Welfare Reform: Competitive Grant Selection Requirement for DOT's
Job Access Program Was Not Followed (07-DEC-01, GAO-02-213).	 
								 
Without adequate transportation, welfare recipients face	 
significant barriers in moving from welfare to working. In 1998, 
three-fourths of welfare recipients lived in central cities or	 
rural areas, but two-thirds of new, entry-level jobs were located
in the suburbs. Public transportation facilities, such as buses  
or subways, often offer limited or no access to many of these	 
jobs. Although the jobs can be reached by car, many welfare	 
recipients do not have cars. To address this mismatch, the	 
Transportation Equity Act for the 21st Century (TEA-21) 	 
authorized up to $750 million for fiscal years 1999 through 2003 
for the Job Access and Reverse Commute (Job Access) program. The 
program authorizes the Department of Transportation (DOT) to	 
provide grants to improve transportation to employment sites.	 
TEA-21 requires DOT to conduct a nationwide solicitation for Job 
Access grant applications and to select grantees on a competitive
basis. In response to language in the conference reports	 
accompanying DOT's fiscal year 2000 and 2001 appropriations acts 
that designated significant Job Access funds for specific states,
localities, and organizations, DOT adopted a two-track process	 
for the selection of Job Access grantees. A noncompetitive	 
process set aside funds for entities identified in the conference
reports, or applicants selected by those entities, and they were 
selected without scoring or ranking their applications. The	 
previously established competitive process for other applicants  
was continued.	This two-track process for selecting Job Access  
grantees decreased opportunities to fund projects identified as  
"meritorious" through the competitive selection process. Although
TEA-21 requires that Job Access grantees be selected on a	 
competitive basis, the allocation of Job Access funds on a	 
noncompetitive basis to entities designated in conference	 
reports, or applicants selected by those entities, was not	 
consistent. Furthermore, the conference reports did not impose	 
legally binding requirements and did not provide a legal basis to
deviate from the act's requirements. Therefore, the use of a	 
noncompetitive process for the selection of Job Access grantees  
in fiscal years 2000 and 2001 was not authorized.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-213 					        
    ACCNO:   A02542						        
  TITLE:     Welfare Reform: Competitive Grant Selection Requirement  
for DOT's Job Access Program Was Not Followed			 
     DATE:   12/07/2001 
  SUBJECT:   Employment 					 
	     Ground transportation operations			 
	     Welfare recipients 				 
	     Grant award procedures				 
	     Grant monitoring					 
	     DOL Job Access and Reverse Commute 		 
	     Program						 
								 

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GAO-02-213
     
Report to Congressional Committees

United States General Accounting Office

GAO

December 2001 WELFARE REFORM Competitive Grant Selection Requirement for
DOT?s Job Access Program Was Not Followed

GAO- 02- 213

Page i GAO- 02- 213 Welfare Reform Letter 1

Results in Brief 3 Background 5 FTA Noncompetitively Selected Most Job
Access Projects for

Fiscal Years 2000 and 2001 6 DOT?s Response to Conference Reports Decreased
Opportunities

to Fund Potentially More Promising Projects 8 FTA?s Process for Selecting
Grantees in Fiscal Years 2000 and 2001

Was Not Consistent With TEA- 21 10 Conclusion 12 Recommendation 13 Agency
Comments and Our Evaluation 13 Scope and Methodology 15

Appendix I Brief Description of Previous GAO Reports on the Job Access
Program 17

Appendix II Objectives, Scope, and Methodology 19

Appendix III Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients

Appendix IV GAO Contact and Staff Acknowledgments 27 GAO Contact 27
Acknowledgments 27

Abbreviations

DOT Department of Transportation FTA Federal Transit Administration FY
Fiscal year TEA- 21 Transportation Equity Act for the 21st Century Contents

Page 1 GAO- 02- 213 Welfare Reform

December 7, 2001 The Honorable Paul S. Sarbanes Chairman The Honorable Phil
Gramm Ranking Minority Member Committee on Banking, Housing,

and Urban Affairs United States Senate

The Honorable Don Young Chairman The Honorable James L. Oberstar Ranking
Democratic Member Committee on Transportation

and Infrastructure House of Representatives

Without adequate transportation, welfare recipients face significant
barriers in moving from being on welfare to working. In 1998, Congress found
that three- fourths of welfare recipients lived in central cities or rural
areas, but two- thirds of new, entry- level jobs were located in the
suburbs. Public transportation facilities, such as buses or subways, often
offer limited or no access to many of these jobs. Although the jobs can be
reached by car, many welfare recipients do not have cars. To address this
mismatch, the Transportation Equity Act for the 21st Century (TEA- 21)
authorized up to $750 million for fiscal years 1999 through 2003 for the Job
Access and Reverse Commute (Job Access) program. The program authorizes the
Department of Transportation (DOT) to provide grants to local agencies,
nonprofit organizations, transit authorities, and others to improve
transportation to employment sites. Within DOT, the Federal Transit
Administration (FTA) is responsible for implementing the program. TEA- 21
requires DOT to conduct a nationwide solicitation for Job Access grant
applications and to select grantees on a competitive basis.

The competitive selection process, as implemented by FTA, includes
evaluating and scoring grant applications under published criteria that are
based on factors identified in TEA- 21. FTA then ranks the applications and
selects them for funding, based on their scores. FTA considers projects to
be ?meritorious? if they score high enough to warrant selection and

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 02- 213 Welfare Reform

funding under the program. From fiscal year 1999 through 2001, FTA selected
368 Job Access projects for grants totaling $247 million.

To date, we have issued four reports on the Job Access program: in May 1998,
before it was established, 1 as well as in November 1999, 2 December 2000, 3
and August 2001. 4 Appendix I contains a brief description of these four
reports. 5 This report, our fifth on the Job Access program, examines

 how DOT implemented the Job Access program in fiscal years 2000 and 2001,
including its response to funding designations for specific states,
localities, and organizations set forth in conference reports accompanying
DOT?s fiscal year 2000 and 2001 appropriations acts;

 the impact on the program of DOT?s response to the funding designations;
and

 whether the manner in which DOT interpreted and applied the conference
reports? funding designations in fiscal years 2000 and 2001 was consistent
with applicable statutory requirements.

To meet these objectives, we interviewed FTA officials, examined program
documentation, and conducted a mail survey of all of the fiscal year 1999
Job Access program grantees. We also reviewed TEA- 21, the appropriations
acts for fiscal years 2000 and 2001, and applicable case law; further, we
sent a letter of inquiry to FTA to obtain its explanation of the actions
taken in response to the designations in the conference reports that
accompanied DOT?s appropriations acts for fiscal years 2000 and 2001. Our
review focused on FTA?s processes for implementing the Job Access program,
rather than on individual grants made in fiscal years 1999, 2000, or 2001.

1 Welfare Reform: Transportation?s Role in Moving from Welfare to Work

(GAO/ RCED- 98- 161, May 29, 1998). 2 Welfare Reform: Implementing DOT?s
Access to Jobs Program in Its First Year

(GAO/ RCED- 00- 14, Nov. 26, 1999). 3 Welfare Reform: DOT Is Making Progress
in Implementing the Job Access Program

(GAO- 01- 133, Dec. 4, 2000). 4 Welfare Reform: GAO?s Recent and Ongoing
Work on DOT?s Access to Jobs Program

(GAO- 01- 996R, Aug. 17, 2001). 5 TEA- 21 requires that we report to the
Congress on FTA?s implementation of the program.

Page 3 GAO- 02- 213 Welfare Reform

In response to language in the conference reports accompanying DOT?s fiscal
year 2000 and 2001 appropriations acts that designated significant Job
Access funds for specific states, localities, and organizations, FTA adopted
a two- track process for the selection of Job Access grantees. FTA
instituted a noncompetitive process for entities identified in the
conference reports, or applicants selected by those entities; FTA set aside
funds for those entities and selected them without scoring and ranking their
applications- that is, comparing them to those submitted by other
applicants. FTA continued to implement the previously established
competitive process for other applicants. Of the $175 million made available
for the program for these 2 years, FTA allocated $125 million for projects
selected under the noncompetitive process, after it determined they had met
selection criteria, such as demonstrating the need for additional Job Access
services in the area to be served by the project. In fiscal year 2000, FTA
allocated $50 million to projects selected under the noncompetitive process
and the remaining $25 million under the competitive process to proposals
submitted in that year. In fiscal year 2001, FTA allocated $75 million to
projects selected under the noncompetitive process; it allocated the
remaining $25 million to proposals submitted in fiscal year 2000 under the
competitive process that were not funded or only partially funded in that
year. FTA did not solicit any proposals in fiscal year 2001.

FTA?s two- track process for the selection of Job Access grantees decreased
opportunities to fund projects that could have been identified as
?meritorious? through the competitive selection process. This approach
reduced the amounts available for projects selected on a competitive basis
from $75 million in fiscal year 1999 to an average of about $25 million a
year in fiscal years 2000 and 2001. FTA had designed its competitive
selection process to help ensure that the projects selected for funding
would best achieve the program?s objectives. The exclusion of significant
Job Access funds from the competitive selection process decreased FTA?s
ability to fund projects that might have emerged from this process as the
most promising in meeting the program?s objectives. According to the
Coordinator of the Job Access program and other FTA officials, the funding
of projects for entities designated in the conference reports resulted in
reduced opportunities to fund other worthy projects that were not designated
in the reports. Also, FTA?s decision not to solicit new project proposals
for competition for program funding in fiscal year 2001- but instead to
select from project proposals submitted in fiscal 2000- foreclosed
opportunities to select projects that FTA may have found more promising than
those actually selected in fiscal year 2001. Moreover, grantees reported
that the reduction in funds available for Results in Brief

Page 4 GAO- 02- 213 Welfare Reform

competitive award resulted in a discontinuation of funding for some Job
Access projects that had been selected on a competitive basis in fiscal year
1999. Specifically, according to our survey of fiscal year 1999 Job Access
grantees, as of September 30, 2001, 19 percent of them did not receive
additional funding or received decreased funding in fiscal years 2000 and
2001.

TEA- 21 requires that Job Access grantees be selected on a competitive
basis. FTA?s allocation of Job Access funds on a noncompetitive basis to
entities designated in conference reports, or applicants selected by those
entities, was not consistent with TEA- 21. Although the conference reports
that accompanied DOT?s fiscal year 2000 and 2001 appropriations acts
designated Job Access funds for certain entities, these designations were
not carried over into the appropriations acts for those years. Furthermore,
the conference reports did not impose legally binding requirements and did
not provide FTA with a legal basis to deviate from the requirements of TEA-
21. Therefore, FTA?s use of a noncompetitive process for the selection of
Job Access grantees in fiscal years 2000 and 2001 was not authorized. This
report contains a recommendation to the Secretary of Transportation to
ensure that grants to entities designated in future conference reports are
made on a competitive basis.

In providing comments on our report, DOT officials disagreed with our
finding that FTA awarded grants to entities designated in conference reports
using a noncompetitive process. They explained that FTA employed separate
competitive selection processes in fiscal years 2000 and 2001 for evaluating
applications received from entities designated in the conference reports and
other applicants, but that both pools of applicants were required to meet
all statutory criteria for award. In their view, both selection methods
represented a reasonable exercise of agency discretion in complying with the
statutory requirement for competitive selection, while considering
congressional views as expressed in appropriations report language. We
disagree that FTA employed competitive methods in selecting all Job Access
grantees during this period or that its two- track approach for selecting
Job Access grantees represented a reasonable exercise of agency discretion.
A competitive selection process necessarily requires a comparison of
applications for available funding against each other, rather than a mere
determination that they meet the criteria for award. FTA did not score or
rank applications from entities designated in the conference reports
accompanying the fiscal year 2000 and 2001 appropriations acts and did not
compare them either to each other or to applications from entities that were
not so designated. Therefore, DOT has not provided us with any basis to
agree with its view

Page 5 GAO- 02- 213 Welfare Reform

that projects for entities identified in the conference reports were
competitively selected or to change our recommendation.

TEA- 21 authorized the Job Access program, through which DOT?s FTA provides
grants to ?qualified entities?- local agencies, nonprofit organizations,
transit authorities, and others- to improve the mobility of welfare
recipients and low- income individuals seeking employment. 6 DOT?s two major
goals for the program are to (1) provide transportation services in urban,
suburban, and rural areas to assist welfare recipients and low- income
individuals to gain access to employment opportunities and (2) increase
collaboration among such parties as transportation providers, human service
agencies, employers, metropolitan planning organizations, states, and
communities in providing access to employment.

TEA- 21 requires DOT to conduct a nationwide solicitation for Job Access
grant applications and to select grantees on a competitive basis. 7 TEA- 21
also identifies factors for DOT to consider in awarding Job Access grants.
These include the percentage of the population in the area to be served by a
grant applicant who are welfare recipients, the need for additional services
in the area to be served, the extent to which the proposed services would
meet that need, and the extent to which an applicant identifies long- term
financing strategies to support the services. In fiscal year 1999, FTA
established a competitive selection process involving the evaluation of
grant applications against published criteria, as well as the scoring and
ranking of applications against each other on the basis of those
evaluations. FTA selected and funded the highest ranked projects. FTA
selects program grantees on an annual basis and makes no commitment for
funding for more than 1 year. As a result, FTA undertakes a new selection
process every year.

Under TEA- 21, Job Access grants are subject to the terms and conditions
applicable to recipients of urbanized area formula grants, as well as other
terms and conditions established by DOT. After selecting projects for
funding, FTA requires the applicants to provide assurances and

6 For areas with populations of 200,000 or more, the metropolitan planning
organizations screen applications and selects qualified entities. States
perform the same function for areas with populations of fewer than 200, 000.
A metropolitan planning organization is an organization that carries out
federally funded transportation planning activities.

7 TEA- 21 does not define the phrase ?competitive basis.? Background

Page 6 GAO- 02- 213 Welfare Reform

documentation of compliance with these standard grant requirements, such as
those concerning drug and alcohol testing, federal procurement standards,
and state and regional transportation planning.

TEA- 21 authorized up to $750 million for the program from fiscal year 1999
through fiscal year 2003. 8 It also required DOT to allocate 60 percent of
the program?s funds each year to projects in urban areas with populations of
at least 200,000; 20 percent of the funds to projects in urban areas with
populations of less than 200, 000; and 20 percent of the funds to projects
in nonurban areas. 9 Job Access grantees are required to provide at least 50
percent matching funds from other sources, including other federal funds
available for transportation services- for example, funds from the Temporary
Assistance for Needy Families program.

In response to funding designations contained in the conference reports
accompanying DOT?s appropriations acts for fiscal years 2000 and 2001, FTA
changed its selection process and adopted a two- track process for the
selection of Job Access projects. Specifically, FTA adopted a noncompetitive
process for the entities designated in the conference reports or applicants
selected by those entities. FTA set aside funding for the designated
entities and selected them without scoring and ranking their applications-
that is, comparing them to those submitted by other applicants. FTA
continued to implement its existing competitive process for other
applicants. In fiscal years 2000 and 2001, FTA selected 199 projects for
grants totaling $125 million on the basis of their designations in
conference reports, rather than on the basis of its competitive review. 10
According to FTA officials, the agency had determined that these projects
met the program?s basic requirements and its selection criteria for

8 Some of the Job Access program funds are ?guaranteed,? that is, subject to
a procedural mechanism designed to ensure that minimum amounts of funding
are made available each year. TEA- 21 provided guaranteed funding of $50
million for fiscal year 1999, $75 million for fiscal year 2000, $100 million
for fiscal year 2001, $125 million for fiscal year 2002, and $150 million
for fiscal year 2003.

9 These funding limitations were not applicable to the program in fiscal
year 2001. 10 FTA selects program grantees on an annual basis. One hundred
fifteen (115) of the 199 projects selected noncompetitively had been
competitively evaluated, scored, and ranked in fiscal year 1999 or fiscal
year 2000. The remaining 84 projects had never been competitively evaluated,
scored, and ranked. According to the Coordinator of the Job Access program
and other FTA officials, none of the 199 projects were selected for funding
based on competitive evaluation, scoring, and ranking against other
applicants. FTA

Noncompetitively Selected Most Job Access Projects for Fiscal Years 2000 and
2001

Page 7 GAO- 02- 213 Welfare Reform

competitively awarded grants. These 199 projects comprised about 61 percent
of the 327 projects selected for grants during those 2 years and about 71
percent of the $175 million that was made available for the program during
those 2 years.

The Department of Transportation and Related Agencies Appropriations Act for
fiscal year 2000 11 provided $75 million for the Job Access program, and the
conference report accompanying the appropriations act designated a total of
$49.6 million in specified amounts for grants to identified states,
localities, and other organizations. 12 FTA?s March 2000 request for project
proposals provided detailed information to prospective grantees, including
requirements for eligibility and guidelines for preparing grant
applications. 13 It also set forth selection processes for entities
identified in the conference report and other applicants, stating that
Congress had allocated $49.6 million for specific states and localities and
that the remaining $25.4 million, along with about $4 million in unobligated
fiscal year 1999 funds, was available for competitive award.

FTA instructed entities identified in the conference report, or applicants
selected by those entities, to submit applications responding to the same
program selection criteria, including conformity with program requirements,
as applicants for competitive awards. 14 In addition, it advised applicants
for ?competitive grants? that- as in 1999- it would evaluate and score
eligible applications according to four factors: (1) the degree of local
coordination exhibited when a project was designed, (2) the demonstrated
need for additional transportation services, (3) the extent to which
proposed services would meet the need, and (4) the ability of an applicant
to obtain resources to continue a project without grant funds. The notice
indicated that, along with such factors as the time frame for implementation
and the geographic distribution of project funding, these award criteria
would provide the basis for project selections.

11 P. L. No. 106- 69, 113 Stat. 986, 1001, 1012 (1999). 12 H. R. Conf. Rep.
No. 106- 355, at 112- 113 (1999). 13 65 Fed. Reg. 13210 (2000). 14 Id.
According to FTA, if the conference report did not designate a specific
organization to receive funding, the area to which funds were assigned
designated applicants. In urbanized areas with populations of 200,000 or
more, applicants were selected by the metropolitan planning organizations,
which are organizations that implement federally funded transportation plans
and programs. In areas with populations of fewer than 200,000, applicants
were selected by the states.

Page 8 GAO- 02- 213 Welfare Reform

The Department of Transportation and Related Agencies Appropriations Act for
fiscal year 2001 15 provided $100 million for the Job Access program, and
the accompanying conference report designated about $75 million for
identified states, localities, and other organizations. 16 As in 2000, FTA
proposed to allocate amounts to entities identified in the conference report
for projects meeting basic program requirements, stating that it would
?honor those allocated projects that meet the statutory intent of the
program.? 17 However, it did not solicit new proposals for competitive
award; rather, it decided to make remaining selections from among proposals
submitted in fiscal year 2000 that were not funded or only partially funded
due to funding limitations in that year.

According to FTA, applicants for projects designated in the conference
reports were notified by letter from the FTA regional administrators, as
well as through its published notices, and instructed to submit project
proposals addressing the criteria used for competitive awards, as well as
standard FTA grant requirements. FTA officials noted that only those
applications meeting the basic eligibility criteria for the Job Access
program were awarded grants, explaining that FTA?s practice is to work with
entities identified in the conference reports and include them in the
program consistent with the underlying statutory requirements.

During fiscal years 2000 and 2001, FTA?s two- track process for the
selection of Job Access grantees decreased opportunities to fund projects
that could have been identified as meritorious through the competitive
evaluation process. Also, some projects selected in fiscal year 1999 were
not selected for funding in fiscal years 2000 or 2001. As a result,
according to grantee officials, some of these projects needed to reduce
their services or ceased to operate.

15 P. L. No. 106- 346, 114 Stat. 1356, 1356A- 16,1356A- 20 (2000). 16 H. R.
Conf. Rep. No. 106- 940, at 140- 141 (2000). 17 66 Fed. Reg. 4900, 4911
(2001). DOT?s Response to

Conference Reports Decreased Opportunities to Fund Potentially More
Promising Projects

Page 9 GAO- 02- 213 Welfare Reform

In response to TEA- 21, FTA designed a competitive process consistent with
the factors identified in the statute to help ensure that the projects
selected for funding would improve the access of low- income individuals to
employment and employment- related services through coordinated efforts of
transportation providers, human service agencies, and others. In fiscal year
1999, FTA allocated all of the program funds-$ 75 million- for projects that
it had competitively selected by evaluating, scoring, and ranking them
against each other. 18 However, for fiscal years 2000 and 2001, FTA
allocated $125 million out of the $175 million available to entities
identified in the conference reports, or applicants selected by those
entities, and only $50 million to competitively selected entities that were
not identified in the conference reports. According to the Coordinator of
the Job Access program and other program officials, as a result of funding
projects designated in the conference reports, many other worthy projects
could not be funded.

In fiscal year 2001, FTA did not solicit new proposals. Instead, it selected
projects from among project proposals submitted for fiscal year 2000 that,
according to FTA, were ?meritorious? but had not been funded or had been
only partially funded because of funding limitations. This change foreclosed
opportunities for FTA to consider projects in fiscal year 2001 that may have
been more promising than those actually selected in that year. In addition,
FTA decreased the minimally acceptable score for project selection from 76.5
ranking points to 54.5 points. As a result, in fiscal year 2001, FTA
selected some projects that it had evaluated and ranked in fiscal year 1999
or 2000 but had not found suitable for award in those years.

According to FTA program officials and grantees, the decrease in funding for
competitively selected projects during fiscal years 2000 and 2001 meant that
about one- fifth of the fiscal year 1999 Job Access projects did not receive
continued funding. To explore the impact of the reduction in funding
available for competitive grants, we sent a questionnaire to 186 fiscal year
1999 grantees. About 83 percent of these grantees- or 155- responded to our
questionnaire. These respondents generally indicated they were satisfied or
very satisfied with the Job Access program. Eightyfive percent said that
they were satisfied with how the Job Access program

18 Congress provided $75 million for the program for fiscal year 1999. FTA
awarded $71 million in that year and the remaining $4 million in fiscal year
2000. Opportunities for

Competitive Awards Were Significantly Decreased in Fiscal Years 2000 and
2001

Some Projects Funded in Fiscal Year 1999 Did Not Receive Additional Job
Access Funding

Page 10 GAO- 02- 213 Welfare Reform

has enabled their organization to help people get to work. However, 19
percent of the respondents- or 30 of them- faced reduced or discontinued
funding during fiscal years 2000 and 2001. Furthermore, eight grantees
reported that funding interruptions caused them to decrease the scope of
service of their projects. For example, the Chesapeake Bay Agency on Aging
(Urbanna, VA) reported that funding disruptions, accompanied by an inability
to secure funding from alternative sources, resulted in some route
cancellations and cutbacks in the number of riders served and the lengths of
some routes. The Chesapeake Bay Agency on Aging and the Richmond (VA)
Transit Authority stated that these service disruptions caused a loss of
credibility with their clientele and cost some passengers their jobs. Three
grantees that reported funding lapses said that, after their services were
interrupted, they could not obtain alternative sources of funding, and their
Job Access projects were permanently discontinued.

In fiscal years 2000 and 2001, FTA selected 199 projects (about 61 percent
of the 327 Job Access projects selected in those years) noncompetitively,
based on language in the conference reports that accompanied the fiscal year
2000 and 2001 appropriations acts. This language designated specific dollar
amounts for grants to states, localities, and organizations. FTA officials
said that in administering the program, FTA complied with applicable
statutory requirements for nationwide solicitation and competitive
selection, while taking into account congressional views as expressed in
this report language.

Section 3037 of TEA- 21, which established the Job Access program,
authorizes the Secretary of Transportation to make grants to assist
qualified entities with financing eligible projects. 19 It directs the
Secretary to conduct a national solicitation for grant applications, and it
requires that grantees be selected on a competitive basis. 20 Although the
statute does not define the phrase ?competitive basis,? it does identify
several factors for the Secretary to consider in awarding grants, including
the percentage of welfare recipients in the population of the area to be
served, the need for additional services, and the degree of coordination
with

19 Section 3037( b) defines the terms ?access to jobs project,? ?reverse
commute project,? and ?qualified entity,? thus establishing the basic
eligibility requirements for participation in the program and the pool of
potential applicants.

20 See section 3037( g). FTA?s Process for

Selecting Grantees in Fiscal Years 2000 and 2001 Was Not Consistent With
TEA21

Page 11 GAO- 02- 213 Welfare Reform

existing transportation service providers. 21 In implementing TEA- 21, FTA
combined the statutory factors into the four essential elements referenced
in its March 2000 request for grant applications and assigned points to
each, on the basis of relative importance. In December 2000, 22 we concluded
that FTA?s program guidance and practices of evaluating and comparing
program applicants were appropriate for helping to ensure that grantees
would be competitively selected on a consistent basis. 23

The fiscal year 2000 and 2001 appropriations acts for the Department of
Transportation and Related Agencies made specified amounts available for the
award of Job Access grants under section 3037. Although the conference
reports accompanying those acts contained language designating entities for
project funding, the designations were not carried over into the
appropriations acts. 24 It is well established that conference report
language and other legislative history, indicating how funds should be
spent, do not impose legally binding requirements; 25 nor does legislative
history supersede or repeal existing statutory requirements. 26 Accordingly,
FTA had no authority to use a noncompetitive process for the selection of
Job Access grantees, including those designated in the conference reports.

21 See section 3037( f). 22 GAO- 01- 133, Dec. 4, 2000. 23 For our December
2000 report on the Job Access program, we reviewed changes made to the
competitive selection process after fiscal year 1999- the first year of the
program. 24 Statutory language designating portions of a lump- sum amount
for particular purposes are commonly referred to as earmarks. 25 See, e. g.,
Lincoln v. Vigil, 508 U. S. 182, 193 (1993)( observing that ?Congress may
always circumscribe agency discretion to allocate resources by putting
restrictions in the operative statutes (though not? just in the legislative
history)?); Tennessee Valley Authority v. Hill, 437 U. S. 153, 191 (1978)(
holding that a substantive statutory provision was not amended or repealed
by language in a subsequent appropriation committee report on the grounds
that ?expressions of committees dealing with requests for appropriations
cannot be equated with statutes enacted by Congress?); 55 Comp. Gen. 307,
319 (1975)( emphasizing that when the Congress appropriates amounts without
statutorily restricting what can be done with those funds, a clear inference
arises that it does not intend to impose legally binding restrictions).

26 64 Comp. Gen. 282 (1985)( holding that spending levels established for
fiscal year 1984 in authorizing legislation for three Small Business
Administration (SBA) loan programs were not superseded or repealed by higher
levels indicated in tables contained in the conference report accompanying
SBA?s fiscal year 1984 appropriation).

Page 12 GAO- 02- 213 Welfare Reform

In response to our inquiries concerning FTA?s legal justification for its
practices in fiscal years 2000 and 2001, FTA officials emphasized that-
notwithstanding the designations in the conference reports- only those
applications meeting the eligibility criteria in section 3037 were awarded
grants and that projects of questionable eligibility were specifically
reviewed by the Office of Chief Counsel to ensure eligibility. FTA officials
also said that the selection of Job Access projects reflected the
requirement of section 3037 to allocate 60 percent of the available funds to
large urban areas, 20 percent to mid- sized urban areas, and 20 percent to
rural areas. 27 According to Job Access program officials, including the
Coordinator, FTA determined how many of the projects from entities
identified in the conference reports fell into each funding category. FTA
set aside funds for these projects in anticipation of awarding them grants.
FTA then awarded grants with the remaining funds in each funding category to
projects selected under the competitive process. FTA acknowledged that it
did not undertake any effort to compare applications from entities
identified in the conference reports to other applications for Job Access
funds. While TEA- 21 does not define ?competitive basis,? competition
necessarily requires the evaluation and comparison of applications for
limited funding against other applications before making selections.

We have not assessed individual projects selected for Job Access grants in
fiscal years 2000 and 2001 for compliance with program eligibility
requirements or FTA?s processes for compliance with overall funding
limitations. Thus, while we have determined that FTA?s two- track process
for the award of Job Access grants did not conform to the statutory
requirement to select grantees on a competitive basis, we have no basis to
conclude that any specific grants, including those made as a result of
conference report language, failed to satisfy the basic eligibility criteria
or were otherwise not worthy of funding. In this respect, FTA has
acknowledged the importance of ensuring that all grants, including grants to
entities designated in conference reports, meet the requirements of the Job
Access program.

In response to language in conference reports that accompanied DOT?s fiscal
year 2000 and fiscal year 2001 appropriations acts, FTA implemented a
noncompetitive selection process for entities designated in those

27 These funding limitations were not applicable to fiscal year 2001.
Conclusion

Page 13 GAO- 02- 213 Welfare Reform

reports, or applicants selected by those entities. At the same time, FTA
sought to satisfy the requirements of TEA- 21 by continuing to use a
competitive process for grant applicants not designated in the conference
reports. The noncompetitive process implemented by FTA did not satisfy the
requirements of section 3037 of TEA- 21. In addition, FTA?s manner of
implementing the program in fiscal years 2000 and 2001 decreased its
opportunities to select projects that were potentially more promising.

We recommend that, in the absence of statutory authority to select Job
Access grantees on a noncompetitive basis, the Secretary of Transportation
ensure that future grants to entities designated in conference reports,
including grants to applicants selected by those entities, be made on a
competitive basis.

We provided copies of the draft report to the Department of Transportation
for review and comment. DOT officials, including the Coordinator of the Job
Access program and representatives from FTA?s Chief Counsel?s office
provided verbal comments regarding our draft report. Overall, DOT officials
stated that in implementing the program, FTA complied with applicable
statutory requirements for nationwide solicitation and competitive
selection, while taking into account congressional views as expressed in
appropriations report language.

According to DOT officials, TEA- 21 requires DOT to (1) conduct a nationwide
solicitation for Job Access grant applications, and (2) select grantees on a
competitive basis. According to DOT officials, FTA solicited applications
through a broad agency announcement published in the

Federal Register, and letters addressed to entities identified in
appropriations report language. DOT agrees that report language and other
legislative history indicating how funds should be spent do not impose
legally binding requirements, nor supersede or repeal statutory
requirements. However, it also emphasizes that the statutory language does
not define the term ?competitive selection,? leaving that to agency
discretion. According to DOT officials, the agency employed separate
competitive selection processes in fiscal years 2000 and 2001 for evaluating
applications received in response to the different solicitation methods. DOT
indicated that both pools of applicants were required to meet all statutory
criteria for award. DOT maintains that both selection methods were
competitive and represent a reasonable exercise of agency discretion in
complying with applicable statutory requirements for nationwide solicitation
and competitive selection, while taking into Recommendation

Agency Comments and Our Evaluation

Page 14 GAO- 02- 213 Welfare Reform

account congressional views, as expressed in appropriations report language.

DOT also stated that the draft report could benefit by more fully discussing
the results of GAO?s survey. For example, DOT noted that 85 percent (132 of
155 respondents) were satisfied with the program, while 12 percent (19 of
155) had no opinion, and only 3 percent (4 of 155) were dissatisfied. DOT
maintains that this high level of satisfaction among its partners clearly
demonstrates FTA?s effective implementation of this very important program.

We agree that Congress left the determination of exactly how to implement
the requirement of TEA- 21 to select grantees ?on a competitive basis? to
FTA?s discretion. However, we do not agree that FTA employed competitive
methods in selecting all Job Access grantees during this period or that the
two- track approach it adopted in implementing the Job Access program
represented a reasonable exercise of agency discretion. As noted in this
report, the competitive selection of grantees necessarily requires a
comparison of applications for available funding against each other, rather
than a mere determination that they meet the criteria for award. Although
DOT asserted that FTA used a competitive selection process for entities
identified in the conference reports accompanying the fiscal year 2000 and
2001 appropriations acts, DOT officials also stated that FTA did not compare
applications from entities designated in these conference reports, either to
each other or to applications from entities that were not so designated.
Applications from entities designated in the conference reports were neither
scored nor ranked but were selected on the basis of the conference report
language. FTA?s public notices support this characterization of FTA?s
approach. These notices did not describe FTA?s process for those entities
identified in the conference reports as

?competitive?; rather, they distinguished between funds ?reserved for
specific projects? and funds ?available for competitive award.? Importantly,
FTA?s description of its Job Access formula proposal clearly stated with
reference to the fiscal year 2000 and 2001 conference reports that
?earmarking of funds does not allow for projects to emerge from a
competitive process.? Therefore, DOT has not provided us with any basis to
agree with its view that projects for entities identified in conference
reports were competitively selected or to change our recommendation.

Regarding DOT?s comments concerning the results of our survey of fiscal year
1999 Job Access grantees, we have incorporated additional information about
the survey in our report. However, the survey does not show whether FTA
implemented the program effectively. Our survey?s

Page 15 GAO- 02- 213 Welfare Reform

respondents made no statement about FTA?s overall effectiveness in
implementing the program. Instead, respondents generally indicated they were
satisfied or very satisfied with how the program enabled them to help people
get to work. As indicated in appendix III, respondents identified areas for
improvement in the program?s implementation.

TEA- 21 requires us to report on DOT?s implementation of the Job Access
program. As discussed in appendix I, we have issued four reports addressing
various aspects of the program since May 1998. In connection with our last
two reviews, we met with FTA officials, grantees, and others who suggested
that funding designations contained in the conference reports accompanying
the Department of Transportation and Related Agencies Appropriations Acts
for fiscal years 2000 and 2001 had a significant impact on the operation of
the program. In addition, in proposing the allocation of Job Access funds by
formula, FTA stated that the funding designations resulted in many highly
worthy applicants not receiving funding and pointed out that such
designations did not allow some projects to emerge successfully from a
competitive process. Accordingly, this report examines the Job Access
program in fiscal years 2000 and 2001.

Specifically, this report addresses (1) how DOT implemented the program in
fiscal years 2000 and 2001, including its response to funding designations
contained in conference reports in those fiscal years; (2) the impact on the
program of DOT?s response to the funding designations; and (3) whether the
manner in which DOT interpreted and applied the conference report funding
designations in fiscal years 2000 and 2001 was consistent with applicable
statutory requirements. To address the first and second objectives, we
interviewed FTA officials, examined Job Access program documentation, and
conducted a mail survey of all of the fiscal year 1999 Job Access program
grantees (see app. III). The rate of response to our survey was about 83
percent. A detailed description of our scope and methodology appears in
appendix II. We also reviewed the strategic plans and reports that DOT filed
under the Government Performance and Results Act of 1993. To address the
third objective we reviewed the requirements of TEA- 21, the appropriations
acts for fiscal years 2000 and 2001, and applicable case law. We also sent a
letter of inquiry to FTA to obtain its explanation of the actions taken in
response to the designations in the conference reports that accompanied
DOT?s appropriations acts for fiscal years 2000 and 2001. Our review focused
on FTA?s processes for implementing the Job Access program. Our objectives
did not include reviewing individual grants made in fiscal years 1999, 2000,
or 2001 and the Scope and

Methodology

Page 16 GAO- 02- 213 Welfare Reform

associated projects, or individual grant applications under the Job Access
program. We conducted our review from July 2001 through November 2001 in
accordance with generally accepted government auditing standards.

We are sending copies of this report to the cognizant congressional
committees; the Secretary of Transportation; the Administrator, Federal
Transit Administration; and other interested parties. We will make copies
available to others on request. If you have any questions about this report,
please call me at (202) 512- 2834 or E- mail me at heckerj@ gao. gov. Key
contributors to this report are listed in appendix IV.

JayEtta Z. Hecker Director, Physical

Infrastructure Issues

Appendix I: Brief Description of Previous GAO Reports on the Job Access
Program

Page 17 GAO- 02- 213 Welfare Reform

Without adequate transportation, welfare recipients face significant
barriers in moving from welfare to work. In 1998, Congress found that three-
fourths of welfare recipients lived in central cities or rural areas, but
two- thirds of new, entry- level jobs were located in the suburbs. Public
transportation facilities, such as buses or subways, often offer limited or
no access to many of these jobs. Although the jobs can be reached by car,
many welfare recipients do not have cars. To address this mismatch, the
Transportation Equity Act for the 21st Century (TEA- 21) authorized up to
$750 million for fiscal years 1999 through 2003 to implement the Job Access
and Reverse Commute (Job Access) program. The program authorizes the
Department of Transportation (DOT) to provide grants to local agencies,
nonprofit organizations, transit authorities, and others to improve
transportation to employment. Within DOT, the Federal Transit Administration
(FTA) is responsible for implementing the program. From fiscal year 1999
through 2001, FTA selected Job Access projects for grants totaling $247
million for 368 Job Access projects.

To date, we have issued four reports on the program: in May 1998- before the
program was established 28 -as well as in November 1999, 29 December 2000,
30 and August 2001. 31 In May 1998, we reported that the proposed Job Access
program would support reform of the nation?s welfare system by, among other
things, providing additional resources to transport welfare recipients to
work. We recommended that DOT (1) establish specific objectives, performance
criteria, and goals for measuring the program?s progress; (2) require
grantees to coordinate transportation strategies with local job placement
and other social service agencies; and (3) work with other federal agencies
to coordinate welfare- to- work activities. TEA- 21 reflected these
recommendations and required appropriate action by DOT.

In November 1999, we reported on the implementation of the program in fiscal
year 1999- its first year. We found that DOT had implemented our second and
third recommendations in carrying out TEA- 21. DOT had also taken
preliminary steps to implement our recommendation that it establish specific
objectives, performance criteria, and goals for measuring the program?s
progress. However, we also found that DOT?s process for

28 GAO/ RCED- 98- 161, May 29, 1998. 29 GAO/ RCED- 00- 14, Nov. 26, 1999. 30
GAO- 01- 133, Dec. 4, 2000. 31 GAO- 01- 996R, Aug. 17, 2001. Appendix I:
Brief Description of Previous

GAO Reports on the Job Access Program

Appendix I: Brief Description of Previous GAO Reports on the Job Access
Program

Page 18 GAO- 02- 213 Welfare Reform

selecting Job Access grant proposals was not consistent in fiscal year 1999,
and the basis for some selections was unclear.

Our December 2000 report examined DOT?s implementation of the program in
fiscal year 2000. We found that DOT had taken steps to improve its process
for selecting Job Access proposals. For example, to promote greater
consistency in the evaluation and selection of grantees, DOT developed a
standard format for reviewing Job Access proposals and provided more
detailed guidance to its reviewers. Almost 90 percent of the fiscal year
1999 Job Access grantees that responded to a GAO survey were satisfied with
the goals and intent of the program. However, 51 percent said that
satisfying various standard FTA grant requirements took too long- about 9
months, on average. As a result, about one- third of respondents reported
experiencing problems in obtaining matching funds. Also, seven projects were
withdrawn (about 4 percent of Job Access projects) for varied reasons,
including, in one case, the loss of matching funds. Also, DOT implemented
our recommendation that it develop specific objectives, performance
criteria, and measurable goals for the Job Access program by developing an
evaluation plan and by requesting specific data from the grantees. DOT
developed a goal to increase new employment sites by 4,050 in fiscal year
2000 and 8,050 in fiscal year 2001.

Our August 2001 report provided our preliminary observations on (1) DOT?s
proposal to use a formula for allocating grant funds to the states, (2) the
status of obligations for the Job Access program, and (3) DOT?s plans for
reporting on the program to the Congress. At the time of our report, DOT had
proposed a change to the Job Access program, beginning in fiscal year 2002,
under which it would allocate funding to the states via a formula, instead
of to individual grantees. DOT proposed this change in response to language
in the conference reports accompanying DOT?s appropriations acts for fiscal
years 2000 and 2001 that designated Job Access funding for specific states,
localities, and organizations. Second, as of August 7, 2001, DOT had
obligated 94 percent of the funds for fiscal year 1999, 67 percent of the
funds for fiscal year 2000, and 20 percent of the funds for fiscal year
2001. Third, DOT had missed its June 2000 deadline for a status report to
the Congress but expected to report instead in September 2001. However, as
of November 26, 2001, DOT had not sent the report to Congress.

Appendix II: Objectives, Scope, and Methodology

Page 19 GAO- 02- 213 Welfare Reform

TEA- 21 requires us to report on FTA?s implementation of the Job Access
program. This report examines (1) how DOT implemented the Job Access program
in fiscal years 2000 and 2001, including its response to funding
designations in conference reports in those fiscal years; (2) the impact on
the program of DOT?s response to the funding designations; and (3) whether
the manner in which DOT interpreted and applied the conference report
funding designations in fiscal years 2000 and 2001 was consistent with
applicable statutory requirements.

To describe FTA?s continued implementation of the Job Access program in
fiscal years 2000 and 2001, we obtained and analyzed documents and
interviewed FTA officials about the agency?s solicitation, selection, and
award procedures and how these were implemented. We also asked agency
management to explain any changes made in the implementation of the program
for projects selected in fiscal years 2000 and 2001.

We examined the consequences of changes in the manner in which FTA selected
Job Access proposals by obtaining and analyzing FTA?s records regarding
projects selected for award during fiscal years 1999 through 2001, including
the operating status of the associated projects during those years and those
projects that were withdrawn. In addition, we conducted a mail survey of the
fiscal year 1999 grantees. (See app. III for the questionnaire and the
results.) FTA identified 186 Job Access projects for fiscal year 1999. 32 We
mailed questionnaires to each of these grantees and received responses from
155 of them- a response rate of 83 percent as of September 30, 2001.

To examine the legality of FTA?s approach to the solicitation and selection
of grantees in fiscal years 2000 and 2001, we reviewed TEA- 21, the
appropriations acts for fiscal years 2000 and 2001, and applicable case law.
We also obtained the views of cognizant agency officials. Specifically, we
asked FTA about its legal justification for its approach to implementing the
Job Access program regarding entities identified in the conference reports
accompanying recent DOT appropriations acts. Our examination

32 When we issued our November 1999 report on DOT?s Job Access program, FTA
had selected 179 projects from among 266 applications and awarded almost $71
million in grants. This number grew to 194 because some proposals were
consolidated, and some organizations chose to have their own grants rather
than participate as subgrantees under consolidated grants. However, we
surveyed organizations representing 186 projects because several
organizations withdrew their projects from the program and did not receive
their grants. Appendix II: Objectives, Scope, and

Methodology

Appendix II: Objectives, Scope, and Methodology

Page 20 GAO- 02- 213 Welfare Reform

was limited to FTA?s processes and did not include a review of awards
designated to particular states, local governments, or organizations.

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients Page 21 GAO- 02- 213 Welfare Reform

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients Page 22 GAO- 02- 213 Welfare Reform

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients Page 23 GAO- 02- 213 Welfare Reform

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients Page 24 GAO- 02- 213 Welfare Reform

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients Page 25 GAO- 02- 213 Welfare Reform

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant
Recipients Page 26 GAO- 02- 213 Welfare Reform

Appendix IV: GAO Contact and Staff Acknowledgments Page 27 GAO- 02- 213
Welfare Reform

JayEtta Z. Hecker (202) 512- 2834 In addition, Sam Abbas, Alan Belkin, Helen
Desaulniers, Ernie Hazera, Alex Lawrence, Bonnie Pignatiello Leer, Sara Ann
Moessbauer, LuAnn Moy, and Frank Taliaferro made key contributions to this
report. Appendix IV: GAO Contact and Staff

Acknowledgments GAO Contact Acknowledgments

(392006)

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