WMATA's Administrative Costs and Largo Extension

Pursuant to a congressional request, GAO reviewed the Washington Metropolitan Area Transit Authority's (WMATA) operating costs, focusing on: (1) why its administrative costs were higher than other major transit authorities'; and (2) whether federal funds are involved in its contract with Maryland for an extension of the Metrorail system. GAO found that: (1) data from the Federal Transit Administration's (FTA) National Transit Database show WMATA 1993 administrative costs were 35.2 percent of its budget; (2) WMATA 1993 administrative costs were significantly higher than the administrative costs of other major transit authorities because WMATA misclassified its transit operators' fringe benefits costs as administrative costs, rather than as operating costs; (3) the cost misclassifications have since been corrected; (4) WMATA 1994 administrative costs were 20.4 percent of its budget, which was similar to other major transit authorities; (5) although the misclassification was discovered by a private contractor responsible for checking the data and following up when mistakes are found, the contractor did not alert WMATA to the error; (6) since the first misclassification of costs, WMATA has found more operating costs misclassified as administrative costs; (7) after correction of the subsequent misclassifications, WMATA 1994 administrative costs were 17.2 percent of its budget; (8) no federal funds are being used to pay for the extension of the Metrorail system into Maryland.