and Safety Oversight, performs internal  safety reviews of WMATA’s operations.
Tri-State Oversight Committee. This committee, which is the designated  state safety oversight agency for WMATA, requires WMATA to develop and  implement system safety and security program plans, report accidents and  unacceptable hazard conditions, and conduct safety reviews. The  committee meets with WMATA quarterly to discuss safety issues and has  the authority to mandate corrective action.
APTA. APTA’s bus and rail safety audits review the adequacy of transit  agencies’ system safety program plans and the extent to which the plans  have been implemented.
FTA. FTA performs audits of the Tri-State Oversight Committee to  determine whether the state oversight agency is carrying out its safety  oversight program and to examine ways in which the overall program can  be improved.
National Transportation Safety Board (NTSB). NTSB has the authority to  conduct investigations of accidents and make recommendations. The  NTSB is currently investigating a November 2004 crash involving two  Metrorail trains; it expects to issue a report on the results of this  investigation in the fall of 2005.
In addition, we plan to review the role of WMATA’s board of directors in  providing oversight of WMATA’s management and operations. As noted  earlier in this statement, WMATA is governed by a board of directors— composed of individuals appointed by each of the local jurisdictions  WMATA serves—which sets policies and oversees all of WMATA’s  activities, including budgeting, operations, development, expansion,  safety, procurement, and other activities.
section_title: Spending Safeguards and Management Oversight Have Helped Recipients of Federal Transportation Assistance Control Costs and Ensure Results
paragraphs: To control costs and ensure results—especially for high-cost  transportation infrastructure projects—Congress, the administration, and  GAO have long recognized the importance of instituting spending  safeguards and management oversight for the state and local governments  and transportation agencies that receive federal funding. For example,  certain federal policies have historically controlled the uses of federal  transportation funds, prohibiting the use of these funds for operating  expenses and requiring that the federal funds be matched to ensure the  use of some local funds for capital infrastructure projects. In addition, a  number of past, ongoing, and planned federal and local efforts provide  insight into the benefits of management oversight and how it can be  carried out. For example, in the 1980s, state legislation enhanced  opportunities for New York City’s ailing Metropolitan Transit Authority to  generate additional revenue while providing increased oversight to ensure  accountability. Furthermore, FTA’s PMO program is designed to help  ensure that grantees building major capital projects have the qualified staff  and procedures needed to successfully plan and carry out those projects.  We have also reported that safeguards should accompany any increased  federal funds provided to the District of Columbia to address the  structural imbalance between its costs and revenue-raising capacity.  Finally, the surface transportation reauthorization bills currently before  Congress include provisions to enhance management oversight controls  for projects receiving federal funds, including establishing a new program  to monitor the use of federal highway funds. Although we have not  evaluated the application of these oversight mechanisms to WMATA, we  believe they provide a number of options for Congress to consider as it  weighs the question of providing additional federal funding to WMATA.
subsections: section_title: Federal Programs Restrict Use of Funds for Operations and Encourage State and Local Spending through Matching Requirements
paragraphs: The federal government has generally discouraged federal transit grants  from being used to fund transit operating expenses, although policy in this  area has shifted over time. Landmark legislation in 1964 established a  program of federal capital expenditure grants to state and local  governments.  At that time, no grant money could be used for operating  expenses because of concerns that such grants would discourage efficient  operations of transit agencies and might even have the perverse effect of  rewarding inefficient operations with funding assistance. However, that  act was amended in 1974 to authorize federal subsidies to pay transit  operating expenses, reflecting the alternative concern that limiting federal  assistance to capital grants created incentives for local governments to  inefficiently waste capital, such as by prematurely replacing buses.
During the 1990s, views on how federal transit grants could be used  shifted again, and limits were placed on the total amount of transit formula  grants that could be used for operating expenses. In 1998, with the passage  of the Transportation Equity Act for the 21st Century (TEA-21), transit  agencies serving urban populations of 200,000 or more could no longer use  funding from FTA’s Urbanized Area Formula Grants for operating  expenses. According to FTA officials, this prohibition was instituted in  part because federal policymakers believed that the federal government  should pay only for the construction and maintenance of mass transit  systems, not for their operation. However, TEA-21 did allow capital funds  to be used for preventive maintenance, which included routine  maintenance on rail cars and buses—activities that were previously  classified as operations activities. After the events of September 11, 2001,  we recommended a legislative exception to the prohibition on operations  funding that would allow transit agencies to use Urbanized Area Formula  Grants for security-related operating expenses. Transit agencies can  spend 1 percent of formula funds on security-related operating expenses.
The federal government has also historically used matching requirements  in its transit and other transportation programs to stimulate local  investment in transportation infrastructure and equipment. Currently,  major capital transit investment programs—including the New Starts and  Rail and Fixed Guideway Modernization programs—provide grants that  fund up to 80 percent of a project’s total costs while requiring a local  match of at least 20 percent.
section_title: Assistance to the New York City Transit Agency in the 1980s Was Tied to Oversight Requirements
paragraphs: During the late 1970s and early 1980s, the New York State Metropolitan  Transit Authority (MTA), which includes New York City Transit’s subway  and bus systems and the Long Island Rail Road, was in a state of fiscal  crisis and operational decay. To help salvage the system, the state  legislature passed legislation that provided MTA with the flexibility to  generate additional revenue—through issuing bonds and notes and  through the creation of a special tax district—needed to rebuild its aging  infrastructure. The legislation also established several oversight bodies— which are still in place at MTA today—to help ensure that MTA’s funds  would be well spent. They are as follows:    The Metropolitan Transportation Capital Review Board. Appointed by  the governor and composed of two members recommended by the New  York State legislature and one each recommended by the governor and the  mayor of New York City, this board reviews and approves, once every 5  years, MTA’s capital program plans for transit and railroad facilities. The  plans include goals and objectives for capital spending, establish  standards for service and operations, and include estimated costs and  expected sources of revenue.
The MTA Committee on Capital Program Oversight. This standing  committee of MTA’s board of directors has various oversight  responsibilities, including monitoring the (1) current and future  availability of funds to be used in the capital program plans and (2)  contract awards made by MTA. The committee issues quarterly reports on  its activities and findings.
The MTA Office of the Inspector General. This office was created as an  independent oversight agency to investigate allegations of abuse, fraud,  and deficiencies in the maintenance and operation of facilities. The  Inspector General may also initiate other reviews of MTA’s operations and  can recommend remedial actions to be taken by MTA and monitor their  implementation. The Inspector General is appointed by the governor and  submits annual reports of findings and recommendations to the governor.  MTA is required to report quarterly to the Inspector General on the  implementation status of all recommendations made in final reports.
Since these oversight bodies were established, and with increased funding,  MTA has improved its on-time performance and reliability. For example,  the mean distance between failures has increased from less than 7,000  miles in 1981 to nearly 140,000 miles in 2003, according to MTA.
section_title: FTA’s PMO Program Helps Protect Federal Funds Spent on Major Capital Projects, Including WMATA’s Projects
paragraphs: FTA’s PMO program was established in the 1980s to safeguard the federal  investment in major capital transit projects, which require large  commitments of public resources, can be technically challenging, and  often take years to construct. This program provides a continuous review  and evaluation of the management of all major transit projects funded by  FTA. Through provisions such as the following, the PMO program is  designed to help ensure that grantees building major capital projects have  the qualified staff and procedures needed to successfully build the  projects:     To receive federal financial assistance, grantees must develop and  implement project management plans that address quality, scheduling, the  budget, and other issues.
Contractors monitor grantees’ projects to determine whether grantees are  progressing on time, within budget, and according to approved plans and  specifications.
The contractors periodically report their findings and recommendations  for any corrective actions that may be needed.
In 2000, we reported and testified that FTA had improved the quality of  the PMO program since the early 1990s, when we designated it as high risk  because it was vulnerable to fraud, waste, abuse, and mismanagement.  We concluded that the program had resulted in benefits for both grantees  and FTA. Grantees have improved their controls over the cost, schedule,  quality, and safety of their projects. FTA has gained a better understanding  of the issues surrounding complex construction projects and an increased  awareness of potential problems that could lead to schedule delays or cost  increases. As contractors have brought cost and schedule issues to FTA’s  attention, FTA has taken actions to help protect the federal investment  and control projects’ costs and schedules.
FTA officials told us that any additional federal funding provided to  WMATA would be subject to the PMO program’s requirements only if  those funds were distributed to WMATA through the U.S. Department of  Transportation and FTA. Otherwise, WMATA’s spending from the  additional funding would not likely be subject to any federal program  oversight.
section_title: We Have Suggested Spending Safeguards for Any Increase in Federal Funds Provided to Address the District of Columbia’s Structural Imbalance
paragraphs: In June 2004, we testified on the structural imbalance between the District  of Columbia’s costs and revenue-raising capability, stating that if the  federal government chooses to provide additional funding to the District  to compensate for this imbalance, the government should implement  safeguards to ensure that the funds are spent efficiently and effectively.   In that testimony, we stated that such safeguards should be written into  any legislation providing additional federal assistance to the District and  could include the following:    District officials should be required to report to Congress on how they  plan to spend the federal assistance and regularly report on how it is being  spent.
Congress may consider further specifying the types of projects for which  federal funds could be used or including a matching requirement to ensure  that some local funds continue to be used for infrastructure and capital  requirements.
section_title: Surface Transportation Reauthorization Bill Would Enhance Management Oversight Controls for Projects Receiving Federal Funds
paragraphs: The House and Senate versions of the surface transportation  reauthorization bill that are currently in conference committee contain  provisions aimed at improving the financial integrity and project delivery  times for surface transportation projects that receive federal financial  assistance. For example:    On the transit side, both the House and Senate versions of the bill would  increase the amount of funds available to the Secretary of Transportation  for management oversight of mass transportation construction projects  receiving federal funds. The funds would be used to review and ensure  compliance with federal requirements for project management. To support  the need for such enhanced oversight, the committee report  accompanying the House bill notes that comprehensive agency oversight,  compliance review, and technical assistance are necessary for all major  grant programs.
On the highway side, both versions of the bill would require the Secretary  of Transportation to establish an oversight program for the Federal-Aid  Highway Program to promote the effective and efficient use of federal  highway funds. As part of this new oversight program, the Federal  Highway Administration (FHWA) would (1) review states’ financial  management systems, (2) develop minimum standards for estimating  project costs, and (3) evaluate state practices for awarding contracts and  reducing project costs. In addition, highway projects receiving a certain  amount of federal assistance—$500 million or more in the House bill and  $1 billion or more in the Senate bill—would be subject to an increased  level of FHWA oversight, including submitting a project management plan  and an annual financial plan to FHWA documenting the project’s  procedures for managing costs and schedules.
section_title: Concluding Observations
paragraphs: WMATA’s service to the nation’s capital and its associated additional  responsibilities need to be considered when determining whether a greater  federal role in providing financial assistance to, and oversight of, WMATA  is warranted. In the end, it is up to Congress to decide whether or in what  form to provide WMATA with additional federal funding in recognition of  its support of the federal government. In addition, if Congress decides to  provide WMATA with the additional funding, it is important for there to be  reasonable assurances that the funds will be spent efficiently and  effectively. WMATA is already subject to oversight from multiple entities,  but it is unclear whether this oversight is sufficient to provide such  assurances. WMATA’s existing oversight could be supplemented by  including safeguards in any legislation that provides additional federal  funding. Our research has shown that a number of options are available  for such safeguards, although we have not fully analyzed their applicability  to WMATA or their relative merits. The options include the following:     Require WMATA officials to report to Congress on how they plan to spend  the federal assistance and regularly report on how it is being spent. For  example, Congress could require officials to submit a plan to Congress on  how they intend to spend the federal assistance—before any funds are  obligated—and update this plan as circumstances or priorities change.
Further specify the types of projects for which federal funds could be used  or include a matching requirement to ensure that some local funds  continue to be used for infrastructure and capital requirements.
Require that any additional funding provided to WMATA be administered  through DOT and FTA and therefore be subject to the PMO program.
Institute additional oversight bodies for WMATA, either through or  independent of its board of directors.
Mr. Chairman, this concludes my prepared statement. I would be pleased  to respond to any questions that you or the other Members of the  Committee may have.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact me at (202)  512-2834 or siggerudk@gao.gov. Individuals making key contributions to  this testimony include Seto Bagdoyan, Mark Bondo, Christine Bonham,  Jay Cherlow, Elizabeth Eisenstadt, Edda Emmanuelli-Perez, Rita Grieco,  Heather Halliwell, Maureen Luna-Long, Susan Michal-Smith, SaraAnn  Moessbauer, Katie Schmidt, and Earl Christopher Woodard.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To determine the Washington Metropolitan Area Transit Authority’s  (WMATA) responsibilities for supporting the federal government, we  interviewed a wide array of federal and local officials including those from  WMATA, the Federal Transit Administration (FTA), the Office of  Personnel Management, the General Services Administration, the National  Capital Planning Commission, the Metropolitan Washington Council of  Governments, the U.S. Secret Service, the U.S. Capitol Police, and the  District of Columbia Department of Transportation. We reviewed federal  guidance on employees’ use of, and the placement of federal buildings  near, mass transit and local and federal emergency planning guidance. We  also used WMATA’s estimates of federal Metrorail ridership based on its  2002 passenger survey. Through our review of the survey methodology,  and use of other corroborating evidence, we determined that the ridership  estimates were sufficiently reliable for our purposes.
To determine the current funding challenges facing WMATA and the  options proposed to address these challenges, we reviewed and analyzed  the budgetary shortfall estimate prepared by the Metro Funding Panel,  budget documents from WMATA, and prior GAO reports. We interviewed  officials from WMATA and local transportation experts who served on the  funding panel.
To determine the entities that currently provide oversight of WMATA and  the focus of their recent reviews, we interviewed WMATA officials and  reviewed selected reports and audits that have been issued by WMATA’s  oversight bodies since the beginning of calendar year 2003. Our review  included the following:    FTA’s Project Management Oversight (PMO) program contractor reports    FTA’s most recent Triennial Review    The independent external auditor’s review of WMATA’s financial  statements and internal controls as required under the Single Audit Act   The American Public Transportation Association’s peer review reports  Although FTA carries out a number of reviews of transit agencies in  addition to the Triennial Review and the PMO reports, we selected the  Triennial Review because it covers grantees’ compliance with a wide  range of statutory and administrative requirements, and we selected the  PMO reports because this program provides oversight of WMATA’s major  capital projects, which represent a significant part of WMATA’s budget.  For this statement, we did not analyze any oversight entities or reports  related to safety, such as those of the Tri-State Oversight Committee, the  National Transportation Safety Board, or the American Public  Transportation Association. We plan to address these, as well as FTA’s  additional compliance reviews, as part of our ongoing work.
To identify applicable examples of spending safeguards and management  oversight of any additional federal assistance provided to WMATA, should  Congress decide to provide such assistance, we reviewed prior GAO work  on surface transportation funding and management oversight, as well as  other documents on transportation planning and finance, and interviewed  officials with expertise in the transit industry, transportation finance, and  transportation planning.
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