Changes in DOT's Grants to Public Transportation Projects in Nonurbanized Areas Would Be Beneficial

In response to a congressional request, GAO reviewed the Department of Transportation's Formula Grant Program for Areas Other Than Urbanized Areas, referred to as the section 18 program. Specifically, GAO was asked to obtain information on: (1) how the program is working; (2) program requirements for labor protection, elderly and handicapped accessibility, and service to the general public; and (3) rural transportation coordination.

GAO found that: (1) the practice of funding operating costs and project administrative costs at the maximum allowable levels provides the opportunity for program funds to be substituted for funds previously provided by other sources; and (2) the opportunity for substitution could be eliminated by limiting section 18 funding to the increase in a transportation system's operating loss from what it was in its last year of operation before section 18 funding. However, it is uncertain whether funding from other sources could be maintained at previous levels in the face of recent and proposed funding cutbacks in the other Federal programs involving funds to rural transportation systems. The section 18 legislation does not prohibit the Federal Highway Administration (FHWA) from classifying certain noncapital costs as project administrative costs and funding them at a higher level than is allowed for the same type of costs under a similar program. FHWA guidance is not specific about what specialized transportation systems can do about serving the general public to qualify for section 18 funding. In the absence of more specific guidance, States are establishing differing requirements. Because of the numerous errors in the program expense categories, FHWA does not know how much of the program funds are being obligated nationwide for capital, administrative, and operating costs. Also, because the data it does collect are limited, monitoring and assessing program accomplishments is impeded. As a result, FHWA cannot accurately inform Congress about the program.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Oliver W. Krueger Team: General Accounting Office: Community and Economic Development Division Phone: (202) 275-4914