Our  November 2012 report found similar funding trends. Specifically, local  funding exceeded total federal funding for the 25 projects approved for  federal New Starts grants—part of FTA’s Capital Investment Grant  Program—from October 2004 through June 2012.important part of this picture, and according to FTA, MAP-21 authorized  federal funding for public transit—$10.6 billion for fiscal year 2013 and  $10.7 billion for fiscal year 2014. Federal funds available for the FTA’s transit programs come from two  sources: (1) the general fund of the U.S. treasury and (2) the Mass  Transit Account of the Highway Trust Fund. The primary mechanism for funding federal  highway and transit for more than 50 years is the Highway Trust Fund,  which is funded through motor fuel and other highway use taxes. For many years, user fees in the form of federal fuel taxes  and taxes on commercial trucks provided sufficient revenues to the  Highway Trust Fund; however, revenues into the fund have eroded over  time, in part because federal fuel tax rates have not increased since 1993  and in part because of improvements in vehicle fuel efficiency. In May  2013, the Congressional Budget Office estimated that to maintain current  spending levels plus inflation between 2015 and 2022, the Highway Trust  Fund will require over $132 billion more than it is expected to take in over  that period. This approach has effectively  broken the link between taxes paid and benefits received by users and  may not be sustainable given competing demands and the federal  government’s growing fiscal challenge. For this and other reasons,  and because MAP-21 did not address these issues, funding surface  transportation remains on GAO’s High-Risk List. Effective Capital- Investment Decisions Help Transit Agencies Use Funds More Efficiently

Our recent work describes how sound capital-investment decisions can  help transit agencies use federal and other transit funds more efficiently,  and MAP-21’s new requirements for transit agencies to use asset  management are consistent with our recent findings. Transit Asset Management

Improved transit asset management is important because of (1) the large  backlog of transit assets—such as buses, rail cars, elevators, and  escalators—that are already beyond their useful lives; (2) increasing  demand for transit services; and (3) financial strains on transit providers  due to rising fuel prices, decreased state and local funding, and likely  limitations of federal funding going forward. According to FTA, roughly  $78 billion (in 2009 dollars) would be necessary to cover the costs of  rehabilitating or replacing the nation’s transit assets and bring them to a  state of good repair. Sound asset-management practices can help  agencies prioritize their capital investments to help optimize limited  funding. However, of the  nine transit agencies we visited, only two measured the effects of capital  investments on the condition of certain transit assets and none of the  agencies measured the effects on future ridership, in part because they  lacked the tools to determine these effects. The FTA concurs with this  recommendation, in part. However,  according to FTA officials, given the agency’s current budget situation, it  is difficult for it to commit to conduct additional research in the near future. Bus Rapid Transit

In addition to maintaining transit agencies’ existing assets in a state of  good repair, some transit agencies also face a need to build and expand  their systems to meet demand. As a result of the lower initial capital costs for BRT  along with the benefits of improved service, transit agencies took  advantage of federal New and Small Starts dollars to invest in a relatively  large number of BRT projects, as compared to other modes of transit. Coordination Efforts for Transportation- Disadvantaged Populations Are Under Way

Effective federal coordination can help maximize limited resources, while  still providing essential services—especially to transportation- disadvantaged populations, including those who cannot provide their own  transportation or may face challenges in accessing public transportation  due to age, disability, or income constraints. We have previously reported  that transportation-disadvantaged populations often benefit from greater  and higher quality services when transportation providers coordinate their  operations. However, effective coordination can be challenging, as federal programs  provide funding under a variety of services, including education,  employment, and medical and other human services. Our June 2012 report also concluded that insufficient federal leadership  and lack of guidance for furthering collaborative efforts might hinder the  coordination of transportation services among state and local providers. Also, the Coordinating Council should  report on the progress of its prior recommendations and develop a plan to  address any outstanding recommendations. Public Transit: Funding for New Starts and Small Starts Projects, October  2004 through June 2012. Bus Rapid Transit: Projects Improve Transit Service and Can Contribute  to Economic Development.
Why GAO Did This Study

Millions of passengers use transit services on a daily basis, and many transit agencies that provide these services receive federal funding. To meet the needs of these passengers in a challenging economy, transit agencies must use federal and other resources wisely, while ensuring quality service.
The July 2012 surface transportation reauthorization act--MAP-21--has addressed a number of transit issues by strengthening federal authority to oversee transit safety and emphasizing the restoration and replacement of aging infrastructure, among other things. While it is too early to assess all of the impacts of MAP-21, the work GAO has done can help inform the next surface transportation reauthorization act.
This testimony covers GAO's recent work on: (1) funding transit; (2) improving capital decision making; and (3) coordinating services for transit-disadvantaged populations.
To address these objectives, GAO drew from its recent reports issued from March 2011 through November 2013. GAO has also analyzed MAP-21, recent rulemaking, and other reports.

What GAO Found

The Moving Ahead for Progress in the 21st Century Act (MAP-21) authorized $10.6 and $10.7 billion for fiscal years 2013 and 2014, respectively, for public transit, but did not address long-term funding. Federal funds available for FTA's transit programs come from the general fund of the U.S. Treasury and the Mass Transit Account of the Highway Trust Fund. The Highway Trust Fund supports surface transportation programs, including highways and transit, and is funded through motor fuel and other highway use taxes; however, revenues have eroded over time because federal fuel tax rate stagnation, fuel efficiency improvements, and the use of alternative fuel vehicles. In May 2013, the Congressional Budget Office estimated that to maintain current spending levels plus inflation between 2015 and 2022, the Fund will require over $132 billion more than it is expected to take in over that period. GAO reported that while Congress transferred over $50 billion in general revenues to the Fund since fiscal year 2008, this approach may not be sustainable given competing demands for funding. For these reasons funding surface transportation remains on GAO's High-Risk List.
To address these funding challenges, sound capital-investment decisions can help transit agencies use their funds more efficiently. GAO's work on transit asset management and bus rapid transit has illustrated these benefits.
Transit asset management : According to the Federal Transit Administration (FTA), it would cost roughly $78 billion (in 2009 dollars) to rehabilitate or replace the nation's aging transit assets--such as buses, rail cars, and escalators. GAO's 2013 report on asset management recognized that many of the nearly 700 public transit agencies struggle to maintain their bus and rail assets in a state of good repair. Sound management practices can help agencies prioritize investments to help optimize limited funding. However, of the nine transit agencies GAO visited, only two measured the effects of capital investments on asset condition and none measured the effects on future ridership. Thus, GAO recommended additional research to measure the effects of capital investments; FTA concurs in part with this recommendation. FTA agency officials recognize the importance of additional research; however, they are hesitant to commit additional resources given their current budget situation.
Bus rapid transit (BRT) : In addition to maintaining assets, transit agencies often need to build or expand systems to meet demand. Transit agencies can apply for federal capital-investment funding for new projects through New and Small Starts and Core Capacity Improvement grants. GAO's 2012 report found that many agencies had taken advantage of New and Small Starts funding to develop BRT projects, which generally require less capital investment compared to rail.
GAO's recent work also shows benefits from coordinating transit services for the transportation-disadvantaged--those who cannot provide their own transportation or face challenges accessing public transportation. GAO's 2012 report pointed out that coordination can be challenging, as federal programs provide funding for a variety of services. GAO also concluded that insufficient federal leadership and guidance on coordinating services for the disadvantaged may hinder coordination among state and local providers. The Coordinating Council--a group of federal agencies providing these services--has completed a strategic plan to strengthen interagency coordination, as GAO recommended.

What GAO Recommends

GAO made recommendations on these issues in previous reports. The Department of Transportation agreed to consider these recommendations and is in various stages of implementing them.