The eight federal transit programs we reviewed,  which represent 97 percent of FTA’s total fiscal year 2010 grant funds  (excluding funds provided under the American Recovery and  Reinvestment Act) and their respective goals are as follows:    The Urbanized Area Formula Grant Program makes funding available  to urbanized areas and to states for public transportation capital projects  and operating assistance for equipment and facilities in urbanized areas  and for transportation-related planning. Some Federal Transit Programs Distribute Funds Based Partly on Performance, but Opportunities to Improve Grant Recipients’ Performance Accountability Remain

Of the eight SAFETEA-LU transit programs we reviewed, two are generally  funded by congressional direction, while the remaining six are funded  through legislatively defined grant formulas. Funding for Nonformula Programs under SAFETEA-LU, Including New Starts, Is Based Partly on Performance

Funding for the New Starts Program and the Bus and Bus Related  Equipment and Facilities Program—the two non-formula-based SAFETEA- LU programs we reviewed—is based partly on performance. Only a Small Percentage of Federal Transit Funding for Formula Programs under SAFETEA-LU Is Awarded Based on Performance Considerations

According to our analysis, the SAFETEA-LU formulas require that about 5  percent, on average, of fiscal year 2010 funding be awarded based on  transit agency performance for the six formula programs we reviewed (see  table 1). As a result,  FTA is missing a valuable opportunity to evaluate the end results of its  program activities and SAFETEA-LU funding formulas. Performance Accountability Mechanisms Can Improve Performance of Transit Agencies, and although They Potentially Present Disadvantages, Most of These Can Be Mitigated by Following Key Strategies

		Potential Advantages of Using Performance Accountability Mechanisms Are Encouraging Good Performance, Deterring Poor Performance, and Helping Agencies Allocate Limited Funds

Through our literature review, we identified major financial and  nonfinancial mechanisms for making federal transit programs more  performance based. Most notably, to demonstrate that an incentive has been achieved or that a  penalty is not warranted, agencies have to gather, maintain, and  analyze data, and these tasks require resources. Ensure mechanisms are of sufficient value. Ensure appropriate measures are selected. Expanding the use of performance accountability  mechanisms in the area of transit could help make transit grants more  performance based. As noted earlier in this report, Congress and the  administration are currently debating reauthorization of the entire surface  transportation program, including transit programs. However, without FTA analysis of the appropriateness, feasibility, and  potential impact of using various transit performance mechanisms,  Congress may lack the information needed to identify and implement the  most effective mechanisms and better help transit agencies maximize their  potential. Selected Transit Agencies Use Performance Measurement to Varying Degrees and See a Role for the Federal Government in Transit but Cited Challenges in Linking Performance with Planning and Decision Making

		All Transit Agencies We Interviewed Measure Performance in Some Categories, but the Extent to Which They Measure It in Others Varies Widely

While officials from all 12 of the transit agencies we interviewed told us  they measure performance in certain categories, the extent to which they  measure other categories varied widely (see table 5). Similarly, officials from 5 of the transit agencies said it was  challenging to measure environmental impact generally because it was  difficult to determine a method for measuring it or to obtain relevant data. The transit agency officials and transit experts we  interviewed offered a variety of suggestions for consideration in  developing federal transit program goals, including the following:    encourage economic growth and access to jobs;  increase the safety of transit systems;    provide increased mobility for populations, particularly in regions with    encourage modal shift from automobiles to public transit; and    promote livable communities around transit that reduces dependence on  foreign oil, encourage economic growth, and addresses environmental  challenges. As part of this analysis, FTA may want to identify  and evaluate, when applicable,  the extent to which transit grant programs are accomplishing their  established goals,  the areas of performance in which FTA should concentrate its program  activities to increase the performance of local transit agencies and the  federal transit program in general, and  the extent to which formula incentives and other performance  accountability mechanisms have influenced the activities and performance  of local transit agencies. DOT  officials provided technical clarifications, which we incorporated into the  report as appropriate, and DOT said it would consider our  recommendations. To address the second objective, on mechanisms that exist for making  federal transit programs more performance based and strategies for  supporting their successful implementation, we conducted a literature  review to identify pertinent studies and reports and interviewed transit  agency officials and industry experts. To address the third objective, describing how selected U.S. and foreign  transit agencies incorporate performance measurement into their planning  and decision making and their views on the federal role in transit, we  conducted semistructured interviews with 12 transit agencies—10 from  the United States and 2 from foreign countries (see table 6).
Why GAO Did This Study

Public demand and federal funding for transit have grown in recent years, yet most of this funding is not tied to performance. As Congress prepares for reauthorization of the federal surface transportation programs, GAO was asked to report on (1) the extent to which federal transit programs use performance information in making decisions about funding distribution and in evaluating the programs' effectiveness; (2) mechanisms for making these programs more performance based, and strategies for supporting their successful implementation; and (3) how selected U.S. and foreign transit agencies have used performance measurement in their planning and decisions, and their views on the federal role in transit. To do so, GAO analyzed legislation, federal documents, and literature; interviewed federal officials and transit experts; and conducted semistructured interviews with selected transit agencies using criteria that, for U.S. agencies, covered a variety of regions and population sizes and, for foreign agencies, multiple transit modes and English language capability.

What GAO Found

Some federal transit programs distribute funds based partly on performance, but opportunities to improve grant recipients' performance accountability remain. Of the eight transit programs GAO reviewed--which represent 97 percent of total federal transit grants in fiscal year 2010 (excluding funds provided under the American Recovery and Reinvestment Act)--two are generally funded by congressional direction, while the remaining six are funded through legislatively defined grant formulas. Federal funding for the two nonformula programs GAO reviewed--the New Starts Program and the Bus and Bus Related Equipment and Facilities Program--is awarded in part according to performance. A small percentage of federal transit funding for the six formula programs is apportioned based on performance--according to GAO's analysis, about 5 percent, on average, of fiscal year 2010 funding. FTA does not, in general, analyze fully or use the performance data it collects from transit agencies to evaluate the effectiveness of its transit grant programs; thus, FTA is missing a valuable opportunity to evaluate the end results of its program activities and programs' funding formulas. GAO identified three performance accountability mechanisms for making federal transit programs more performance based, including providing financial rewards or penalties/sanctions, increasing or decreasing program flexibility as a performance incentive, and recognizing entities that achieve certain performance goals. These mechanisms have both potential advantages--most notably, they can encourage improved performance and help agencies make sound decisions when allocating limited funds--and potential disadvantages that can produce inequitable results or burden transit agencies with requirements to gather, maintain, and analyze data. GAO also identified several key strategies that can support the use of these mechanisms and mitigate their disadvantages, such as ensuring that mechanisms are of sufficient value and that appropriate measures are selected, among others. However, without FTA analysis of the appropriateness, feasibility, and potential impact of using various transit performance mechanisms, Congress may lack information to determine whether and how these mechanisms could be used to make transit funding more performance based as it prepares for the upcoming surface transportation reauthorization. Transit agencies that GAO interviewed use performance measurement to varying degrees, but they face challenges in linking performance with planning and decision making. All of these agencies measure performance in certain categories, such as ridership and on-time performance, but the extent to which they measure it in others--such as environmental impact, energy usage, and economic development--varies widely. Transit agency officials reported that measuring performance presents challenges, in part because it can be difficult to obtain relevant data and develop a sound methodology. They also said that linking performance to planning and decision making is challenging because of either limited funding or political priorities. These transit agencies and other experts suggested a variety of changes to the federal role in transit, including increasing investment in existing transit infrastructure; developing federal transit program goals that generally address broader issues, such as encouraging a shift from automobiles to public transit; and promoting livable communities around transit systems. The Federal Transit Administration (FTA) should (1) report to Congress on options for adding performance accountability mechanisms to transit programs to ensure efficient and effective federal transit programs and (2) further analyze and use transit agency data, when applicable, for evaluating federal transit program performance. DOT reviewed a draft of this report, provided technical clarifications, and said it would consider our recommendations.