	Options Exist to Address the Federal- Aid Highway Program’s Oversight Challenges

The federal-aid highway program provides nearly $30 billion annually to  the states, most of which are formula grant funds that FHWA distributes  through annual apportionments according to statutory formulas; once  apportioned, these funds are generally available to each state for eligible  projects. Many elements of the administration’s proposal are responsive to  problems and options we have described in past reports and testimony. Should the Congress determine that enhancing federal oversight of major  highway and bridge projects is needed and appropriate, options we have  identified in prior work remain available to build on the administration’s  proposal during the reauthorization process. Clarify uncertainties concerning FHWA’s role and authority. These requirements apply to programs managed by and  acquisitions made by federal agencies, but they do not apply to the federal- aid highway program, a federally assisted state program. NHTSA Makes Inconsistent and Limited Use of Oversight Tools

Over the last 25 years, more than 1.2 million people have died as a result of  traffic crashes in the United States—more than 42,000 in 2002. To improve safety on the nation’s highways, NHTSA administers a number  of programs, including the core federally funded highway safety program,  Section 402 State and Community Grants, and several other highway  safety programs that were authorized in 1998 by TEA-21. NHTSA  has two tools available to strengthen its monitoring and oversight of the  state programs—improvement plans that states not making progress  towards their highway safety goals are to develop, which identify  programs and activities that a state and NHTSA regional office will  undertake to help the state meet its goals; and management reviews,  which generally involve sending a team to a state to review its highway  safety operations, examine its projects, and determine that it is using  funds in accordance with requirements. Challenges

Among the key challenges in this area are (1) evaluating how well the  federally funded state highway safety programs are meeting their goals  and (2) determining how well the states are spending and controlling their  federal highway safety funds. For example, the proposal would somewhat simplify  the current grant structure for NHTSA’s highway safety programs. Unlike the federal highway program and certain transit programs, under  which funds are automatically distributed to states on the basis of  formulas, the New Starts program requires local transit agencies to  compete for New Starts project funds on the basis of specific financial and  project justification criteria. Strategies

FTA has developed strategies to address the twin challenges of selecting  the right projects and monitoring their implementation costs, schedule,  and performance. Figure 3 illustrates the New Starts  evaluation and ratings process. While FTA has made substantial progress in establishing a systematic  process for evaluating and rating potential projects, our work has raised  some concerns about the process. FTA has  not implemented this recommendation. However, this initiative might reduce the number of smaller communities  that would participate in the New Starts program. DOT’s Essential Air Service Program Faces Possible Program Modifications Due to Changing Conditions

The Congress established the Essential Air Service (EAS) program as part  of the Airline Deregulation Act of 1978. Under the Airline Deregulation Act, the EAS program  was intended to sunset, or end, after 10 years. Challenges

As the airline industry has evolved since the industry was deregulated in  1978, the EAS program has faced increasing challenges to remain viable. Strategies

Over the past year, the Congress, the administration, and we have each  identified a number of potential strategies generally aimed at enhancing  the EAS program’s long-term sustainability. Mass Transit: Implementation of FTA’s New Starts Evaluation Process  and FY 2001 Funding Proposals. Essential Air Service: Changes in Subsidy Levels, Air Carrier Costs, and  Passenger Traffic.
Why GAO Did This Study

It is important to ensure that longterm spending on transportation programs meets the goals of increasing mobility and improving transportation safety. In this testimony, GAO discusses what recently completed work on four transportation programs suggests about challenges and strategies for improving the oversight and use of taxpayer funds. These four programs are (1) the federal-aid highway program, administered by the Federal Highway Administration (FHWA); (2) highway safety programs, administered by the National Highway Traffic Safety Administration (NHTSA); (3) the New Starts program, administered by the Federal Transit Administration (FTA); and (4) the Essential Air Service (EAS) program, administered out of the Office of the Secretary of Transportation. Differences in the structure of these programs have contributed to the challenges they illustrate. The federal-aid highway program uses formulas to apportion funds to the states, the highway safety programs use formulas and grants, the New Starts program uses competitive grants, and the EAS program provides subsidies. For each program, GAO describes in general how the program illustrates a particular challenge in managing or overseeing long-term spending and in particular what challenges and strategies for addressing the challenges GAO and others have identified.

What GAO Found

The federal-aid highway program illustrates the challenge of ensuring that federal funds (nearly $30 billion annually) are spent efficiently when projects are managed by the states. GAO has raised concerns about cost growth on and FHWA's oversight of major highway and bridge projects. Recent proposals to strengthen FHWA's oversight are responsive to issues and options GAO has raised. Options identified in previous GAO work provide the Congress with opportunities to build on recent proposals by, among other things, clarifying uncertainties about FHWA's role and authority. NHTSA's highway safety programs illustrate the challenge of evaluating how well federally funded state programs are meeting their goals. Over 5 years, the Congress provided about $2 billion to the states for programs to reduce traffic fatalities, which numbered over 42,000 in 2002. GAO found that NHTSA was making limited use of oversight tools that could help states better implement their programs and recommended strategies for improving the tools' use that NHTSA has begun to implement. The administration recently proposed performance-based grants in this area. FTA's New Starts program illustrates the challenge of developing effective processes for evaluating grant proposals. Under the New Starts program, which provided about $10 billion in mass transit funding in the past 6 years, local transit agencies compete for project funds through grant proposals. FTA has developed a systematic process for evaluating these proposals. GAO believes that FTA has made substantial progress by implementing this process, but our work has raised some concerns, including the extent to which the process is able to adequately prioritize the projects. The Essential Air Service (EAS) program illustrates the challenge of considering modifications to statutorily defined programs in response to changing conditions. Under the EAS program, many small communities are guaranteed to continue receiving air service through subsidies to carriers. However, the program has faced increasing costs and decreasing average passenger levels. The Congress, the administration, and GAO have all proposed strategies to improve the program's efficiency by better targeting available resources and offering alternatives for sustainable services.