Recovery Act
Use of Transportation Funds, Outcomes, and Lessons Learned Gao ID: GAO-11-610T May 4, 2011The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided more than $48 billion to the Department of Transportation (DOT) to be distributed through existing programs and through two new competitive grant programs--high speed intercity passenger rail and the Transportation Investment Generating Economic Recovery (TIGER) program. As requested, this testimony addresses the (1) status and use of Recovery Act transportation funds, (2) outcomes and long-term benefits of Recovery Act transportation investments, and (3) lessons learned from DOT's and states' experiences implementing the Recovery Act. GAO reviewed prior and ongoing work, federal legislation, and guidance. GAO also analyzed Recovery Act data and interviewed federal, state, and local officials.
As of March 31, 2011, more than $45 billion (about 95 percent) of Recovery Act transportation funds had been obligated for over 15,000 projects nationwide, and more than $26 billion had been expended. States and other recipients continue to report using Recovery Act funds to improve the nation's transportation infrastructure. Highway funds have been primarily used for pavement improvement projects and transit funds have been primarily used to upgrade transit facilities and purchase new vehicles. Recovery Act funds have also been used to rehabilitate airport runways and improve Amtrak's infrastructure. DOT continues to obligate funds for its high speed intercity passenger rail and TIGER grant programs. As of March 31, 2011, DOT had obligated nearly all of the $1.5 billion in TIGER funds for 51 surface transportation projects. The Recovery Act helped to fund transportation jobs, but long-term benefits are unclear. For example, according to available data, Recovery Act transportation projects supported about 50,000 full-time equivalents (FTE) in the three months from October through December 2010. The most recent data showed that highway projects accounted for about two-thirds of the transportation FTEs reported, and the remaining one-third of the FTEs were attributed to transit and other transportation projects. However, the impact of Recovery Act investments in transportation is unknown, and GAO has recommended that DOT determine the data needed to assess the impact of these investments. Although DOT has set broad performance goals for its high speed intercity passenger rail and TIGER programs--and is currently evaluating the best methods for measuring objectives and collecting data--it has not committed to assessing the long-term benefits of the Recovery Act investments in transportation. Certain Recovery Act provisions meant to stimulate the economy, but not typically required under existing DOT programs, proved challenging. For example, GAO has reported on numerous challenges DOT and states faced in implementing the transportation maintenance-of-effort requirement, which required states to maintain their planned levels of spending over approximately 18 months or be ineligible to participate in the August 2011 redistribution of obligation authority under the Federal-Aid Highway Program. A January 2011 preliminary DOT report found that 29 states met the requirement while 21 states did not. In this report, DOT also discussed how the maintenance-of-effort provision could be improved. With regard to the high speed intercity passenger rail and TIGER programs, GAO found that while DOT generally followed recommended grant-making practices, DOT could have better documented its award decisions. For example, the Federal Railroad Administration could have developed clearer records for how it made award decisions. Without a clear record of selection decisions, DOT is vulnerable to criticism about the integrity of its decisions. Likewise, DOT did not clearly document its final decisions and rationale for selecting recommended TIGER projects. This testimony does not include new recommendations. In our past work, GAO recommended that the Secretary of Transportation take several actions, such as directing the Federal Highway and Federal Transit administrations to determine the data needed to assess the impact of Recovery Act projects; we recently recommended that the Federal Railroad Administration and DOT better document decisions regarding their competitive grant programs. DOT has addressed some GAO recommendations, but others remain open. We will continue to track them. GAO provided a draft of this statement to DOT and incorporated its comments where appropriate.
GAO-11-610T, Recovery Act: Use of Transportation Funds, Outcomes, and Lessons Learned
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United States Government Accountability Office:
GAO:
Testimony:
Before the Committee on Transportation and Infrastructure, House of
Representatives:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Wednesday, May 4, 2011:
Recovery Act:
Use of Transportation Funds, Outcomes, and Lessons Learned:
Statement of Phillip R. Herr, Director:
Physical Infrastructure:
GAO-11-610T:
GAO Highlights:
Highlights of GAO-11-610T, a testimony before the Committee on
Transportation and Infrastructure, House of Representatives.
Why GAO Did This Study:
The American Recovery and Reinvestment Act of 2009 (Recovery Act)
provided more than $48 billion to the Department of Transportation
(DOT) to be distributed through existing programs and through two new
competitive grant programs”high speed intercity passenger rail and the
Transportation Investment Generating Economic Recovery (TIGER)
program. As requested, this testimony addresses the (1) status and use
of Recovery Act transportation funds, (2) outcomes and long-term
benefits of Recovery Act transportation investments, and (3) lessons
learned from DOT‘s and states‘ experiences implementing the Recovery
Act. GAO reviewed prior and ongoing work, federal legislation, and
guidance. GAO also analyzed Recovery Act data and interviewed federal,
state, and local officials.
What GAO Found:
As of March 31, 2011, more than $45 billion (about 95 percent) of
Recovery Act transportation funds had been obligated for over 15,000
projects nationwide, and more than $26 billion had been expended.
States and other recipients continue to report using Recovery Act
funds to improve the nation‘s transportation infrastructure. Highway
funds have been primarily used for pavement improvement projects and
transit funds have been primarily used to upgrade transit facilities
and purchase new vehicles. Recovery Act funds have also been used to
rehabilitate airport runways and improve Amtrak‘s infrastructure. DOT
continues to obligate funds for its high speed intercity passenger
rail and TIGER grant programs. As of March 31, 2011, DOT had obligated
nearly all of the $1.5 billion in TIGER funds for 51 surface
transportation projects.
The Recovery Act helped to fund transportation jobs, but long-term
benefits are unclear. For example, according to available data,
Recovery Act transportation projects supported about 50,000 full-time
equivalents (FTE) in the three months from October through December
2010. The most recent data showed that highway projects accounted for
about two-thirds of the transportation FTEs reported, and the
remaining one-third of the FTEs were attributed to transit and other
transportation projects. However, the impact of Recovery Act
investments in transportation is unknown, and GAO has recommended that
DOT determine the data needed to assess the impact of these
investments. Although DOT has set broad performance goals for its high
speed intercity passenger rail and TIGER programs-”and is currently
evaluating the best methods for measuring objectives and collecting
data”-it has not committed to assessing the long-term benefits of the
Recovery Act investments in transportation.
Certain Recovery Act provisions meant to stimulate the economy, but
not typically required under existing DOT programs, proved
challenging. For example, GAO has reported on numerous challenges DOT
and states faced in implementing the transportation maintenance-of-
effort requirement, which required states to maintain their planned
levels of spending over approximately 18 months or be ineligible to
participate in the August 2011 redistribution of obligation authority
under the Federal-Aid Highway Program. A January 2011 preliminary DOT
report found that 29 states met the requirement while 21 states did
not. In this report, DOT also discussed how the maintenance-of-effort
provision could be improved. With regard to the high speed intercity
passenger rail and TIGER programs, GAO found that while DOT generally
followed recommended grant-making practices, DOT could have better
documented its award decisions. For example, the Federal Railroad
Administration could have developed clearer records for how it made
award decisions. Without a clear record of selection decisions, DOT is
vulnerable to criticism about the integrity of its decisions.
Likewise, DOT did not clearly document its final decisions and
rationale for selecting recommended TIGER projects.
What GAO Recommends:
This testimony does not include new recommendations. In our past work,
GAO recommended that the Secretary of Transportation take several
actions, such as directing the Federal Highway and Federal Transit
administrations to determine the data needed to assess the impact of
Recovery Act projects; we recently recommended that the Federal
Railroad Administration and DOT better document decisions regarding
their competitive grant programs. DOT has addressed some GAO
recommendations, but others remain open. We will continue to track
them. GAO provided a draft of this statement to DOT and incorporated
its comments where appropriate.
View [hyperlink, http://www.gao.gov/products/GAO-11-610T] or key
components. For more information, contact Phillip R.Herr at (202) 512-
2834 or herrp@gao.gov or Susan A. Fleming at (202) 512-2834 or
flemings@gao.gov.
[End of section]
Chairman Mica, Ranking Member Rahall, and Members of the Committee:
We are pleased to be here today to discuss our observations on
Department of Transportation (DOT) programs funded under the American
Recovery and Reinvestment Act of 2009 (Recovery Act).[Footnote 1]
Congress enacted the Recovery Act in response to a serious economic
crisis to, among other things, preserve and create jobs, promote
economic recovery across the nation, and invest in transportation and
other infrastructure to provide long-term economic benefits. We have
noted that, given the nation's long-term fiscal challenges, any
economic stimulus package should be timely, targeted, and temporary.
The Recovery Act provided more than $48 billion for transportation
investments just over a year after the onset of the recession, and
stipulated that most of the funds be obligated by September 30, 2010.
The Recovery Act targeted the majority of transportation funds for
investments in infrastructure, including airports and air navigation
facilities, roads and bridges, public transit systems, and high speed
intercity passenger rail.[Footnote 2]
The Recovery Act assigned several roles to GAO, including reviewing
how selected states and localities used funds made available under the
act. As part of those reviews, we examined how Recovery Act
transportation funds are being used and whether they are achieving the
act's stated purposes.[Footnote 3] We also recently issued reports on
two competitive grant programs funded under the Recovery Act,
including the Federal Railroad Administration's (FRA) high speed
intercity passenger rail program and the Transportation Investment
Generating Economic Recovery (TIGER) grant program[Footnote 4]
administered by the Office of the Secretary of Transportation, both of
which we discuss in this statement.[Footnote 5]
Our statement is based on our recently completed and ongoing work, and
addresses the (1) status and use of Recovery Act transportation funds,
(2) outcomes and long-term benefits of Recovery Act transportation
investments, and (3) challenges and key lessons learned from DOT's and
states' experiences implementing the Recovery Act. We conducted all of
our work in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to produce a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our statement today. Additional information on our scope and
methodology is available in each issued report.
Background:
The vast majority of the $48.1 billion of Recovery Act funding for
transportation programs went to the Federal Highway Administration
(FHWA), FRA, and the Federal Transit Administration (FTA) for highway,
road, bridge, rail, and transit projects. Indeed, more than half of
all Recovery Act transportation funds were designated for the
construction, rehabilitation, and repair of highways, roads, and
bridges (see figure 1). The remaining funds were allocated among other
DOT operating administrations.[Footnote 6]
Figure 1: Recovery Act Funds Appropriated to DOT Programs:
[Refer to PDF for image: pie-chart and associated data]
Total DOT Recovery Act funding: $48.1 billion.
Operating administration: Maritime Administration (MARAD): $100
million (0.2%);
Program: Assistance to small shipyards: $100 million.
Operating administration: Federal Aviation Administration (FAA): $1.3
billion (2.7%);
Programs:
Grants-in-aid for airports: $1.1 billion.
FAA facilities and equipment: $200 million.
Operating administration: Office of the Secretary of Transportation
(OST): $1.5 billion (3.1%);
Program: Transportation Investment Generating Economic Recovery
(TIGER) grants: $1.5 billion.
Operating administration: Federal Transit Administration (FTA): $8.4
billion (17.5%);
Programs:
Transit capital assistance program (TCAP)[A]: $6.9 billion;
Fixed guideway infrastructure: $750 million;
Capital investment grants: $750 million.
Operating administration: Federal Railroad Administration (FRA): $9.3
billion (19.3%);
Programs:
High speed intercity passenger rail: $8.0 billion;
Amtrak: $1.3 billion.
Operating administration: Federal Highway Administration (FHWA): $27.5
billion (57.2%);
Program: Highway infrastructure investment[B]: $27.5 billion.
Source: GAO analysis of DOT data.
[A] TCAP includes nonurban and urban formula funds, tribal grants,
funds transferred from FHWA, and Transit Investment for Greenhouse Gas
and Energy Reduction grants.
[B] Of the $27.5 billion the Recovery Act made available to FHWA, FHWA
apportioned $26.6 billion to states for highway infrastructure
investment and $105 million for the Puerto Rico highway program. Of
the remaining funds, $550 million was allocated to Federal Lands and
Indian Reservations, $20 million for Highway Surface Transportation
Technical Training, $45 million for the Territorial Highway Program,
and $60 million for the Ferry Boat Discretionary Program, among others.
[End of figure]
DOT administered most Recovery Act funds through existing
transportation programs. For example, highway funds were distributed
under rules governing the Federal-Aid Highway Program generally and
the Surface Transportation Program in particular.[Footnote 7] DOT also
established new grant processes to award high speed intercity
passenger rail and TIGER grants. For these programs, DOT published
selection criteria, solicited and reviewed applications, and awarded
grants to applicants that it judged best met the criteria and complied
with legislative and regulatory requirements.
The Recovery Act included obligation deadlines to indicate the
temporary nature of the funds and to facilitate their timely use.
Therefore, the Recovery Act identified short deadlines for obligating
most transportation funds, and it required that preference be given to
projects that could be started and completed expeditiously. For
example, highway and transit funds were to be fully obligated by
September 30, 2010. All TIGER funds must be obligated by September 30,
2011, and all high speed intercity passenger rail funds must be
obligated by September 30, 2012.
The Recovery Act also introduced new requirements for existing
programs to help ensure that funds add to states' and localities'
overall economic activity, and are targeted to areas of greatest need.
For example, the Recovery Act required governors of each state to
certify that their state will maintain its planned level of spending
for the types of transportation projects funded by the act and also
required states to give priority to projects in economically
distressed areas.[Footnote 8]
State and local agencies, contractors, and others that receive
Recovery Act funding are required to submit quarterly reports on the
number of jobs created or retained, among other data. These job
calculations are based on the number of hours worked in a quarter and
funded under the Recovery Act--expressed in full-time equivalents
(FTE)--but they do not account for the total employment arising from
the expenditure of Recovery Act transportation funds. That is, the
data recipients report do not include employment at suppliers
(indirect jobs) or in the local community (induced jobs).[Footnote 9]
Most Recovery Act Transportation Funds Have Been Obligated, and
Expenditures for Infrastructure Continue to Increase:
According to DOT data, as of March 31, 2011, DOT had obligated more
than $45 billion (about 95 percent) on over 15,000 projects and had
expended more than $26 billion (about 59 percent) of the $48.1 billion
it received under the Recovery Act (see table 1).[Footnote 10]
Table 1: Recovery Act Transportation Projects, Obligations, and
Expenditures, as of March 31, 2011:
Federal Highway Administration:
Program: Highway infrastructure investment[A];
Number of projects: Awarded: 12,931;
Number of projects: Completed: 7,072;
Obligations: Amount: $26.342 billion;
Obligations: Percent obligated: 99.9%;
Expenditures: Amount: $18.661 billion;
Expenditures: Percent expended: 70.8%.
Federal Railroad Administration:
Program: High speed intercity passenger rail;
Number of projects: Awarded: 57;
Number of projects: Completed: 0;
Obligations: Amount: $5.354 billion;
Obligations: Percent obligated: 67.1%;
Expenditures: Amount: $94 million;
Expenditures: Percent expended: 1.8%.
Program: Capital grants to Amtrak;
Number of projects: Awarded: 154;
Number of projects: Completed: 89;
Obligations: Amount: $1.291 billion;
Obligations: Percent obligated: 100.0%;
Expenditures: Amount: $1.180 billion;
Expenditures: Percent expended: 91.4%.
Federal Transit Administration:
Program: Transit capital assistance program (TCAP);
Number of projects: Awarded: 1,010;
Number of projects: Completed: 146;
Obligations: Amount: $7.829 billion;
Obligations: Percent obligated: 100.0%;
Expenditures: Amount: $4.265 billion;
Expenditures: Percent expended: 58.5%.
Program: Fixed guideway infrastructure;
Number of projects: Awarded: 51;
Number of projects: Completed: 23;
Obligations: Amount: $743 million;
Obligations: Percent obligated: 100.0%;
Expenditures: Amount: $441 million;
Expenditures: Percent expended: 59.4%.
Program: Capital investment grants;
Number of projects: Awarded: 11;
Number of projects: Completed: 11;
Obligations: Amount: $743 million;
Obligations: Percent obligated: 100.0%;
Expenditures: Amount: $743 million;
Expenditures: Percent expended: 100.0%.
Office of the Secretary of Transportation:
Program: TIGER grants;
Number of projects: Awarded: 51;
Number of projects: Completed: 0;
Obligations: Amount: $1.489 billion;
Obligations: Percent obligated: 99.3%;
Expenditures: Amount: $77 million;
Expenditures: Percent expended: 5.2%.
Federal Aviation Administration:
Program: Grants-in-aid for airports;
Number of projects: Awarded: 372;
Number of projects: Completed: 364;
Obligations: Amount: $1.088 billion;
Obligations: Percent obligated: 99.1%;
Expenditures: Amount: $1.043 billion;
Expenditures: Percent expended: 95.9%.
Program: FAA facilities and equipment;
Number of projects: Awarded: 399;
Number of projects: Completed: 378;
Obligations: Amount: $198 million;
Obligations: Percent obligated: 99.0%;
Expenditures: Amount: $130 million;
Expenditures: Percent expended: 65.7%.
Maritime Administration:
Program: Assistance to small shipyards;
Number of projects: Awarded: 70;
Number of projects: Completed: 30;
Obligations: Amount: $98 million;
Obligations: Percent obligated: 100.0%;
Expenditures: Amount: $76 million;
Expenditures: Percent expended: 77.6%.
Total:
Number of projects: Awarded: 15,106;
Number of projects: Completed: 8,113;
Obligations: Amount: $45.175 billion;
Obligations: Percent obligated: 95.5%;
Expenditures: Amount: $26.710 billion;
Expenditures: Percent expended: 59.1%.
Source: GAO analysis of DOT data.
Notes: For information on total federal outlays for all programs
administered by states and localities under the Recovery Act, see
[hyperlink, http://gao.gov/recovery].
The percentage obligated is not based on the total Recovery Act funds
each agency received but on the amount agencies allotted for
distribution to projects. In most cases, this amount was less than the
total amount of Recovery Act funds the agency received.
[A] Includes Puerto Rico and the other territories but not federal
lands projects.
[End of table]
States and other recipients continue to report using Recovery Act
funds to improve the condition of the nation's transportation
infrastructure, as well as invest in new infrastructure. For example,
according to DOT data, highway funds have been primarily used for
pavement improvement projects, such as resurfacing, reconstruction,
and rehabilitation of existing roadways, and public transit funds have
been used primarily for upgrading transit facilities and purchasing
new vehicles (see figure 2).
Figure 2: Highway and Transit Obligations, by Project Type:
[Refer to PDF for image: 2 pie-charts]
Highway obligations ($26.2 billion):
Pavement improvement: reconstruction/rehabilitation ($7.1 billion):
27%;
Pavement improvement: resurface ($6.1 billion): 23%;
Pavement widening ($4.7 billion): 18%;
Other ($3.3 billion): 13%;
New construction ($1.8 billion): 7%;
Bridge replacement ($1.4 billion): 5%;
Bridge improvement ($1.2 billion): 5%;
New bridge construction ($0.5 billion): 2%.
Transit obligations ($8.8 billion):
Transit infrastructure ($4.5 billion): 51%;
Vehicle purchases and rehabilitation ($2.0 billion): 23%;
Other capital expenses ($1.0 billion): 11%;
Preventive maintenance ($0.8 billion): 9%;
Rail car purchases and rehabilitation ($0.3 billion): 4%;
Operating assistance ($0.2 billion): 2%.
Source: GAO analysis of DOT data.
Notes: Percentages may not add to 100 because of rounding.
Transit obligations include Recovery Act funds that were transferred
from FHWA to FTA. The category "other" includes safety projects, such
as improving safety at railroad grade crossings; engineering; right-of-
way purchases; and transportation enhancement projects, such as
pedestrian and bicycle facilities. "Transit infrastructure" includes
engineering and design, acquisition, construction, and rehabilitation
and renovation activities. "Other capital expenses" includes leases,
training, finance costs, mobility management project administration,
and other capital programs.
Highway data are as of December 31, 2010, and transit data are as
September 30, 2010.
[End of figure]
Recovery Act funding for aviation is reported to have gone to
rehabilitating and reconstructing airfield runways and taxiways, as
well as air navigation infrastructure such as air traffic control
towers, engine generators, back-up batteries, and circuit breakers.
The Recovery Act grant provided to Amtrak has been used to make
infrastructure improvements and return cars and locomotives to
service. Because high speed intercity passenger rail and TIGER were
new grant programs, the Recovery Act allowed additional time for DOT
to develop criteria, publish notices of funding availability for each
program, and award grants. As a result, projects selected for high
speed intercity passenger rail and TIGER were announced about a year
after enactment, and DOT has been making progress obligating Recovery
Act funds for these programs. For example, DOT selected one intercity
passenger rail project to rehabilitate track and provide service from
Portland to Brunswick, Maine, at speeds up to 70 miles per hour.
Another project was selected to initiate the first part of
California's high speed rail system, which envisions service at more
than 200 miles per hour between Los Angeles, San Francisco and the
Central Valley, and eventually, San Diego. DOT's TIGER grants funded
projects across different surface transportation modes, including
highways, transit, rail, and ports. For example, the California Green
Trade Corridor/Marine Highway project is a collaborative effort of
three regional ports in California to develop and use a marine highway
system as an alternative to existing truck and rail infrastructure for
transporting consumer goods and agricultural products.
According to DOT, a variety of Recovery Act projects have been
completed. Approximately 68 percent of the completed highway projects
involve pavement improvement, according to FHWA, and completed transit
projects generally included preventative maintenance activities and
some vehicle purchases and facility construction, according to FTA.
Amtrak had also completed a variety of projects, including
construction station upgrades, right-of-way improvements, installing
communications and signaling systems, and replacing aging bridges,
among other things. While no high speed intercity passenger rail
projects had been completed as of March 31, 2011, 15 projects were
under way, according to FRA. These projects, which represent more than
two-thirds of the allotted funding, include track and signaling work
to improve reliability and increase operating speeds, improvements to
stations, and the environmental analysis and preliminary engineering
required to advance projects to construction.
The Recovery Act Helped Fund Transportation Jobs, but Long-Term
Benefits Are Unclear:
Recovery Act funds helped pay for jobs across various transportation
modes. At a time when the construction industry was experiencing
historically high unemployment and many states could not afford to
maintain existing infrastructure, transportation officials we met with
told us that the Recovery Act helped to keep the transportation
industry in operation while allowing states to tackle some of their
infrastructure maintenance priorities. According to the most recent
recipient reported data, Recovery Act transportation projects
supported about 50,000 FTEs from October 2010 through December 2010.
[Footnote 11] Transportation recipients reported the highest FTE
counts during the quarter that ended September 2010, when many
projects were under way (see figure 3).
Figure 3: FTEs Reported by Recovery Act Transportation Program
Recipients for Quarters Ending December 2009 through December 2010:
[Refer to PDF for image: stacked vertical bar graph]
Reporting quarter end date: 12/31/2009;
Highways: 25,845;
Transit: 9,910;
Other: 3,715.
Reporting quarter end date: 3/31/2010;
Highways: 16,596;
Transit: 12,944;
Other: 3,290.
Reporting quarter end date: 6/30/2010;
Highways: 41,262;
Transit: 14,1265;
Other: 4,887.
Reporting quarter end date: 9/30/2010;
Highways: 46,363;
Transit: 12,390;
Other: 6,354.
Reporting quarter end date: 12/31/2010;
Highways: 31,869;
Transit: 11,580;
Other: 4,869.
Source: GAO analysis of recipient reported data from Recovery.gov.
Note: "Highways" includes FHWA projects funded for highway planning
and construction. "Transit" includes FTA projects funded with capital
investment grants, metropolitan transportation planning grants,
formula grants (including grants for other than urbanized areas), and
the capital assistance program for reducing energy consumption and
greenhouse gas emissions. "Other" includes projects funded by FAA's
Airport Improvement Program; FRA's Amtrak grant and high speed
intercity passenger rail program; Maritime Administration's Assistance
to Small Shipyards Program; and the Office of the Secretary of
Transportation's Bonding Assistance Program and TIGER grants.
[End of figure]
For the most recent reporting quarter, highway projects accounted for
approximately two-thirds of the transportation FTEs reported, and the
remaining one-third of FTEs were attributed to transit and all other
transportation projects. The relatively low portion of FTEs reported
for all other transportation projects is expected to rise in future
reporting quarters as more high speed intercity passenger rail and
TIGER program funds are obligated and projects get under way.
While FTEs reported for the high speed intercity passenger rail and
TIGER programs are expected to increase as these projects get under
way, other program areas have reported fewer FTEs in the most recent
reporting quarter. Recipient reported data for the quarter ending
December 31, 2010, showed fewer recipients reporting than in the
previous quarter across all program areas (highways, transit, and
other). This may indicate that more projects were completed in the
quarter ending December 31, 2010, than were started. Also in that
quarter, the percentage of recipients that reported any FTEs decreased
compared to the previous quarter, which may indicate that some
projects are essentially completed but not closed out financially or
may reflect interruptions in work due to winter weather for some
projects in colder climates.
Although recipients reported jobs funded, other long-term impacts of
Recovery Act investments in transportation are unknown at this point.
Transportation officials in several states we visited told us that
Recovery Act funds helped reduce backlogs of "shovel-ready"
resurfacing projects. Some states have efforts under way to report on
Recovery Act benefits, but federal and state officials told us that
attributing transportation benefits to Recovery Act funds can be
difficult, particularly when projects are funded from multiple sources
or when historic performance data is not available for particular
projects.
We recommended that DOT ensure that the results of Recovery Act
projects are assessed and a determination is made about whether these
investments produced long-term benefits.[Footnote 12] Specifically, in
the near term, we recommended that FHWA and FTA determine the types of
data and performance measures needed to assess the impact of the
Recovery Act and the specific authority they may need to collect data
and report on these measures. DOT officials told us that they expect
to be able to report on Recovery Act outputs, such as miles of roads
paved, bridges built or repaired, and transit vehicles purchased,
which will help to assess the act's impact. DOT will not be able to
report on outcomes, such as reductions in travel time. DOT has not
committed to assessing the long-term benefits of Recovery Act
investments in transportation. DOT stated that limitations in its data
systems, coupled with the fact that Recovery Act funds represented
only about one year of additional funding for some transportation
programs, would make assessing the benefits of Recovery Act projects
difficult. We continue to believe, however, that it is important for
organizations to measure performance to understand the progress they
are making toward their goals and to produce a set of performance
measures that demonstrates results.
For Recovery Act high speed intercity passenger rail and TIGER grant
programs, DOT has set broad performance goals and required recipients
to identify potential project benefits. Specifically, FRA has outlined
goals for developing high speed intercity passenger rail service in
its strategic plan and national rail plan and evaluated grant
proposals based on the potential project benefits they intended in
their applications.[Footnote 13] However, the identified goals are
broad--such as providing for transportation safety and economic
competitiveness--and do not contain specific targets necessary to
determine how or when FRA will realize intended benefits. DOT also
incorporated performance measures tailored to each TIGER grant awardee
based on the project design and the capacity of the recipient to
collect and evaluate data. DOT is evaluating the best methods for
measuring objectives and collecting data and is working
collaboratively with applicants to weigh options for measuring
performance. As many TIGER projects are just being initiated, the
effectiveness of these measures will not be clear for some time.
Recovery Act Requirements Proved Challenging for DOT and Some States,
Leading to Several Lessons Learned:
Federal, state, and local transportation officials we contacted
reported that while Recovery Act transportation funds provided many
positive outcomes, they also provided lessons learned that may be
relevant as Congress considers the next surface transportation
reauthorization. In addition, our reports on high speed intercity
passenger rail and the TIGER grant program identified a number of
challenges and key lessons learned.
Maintenance of Effort and Economically Distressed Area Requirements
Proved Challenging:
Certain Recovery Act provisions not typically required under existing
DOT programs proved challenging for some states to meet. We found that
it may have been difficult for states to meet these requirements for a
number of reasons, including rapidly changing state economic
conditions. Confusion among the states as to how to interpret and
apply the new requirements was also a contributing factor.
* Maintenance of effort. We have reported that there were numerous
challenges for DOT and states in implementing the transportation
maintenance-of-effort provision in the Recovery Act. This provision
required the governor of each state to certify that the state would
maintain its planned level of transportation spending from February
17, 2009, through September 30, 2010, to help ensure that federal
funds would be used in addition to, rather than in place of, state
funds and thus increase overall spending. A January 2011 preliminary
DOT report indicated that 29 states met their planned levels of
expenditure, and 21 states did not. States had a monetary incentive to
meet their certified planned level of spending in each transportation
program area funded by the Recovery Act because those that fail will
not be eligible to participate in the August 2011 redistribution of
obligation authority under the Federal-Aid Highway Program.[Footnote
14] States had until April 15, 2011, to verify their actual
expenditures for transportation programs covered by the Recovery Act.
DOT is reviewing this information to determine if any more states met
their planned levels of spending.
The DOT preliminary report summarized reasons states did not meet
their certified planned spending levels, such as experiencing a
reduction in dedicated revenues for transportation due to a decline in
state revenues or a lower-than-expected level of approved
transportation funding in the state budget.[Footnote 15] The
preliminary report also identified a number of challenges DOT
encountered in implementing the provision, such as insufficient
statutory definitions of what constitutes "state funding" or how well
DOT guidance on calculating planned expenditures would work in the
many different contexts in which it would have to operate. As a
result, many problems came to light only after DOT had issued initial
guidance and states had submitted their first certifications. DOT
issued seven pieces of guidance to clarify how states were to
calculate their planned or actual expenditures for their maintenance-
of-effort certifications.
DOT invested a significant amount of time and work to ensure
consistency across states on how compliance with the maintenance-of-
effort provision is certified and reported. As a result, DOT is well-
positioned to understand lessons learned--what worked, what did not,
and what could be improved in the future. DOT and state officials told
us that while the maintenance-of-effort requirement can be useful for
ensuring continued investment in transportation, more flexibility to
allow for differences in states and programs, and to allow adjustments
for unexpected changes to states' economic conditions, should be
considered for future provisions. For example, the Recovery Act allows
the Secretary of Education to waive state maintenance-of-effort
requirements under certain circumstances and allows states to choose
the basis they use to measure maintenance of effort.[Footnote 16] The
maintenance-of-effort requirement for transportation programs proved
difficult for states to apply across various transportation programs
because of different and complicated revenue sources to fund the
programs. Many states did not have an existing means to identify
planned transportation expenditures for a specific period and their
financial and accounting systems did not capture that data. Therefore,
according to DOT, a more narrowly focused requirement applying only to
programs administered by state DOTs or to programs that typically
receive state funding could help address maintenance-of-effort
challenges.
* Consideration of economically distressed areas. Our previous reports
have identified challenges DOT faced in implementing the Recovery Act
requirement that states give priority to highway projects located in
economically distressed areas. For example, while an economically
distressed area is statutorily defined, we found that there was
substantial variation in how some states identified economically
distressed areas and the extent to which some states prioritized
projects in those areas. We reported instances of states developing
their own eligibility requirements for economically distressed areas
using data or criteria not specified in the Public Works and Economic
Development Act.[Footnote 17] Three states--Arizona, California, and
Illinois--developed their own eligibility requirements or interpreted
the special-needs criterion in a way that overstated the number of
eligible counties, and thus the amount of funds, directed to
economically distressed areas.[Footnote 18] Officials in these three
states told us that they did so to respond to rapidly changing
economic conditions. In May 2010, we recommended that DOT advise
states to correct their reporting on economically distressed area
designations, and in July 2010 FHWA instructed its division offices to
advise states with identified errors to revise their economically
distressed area designations. In September 2010, we recommended that
DOT make these data publicly available to ensure that Congress and the
public have accurate information on the extent to which Recovery Act
funds were directed to areas most severely affected by the recession
and the extent to which states prioritized these areas in selecting
projects for funding. DOT recently posted an accounting of the extent
to which states directed Recovery Act transportation funds to projects
located in economically distressed areas on its website, and we are in
the process of assessing these data.
Most states we visited as part of our ongoing Recovery Act oversight
considered the requirement to prioritize projects in economically
distressed areas in addition to other immediate and long-term
transportation goals, as the Recovery Act required. For example,
officials in Washington state said that they considered federally-
recognized economically distressed areas as one of several criteria
when selecting projects. Other criteria included state economic data
and projects that would be ready to proceed in a short amount of time.
However, state officials were also uncertain what the economically
distressed area requirement was intended to accomplish, such as
whether it was intended to provide jobs to people living in those
areas or to deliver new infrastructure to those areas. The
economically distressed area provision proved difficult to implement
because of changing economic conditions, and it is unclear that it
achieved its intended goal.
Better Documentation Could Reduce Challenges to the Integrity of
Selection Decisions for High Speed Intercity Passenger Rail and TIGER
Grant Programs:
We have reported that allocating federal funding for surface
transportation based on performance in general, and directing some
portion of federal funds on a competitive basis to projects of
national or regional significance in particular, can more effectively
address certain challenges facing the nation's surface transportation
programs. In our recent reports on the high speed intercity passenger
rail and TIGER programs, we found that while DOT generally followed
recommended grantmaking practices, DOT could have documented more
information about its award decisions.
The Recovery Act and the Passenger Rail Investment and Improvement Act
of 2008 required FRA to implement a plan to award and oversee billions
of dollars for high speed intercity passenger rail grants. This was
challenging for FRA as it did not have a large-scale grantmaking
infrastructure in place and had to develop that capability within a
short time frame to meet Recovery Act goals. We mostly found that FRA
substantially followed recommended practices for awarding these
grants, including communicating key information to applicants and
planning for the grant competition.[Footnote 19] However, one area in
which FRA could have done better is to develop clearer records for how
it made final grant award decisions. Specifically, while FRA
maintained detailed records on how officials evaluated applications on
technical merit, the documented reasons for making final grant
selections were typically vague and provided little insight into why
projects were or were not selected. In addition, FRA provided only
general reasons for adjusting applicants' requested funding amounts.
We recommended that FRA should better document the rationales for
award decisions in any future high speed and intercity passenger rail
funding rounds by including substantive reasons why individual
projects are or are not selected and for any changes made to requested
funding amounts. Without a clear record of selection decisions, FRA is
vulnerable to criticism about the integrity of its decisions. This is
important because FRA has already been criticized for its award
decisions and for providing incremental improvements to existing
systems rather than providing more funds to meet the administration's
expectations of developing a true national high speed rail intercity
passenger network.
To evaluate the more than 1,450 TIGER grant applications it received,
DOT developed criteria to assess the merits of these projects. We
evaluated these criteria and concluded that DOT had followed key
federal guidance and standards. The criteria clearly indicated that
projects should produce long-term benefits, such as improving the
state of repair of existing transportation infrastructure, reducing
fatalities and injuries, and improving the efficient movement of
workers or goods. To apply its criteria, DOT used 10 Evaluation Teams
of five reviewers to conduct a technical review of all applications.
The evaluators drafted narratives explaining their assessments,
assigned ratings such as "highly recommended" and "recommended," and
advanced those that best met the criteria for further review. A
Control and Calibration Team, made up of senior staff from the Office
of the Secretary of Transportation, also selectively reviewed and
advanced applications throughout the process to ensure consistency
across Evaluation Teams' ratings and to help meet statutory
requirements such as an equitable distribution of funds. The
Evaluation Teams advanced 115 highly recommended applications. The
Control and Calibration Team advanced an additional 50 recommended
applications as well as 1 application that was not recommended.
Together, the teams advanced 166 applications for further review. The
TIGER Review Team--composed of 12 senior DOT officials, such as the
Deputy Secretary and cognizant operating administrators--reviewed
those 166 applications. This team--which considered a broader set of
factors than the Evaluation Teams, including project readiness and
whether expected project benefits outweighed costs--developed a final
list of 51 projects that it recommended to the Secretary of
Transportation for award. All 51 projects were accepted by the
Secretary, and the awards were announced on February 17, 2010.
Of the 51 applications that received awards, 26 were from the highly
recommended applications advanced by the Evaluation Teams and the
other 25, which received one-third of the TIGER funds, were from the
recommended applications advanced by the Control and Calibration Team
(see figure 4).
Figure 4: Number of TIGER Applications Advanced and Selected:
[Refer to PDF for image: illustration]
Over 1,450 applications received, requesting almost $60 billion:
The Evaluation Teams advanced 115 highly recommended applications
requesting $7.7 billion.
The Control and Calibration Team advanced 50 recommended applications
and 1 not recommended application requesting $3.7 billion.
Review Team:
Advanced by the Evaluation Team: 26 awardees received about $950
million;
Advanced by the Control and Calibration Team: 25 awardees received
about $549 million;
In total, 51 awardees received about $1.5 billion in TIGER funds.
Source: GAO analysis of DOT information.
[End of figure]
While DOT thoroughly documented the Evaluation Teams' assessments and
the Review Team's memorandum recommending projects to the Secretary of
Transportation for award described the strengths of projects
recommended for award, it did not document the Review Team's final
decisions and its rationale for selecting recommended projects for
half the awards over highly recommended ones. DOT officials told us
that some highly recommended projects were not selected to achieve a
more equitable geographic distribution of award funds, as required by
the Recovery Act. Furthermore, our discussions with DOT officials
indicated that the Review Team raised some valid concerns about some
highly recommended projects, such as whether a project's economic
benefits were overstated. However, without adequate documentation of
final decisions, DOT cannot definitively demonstrate the basis for its
award selections, particularly the reasons why recommended projects
were selected for half the awards over highly recommended ones.
Developing internal documentation is a key part of accountability for
decisions, and DOT guidance states that officials should explain how
discretionary grant projects were selected when projects with the
highest priority in a technical review were not funded. The absence of
documentation can give rise to challenges to the integrity of the
decisions made, and DOT is vulnerable to criticism that projects were
selected for reasons other than merit. We recommended that DOT
document key decisions for all major steps in the review of
applications, particularly decisions in which lower-rated applications
are selected for award over higher-rated applications, and, in
consultation with Congress, develop and implement a strategy to
disclose information regarding award decisions.[Footnote 20]
Both the high speed intercity passenger rail and TIGER programs
represent important steps toward investing in projects of regional and
national significance through a merit-based, competitive process. We
noted a natural tension between providing funding based on merit and
performance and providing funds on a formula basis to achieve equity
among the states as the formula approach can potentially result in
projects of national or regional significance that cross state lines
and involve more than one transportation mode not competing well at
the state level for funds. Given that the Recovery Act was intended to
create and preserve jobs and promote economic recovery nationwide,
Congress believed it important that TIGER grant funding be
geographically dispersed. As we noted in our recent report discussing
the TIGER grant program, when Congress considers future DOT
discretionary grant programs, it may wish to consider balancing the
goals of merit-based project selection with geographic distribution of
funds and limit, as appropriate, the influence of geographic
considerations.
Chairman Mica, Ranking Member Rahall, and Members of the Committee,
this concludes my statement. I would be pleased to respond to any
questions at this time.
GAO Contact and Staff Acknowledgments:
For further information regarding this statement, please contact
Phillip R. Herr at (202) 512-2834 or herrp@gao.gov or Susan A. Fleming
at (202) 512-2834 or flemings@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this statement. Individuals making key contributions to this
testimony were Steve Cohen, Assistant Director; Heather MacLeod,
Assistant Director; James Ratzenberger, Assistant Director; Jonathan
Carver; Matt Cook; John Healey; Joah Iannotta; Bert Japikse; Delwen
Jones; SaraAnn Moessbauer; Josh Ormond; and Pamela Vines.
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] Recovery Act, div. A, title XII, 123 Stat., 202.
[3] See GAO, Recovery Act: Opportunities to Improve Management and
Strengthen Accountability over States' and Localities' Use of Funds,
[hyperlink, http://www.gao.gov/products/GAO-10-999] (Washington, D.C.:
Sept. 20, 2010) and Recovery Act: States' and Localities' Uses of
Funds and Actions Needed to Address Implementation Challenges and
Bolster Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-604] (Washington, D.C.: May 26,
2010). Additional reports on Recovery Act implementation can be found
at [hyperlink, http://gao.gov/recovery/related-products/].
[4] The high speed intercity passenger rail and TIGER grant programs
are discretionary grant programs. Traditionally, federal surface
transportation funding has been primarily delivered through formula
grant programs based on distributions prescribed by federal statute.
In a discretionary grant program, agency officials generally have the
authority to determine which eligible applicants will receive awards
and how much each will be awarded.
[5] GAO, Intercity Passenger Rail: Recording Clearer Reasons for
Awards Decisions Would Improve Otherwise Good Grantmaking Practices,
[hyperlink, http://www.gao.gov/products/GAO-11-283] (Washington D.C.:
Mar. 10, 2011) and Surface Transportation: Competitive Grant Programs
Could Benefit From Increased Performance Focus and Better
Documentation of Key Decisions, [hyperlink,
http://www.gao.gov/products/GAO-11-234] (Washington, D.C.: Mar. 30,
2011).
[6] The total amount of Recovery Act funds allocated to each program
does not equal the total funds distributed. Most operating
administrations, as allowed by the Recovery Act, retained a small
percentage of the funds for oversight and administrative costs, and
some fund allocations included set asides for other programs or
activities. The Recovery Act also provided $20 million for salaries
and expenses at the DOT Office of Inspector General to monitor DOT's
Recovery Act programs.
[7] The majority of federal-aid highway infrastructure funding is
distributed through seven major projects, often referred to as core
highway programs. These programs are the Surface Transportation
Program, National Highway System Program, Interstate Maintenance
Program, Highway Bridge Program, Highway Safety Improvement Program,
Congestion Mitigation and Air Quality Improvement Program, and the
Equity Bonus Program.
[8] Economically distressed areas are defined by the Public Works and
Economic Development Act of 1965, as amended. To qualify, the areas
must have (1) a per capita income of 80 percent or less of the
national average, (2) a 24-month average unemployment rate that is 1
percent greater than the national average, or (3) "special needs"
arising from actual or threatened severe unemployment or economic
adjustment programs resulting from severe short-or long-term changes
in economic conditions.
[9] Therefore, both the data reported by recipients and other
macroeconomic data and methods are necessary to gauge the overall
employment effects of the stimulus. The employment effects in any
state will vary with labor market stress and fiscal condition.
[10] Programs administered by DOT and funded by the Recovery Act
typically required DOT review and approval of proposed projects
submitted by the states or other applicants, resulting in an
obligation of federal funds. (An obligation is a commitment that
creates a legal liability of the government for the payment of goods
or services ordered or received.) States or other recipients then
solicit for and select contractors to perform the work. Federal funds
are expended when the state or other intended recipient submits
invoices for completed work.
[11] Recipient reported data for January 2011 through March 2011 was
expected to be published on Recovery.gov on April 30, 2011.
[12] GAO, Recovery Act: States' and Localities Uses of Funds and
Actions Needed to Address Implementation Challenges to Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010).
[13] Department of Transportation, Vision for High-Speed Rail in
America (Washington, D.C., April 2009); FRA, Preliminary National Rail
Plan (Washington, D.C., October 2009); and FRA, National Rail Plan-
Moving Forward: A Progress Report (Washington, D.C., September 2010).
[14] As part of the Federal-Aid Highway Program, FHWA assesses the
ability of each state to have its apportioned funds obligated by the
end of the federal fiscal year (September 30) and adjusts the
limitation on obligations for federal-aid highway and highway safety
construction programs by reducing it for some states while increasing
it for others.
[15] As of February 17, 2009, many states did not yet have an enacted
budget for fiscal year 2010 and in response to anticipated changes in
available funding, state legislatures adopted reduced budgets.
[16] See GAO, Recovery Act: Planned Efforts and Challenges in
Evaluating Compliance with Maintenance of Effort and Similar
Provisions, [hyperlink, http://www.gao.gov/products/GAO-10-247]
(Washington, D.C.: Nov. 30, 2009).
[17] In response to a recommendation we made, FHWA, in consultation
with the Department of Commerce, issued guidance on August 24, 2009,
that provided criteria for states to use for designating special-need
areas for the purpose of Recovery Act funding. The criteria align
closely with special-need criteria used by the Department of
Commerce's Economic Development Administration in its own grant
programs, including factors such as actual or threatened business
closures (including job loss thresholds), military base closures, and
natural disasters or emergencies. FHWA issued "questions and answers"
on Nov. 12, 2009, to further address implementation questions.
[18] As part of our Recovery Act oversight, we tracked the uses and
accountability for Recovery Act funds in 16 states, including Arizona,
California, and Illinois, and the District of Columbia.
[19] [hyperlink, http://www.gao.gov/products/GAO-11-283].
[20] [hyperlink, http://www.gao.gov/products/GAO-11-234].
[End of section]
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