Mass Transit: Preliminary Views on Options for Additional Fiscal
Oversight of the Washington Metropolitan Area Transit Authority
(28-JUL-05, GAO-05-922T).
In recent years, the Washington Metropolitan Area Transit
Authority (WMATA) has faced serious financial and budgetary
problems as well as continuing challenges related to the safety
and reliability of its transit services. At the same time,
ridership is at an all-time high, and WMATA continues to provide
critical services and considerable benefits to the Washington
region and to the federal government. This statement discusses
(1) WMATA's responsibilities for serving the interests of the
federal government, including the agency's role in transporting
federal employees and visitors to the nation's capital and in
supporting homeland security for the Washington metropolitan
region; (2) the current funding challenges facing WMATA and the
options proposed to address these challenges; (3) preliminary
information on some of the entities that currently provide
oversight of WMATA and the focus of their recent reviews; and (4)
some considerations and options in instituting spending
safeguards and oversight of any additional federal assistance
provided to WMATA, should Congress decide to provide such
assistance. GAO discussed this testimony with WMATA and FTA
officials, who provided comments and additional information that
GAO incorporated as appropriate.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-922T
ACCNO: A31562
TITLE: Mass Transit: Preliminary Views on Options for Additional
Fiscal Oversight of the Washington Metropolitan Area Transit
Authority
DATE: 07/28/2005
SUBJECT: Budget deficit
Federal funds
Funds management
Future budget projections
Internal controls
Mass transit
Mass transit funding
Financial analysis
Federal aid for transportation
******************************************************************
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GAO-05-922T
United States Government Accountability Office
GAO Testimony
Before the Committee on Government Reform, House of Representatives
For Release on Delivery
Expected at 10:00 a.m. EDT MASS TRANSIT
Thursday, July 28, 2005
Preliminary Views on Options for Additional Fiscal Oversight of the Washington
Metropolitan Area Transit Authority
Statement of Katherine Siggerud, Director Physical Infrastructure Issues
GAO-05-922T
[IMG]
July 28, 2005
MASS TRANSIT
Preliminary Views on Options for Additional Fiscal Oversight of the Washington
Metropolitan Area Transit Authority
What GAO Found
WMATA transports a substantial share of the federal workforce and provides
an important means of transportation to special events that occur in
Washington, D.C., as the nation's capital. WMATA's Metro Transit Police
assists federal law enforcement agencies by providing expertise in civil
disturbance management and explosives detection and by training first
responders in emergency management techniques specific to transit
environments. WMATA's Metrorail and Metrobus are the preferred means of
transportation in an emergency scenario requiring evacuation, and both the
regional and the District of Columbia emergency transportation plans rely
heavily on them.
A regional funding panel estimated WMATA's budgetary shortfall at $2.4
billion for fiscal years 2006 through 2015 if WMATA were to fund many of
the projects in its 10-year capital improvement plan. This shortfall may
be even greater because the panel's shortfall calculation did not include
the costs of providing specialized transportation for persons with
disabilities, as required under the Americans with Disabilities Act. To
deal with WMATA's funding shortfall, the regional panel concluded that the
region needs to develop a dedicated source of revenue for WMATA (e.g.,
local sales tax) and that the federal government needs to provide
significant contributions because of the benefits it receives from WMATA.
However, given the large federal budget deficit and competing claims on
federal resources, GAO believes WMATA may also need to reexamine its own
spending priorities.
As part of its ongoing work on WMATA's oversight entities, GAO found that
WMATA is subject to oversight from multiple entities that, since 2003,
have issued hundreds of reports-which vary in scope-on a broad range of
topics. These entities include WMATA's Auditor General, an independent
external auditor, the Federal Transit Administration (FTA), and industry
peer review panels. The entities have made recommendations to WMATA, which
WMATA has generally implemented or plans to implement. As part of its
ongoing work, GAO plans to analyze these reviews in more detail to
determine if they comprehensively identify and address WMATA's overall
management and operational challenges. GAO's ongoing work will also cover
other FTA reviews and safety reviews of WMATA's operations.
Congress, the administration, and GAO have long recognized the benefits of
having spending safeguards and management oversight for entities that
receive federal funding. If Congress decides to provide WMATA with
additional federal funding, there needs to be reasonable assurance that
the funds will be spent effectively. We identified several options for
additional oversight that could be incorporated into legislation that
provides additional federal funding to WMATA, including having WMATA
officials periodically report to Congress on how the funding is being
spent; specifying the types of projects for which federal funds could be
used; and requiring that any additional federal funding be subject to
FTA's oversight programs.
United States Government Accountability Office
Mr. Chairman and Members of the Committee:
We are pleased to testify before you today on issues related to the
Washington Metropolitan Area Transit Authority (WMATA) and the federal
government. In recent years, WMATA has faced financial and budgetary
problems, as well as continuing challenges related to the safety and
reliability of its transit services. At the same time, ridership is at an
all-time high, and WMATA continues to provide critical services and
considerable benefits that support the Washington region's economy and the
federal government. For example, WMATA operates a transit system that
provides an indispensable commuting option for hundreds of thousands of
Washington-area workers, including federal government employees, tourists,
and others who visit the region each day.
Our statement today is based on the interim results of our work on WMATA.
We will discuss
o WMATA's responsibilities for serving the interests of the federal
government, including the agency's role in transporting federal employees
and visitors to the nation's capital and in supporting homeland security
for the Washington metropolitan region;
o the current funding challenges facing WMATA and the options proposed
to address these challenges;
o preliminary information on some of the entities that currently provide
oversight of WMATA and the focus of their recent reviews; and
o some considerations and options in providing spending safeguards and
oversight of any additional federal assistance provided to WMATA, should
Congress decide to provide such assistance.
Our work is based on our review of WMATA's documentation of the transit
services it provides to federal employees and others; its budgetary and
other financial documentation; our analysis of reports on WMATA's
financial problems that we and others have issued; and interviews with
officials at WMATA, the U.S. Department of Transportation (DOT), other
federal agencies that rely on WMATA's services, and officials with
expertise in the transit industry, transportation planning, and
transportation finance. We reviewed selected reports issued by entities
that oversee WMATA-including WMATA's Auditor General, an independent
external auditor, and the Federal Transit Administration (FTA). We also
reviewed prior GAO reports on various oversight issues
related to mass transit and other areas of surface transportation. We
conducted our work from March 2005 through July 2005 in accordance with
generally accepted government auditing standards. We obtained oral
comments on this statement from WMATA and DOT officials, who generally
agreed with the information and provided technical comments, which we
incorporated as appropriate. We also provided selected portions of the
statement to the District of Columbia Department of Transportation, the
General Services Administration, the Office of Personnel Management, the
National Capital Planning Commission, the U.S. Capitol Police, and the
U.S. Secret Service. Some of these agencies provided technical comments,
which we incorporated as appropriate. Details of our scope and methodology
are provided in appendix I.
In summary:
o WMATA transports a substantial share of the federal workforce and
provides an important means of transportation to the special events that
occur in Washington, D.C., as the nation's capital and its "seat of
government." WMATA's Metro Transit Police also plays an important role in
assisting federal law enforcement agencies by providing expertise in civil
disturbance management and explosives detection and by making Metrobuses
available for perimeter security and for redirecting traffic at
high-security federal events. Additionally, WMATA trains first responders
in emergency management techniques specific to transit environments at its
tunnel facility in Landover, Maryland, and through its training course on
managing Metrorail emergencies. The Metrorail system is equipped with
chemical and radiological early warning systems to alert first responders
to potential hazardous materials incidents. In addition, both the regional
and the District of Columbia emergency transportation plans rely heavily
on Metrorail and Metrobus for transportation in an emergency scenario
requiring evacuation.
o Over the years, WMATA has faced funding challenges, and the options
proposed to address those challenges generally include both a dedicated
revenue source and a federal contribution. A regional panel, convened in
September 2004, estimated that under its current revenue structure, WMATA
would have a total budgetary shortfall of $2.4 billion during fiscal years
2006 through 2015 if it went forward with the projects remaining in its
10-year capital improvement plan, except for those that involved expanding
the current system. We believe that WMATA's anticipated shortfall may be
even greater because, in calculating the shortfall, the
panel did not include the costs of providing paratransit services as
required under the Americans with Disabilities Act (ADA).1 These costs are
significant; in fact, the panel estimated that these services could result
in a
shortfall for WMATA of about $1.1 billion over the 10-year period from
fiscal year 2006 through fiscal year 2015, thus raising the total
anticipated
shortfall to $3.5 billion for that period. In dealing with its funding
challenges, WMATA-unlike most other major transit systems-does not
have a dedicated source of revenue, such as a local sales tax whose
receipts are automatically directed to the transit authority. As a result,
the
regional panel and others have concluded that the Washington region
needs to develop a dedicated source of revenue for WMATA. In addition,
the panel has concluded that the federal government needs to participate
"significantly" in addressing WMATA's budgetary shortfall, particularly
for
capital maintenance and system enhancement, because WMATA has
provided numerous benefits to the Washington region and the federal
government over the years. To the extent that the federal government
cannot provide significant additional support to WMATA because of
competing claims on federal resources, and WMATA's current revenue
structure continues to be insufficient to support its planned capital
projects, WMATA may need to reexamine its spending priorities, including
how it will meet its ADA obligations.
o As part of our preliminary review of WMATA's oversight entities, we
found that WMATA is subject to oversight from multiple entities that,
since 2003, have issued hundreds of reports and made dozens of
recommendations. These entities include WMATA's Office of Auditor General,
which has issued nearly 500 reports, including internal and investigative
audits and reviews of contracts and pricing proposals, and an independent
external auditor, which annually reviews WMATA's financial statements and
related internal controls. Additionally, FTA oversees WMATA's major
capital projects through the project management oversight program; FTA has
issued 125 monthly monitoring reports on seven of WMATA's major projects
through this program since 2003. FTA also reviews WMATA's compliance with
a wide range of administrative and statutory requirements through its
Triennial Review. In 2005, at WMATA's request, panels assembled by a
transit industry association conducted peer reviews of WMATA's bus and
rail operations. The peer review panels developed recommendations to
improve the effectiveness and efficiency of bus and rail operations in
multiple areas, including staffing, organization,
1Paratransit most often refers to wheelchair-accessible, demand-response
van service for individuals who are unable to use the regular transit
system independently because of a physical or mental impairment.
maintenance, and technology. WMATA has generally implemented or plans to
implement the recommendations resulting from the various oversight
reviews. As part of our ongoing work, we plan to analyze these reviews in
greater detail to determine whether, taken as a whole, they identify
systemic problems and are adequate to address WMATA's overall management
and operational challenges. Our ongoing work will also include FTA's
in-depth reviews of program or system compliance, as well as safety
reviews conducted by external and internal entities.
o To control costs and ensure results-especially for high-cost
transportation infrastructure projects-Congress, the administration, and
GAO have long recognized the benefits of spending safeguards and
management oversight for the state and local governments and
transportation agencies that receive federal funding. For example, certain
federal laws have historically controlled the uses of federal
transportation funds, including instituting "matching" requirements to
ensure the use of some local funds for capital infrastructure projects and
prohibiting the use of these funds for operating expenses. Several
ongoing, planned, and past efforts illustrate the benefits of management
oversight and the ways it can be carried out. At the local level, in the
1980s, New York City's ailing Metropolitan Transit Authority was subject
to increased oversight legislated by the state. This oversight, along with
increased revenue, was followed by improvements in the performance of the
authority's subway system. We have also reported that safeguards should
accompany any increased federal funds provided to the District of Columbia
to address the structural imbalance between its costs and revenue-raising
capacity. At the federal level, FTA's project management oversight program
is designed to help ensure that grantees building major capital projects
have the qualified staff and procedures needed to successfully plan and
carry out those projects. Finally, the House and Senate versions of the
surface transportation reauthorization bill currently before Congress
include provisions that enhance management oversight for major capital
projects receiving federal funds. We have not fully analyzed the
applicability of these oversight options to WMATA or evaluated their
relative merits. However, we believe that should Congress decide to
provide WMATA with additional federal funding in recognition of its
support of the federal government, Congress should have reasonable
assurances that the funds would be spent efficiently and effectively.
Accordingly, we identified several options for writing safeguards into
legislation that provides any additional federal funding to WMATA. These
options include having WMATA officials periodically report to Congress on
how the funding is being spent; specifying the types of projects for which
federal funds could be used; and instituting additional oversight bodies
for WMATA.
Background
WMATA was created in 1967 by an interstate compact that resulted from the
enactment of identical legislation by Virginia, Maryland, and the District
of Columbia, with the concurrence of the U.S. Congress.2 WMATA began
building its Metrorail system in 1969, acquired four regional bus systems
in 1973, and began the first phase of Metrorail operations in 1976. In
January 2001, WMATA completed the originally planned 103-mile Metrorail
system, which included 83 rail stations on five rail lines. The transit
system encompasses (1) the Metrorail subway system, which now has 86
Metrorail stations on five rail lines and a fleet of about 946 rail cars;
(2) the Metrobus system, which has a fleet of about 1,447 buses serving
350 routes; and (3) the MetroAccess ADA complementary paratransit system,
which provides specialized transportation services, as required by law, to
persons with disabilities who are certified as being unable to access
WMATA's fixed-route transit system.
Congress and the executive branch have supported considerable federal
funding for WMATA since its inception in the 1960s, citing several reasons
including (1) the federal government's large presence in the area, (2) the
attraction of the nation's capital for tourists, (3) the overlapping needs
of adjacent jurisdictions, and (4) the limitations faced in raising other
revenue for transit needs. This federal funding has taken several forms
over the years.3 First, WMATA relied on federal funding to pay for nearly
70 percent of the costs to build its Metrorail subway system. From 1969
through 1999, the federal government provided about $6.9 billion4 of the
approximately $10 billion that WMATA spent to construct the original
103mile system, according to WMATA officials.5 Second, WMATA has also
relied on federal funding to cover more than 40 percent of its capital
improvement costs during the last 10 fiscal years. Of about $3.5 billion
that WMATA received from all sources for capital improvements during
fiscal years 1995 through 2005 (as of February 2005), about $1.5 billion,
or about
2Washington Metropolitan Area Transit Authority Compact, Pub. L. No.
89-774 (1966).
3See GAO, Mass Transit: Information on the Federal Role in Funding the
Washington Metropolitan Area Transit Authority, GAO-05-358T (Washington,
D.C.: Feb. 18, 2005).
4In our February 2005 testimony (see GAO-05-358T), we reported
information, provided by WMATA officials, showing that the federal
government's contribution from 1969 through 1999 was $6.2 billion. In
commenting on a draft of today's testimony statement, WMATA officials told
us that they had provided us with incomplete information in February 2005
and that, in fact, the total federal contribution during those years was
$6.9 billion.
5All dollar figures presented in this statement are in nominal dollars
(not adjusted for inflation).
43 percent, came from the federal government, with the remaining $2
billion, or about 57 percent, coming from the state and local
jurisdictions that WMATA serves and from other sources. Most of this
federal funding has come through grants administered by FTA. Finally,
WMATA received about $49.9 million for congressionally designated
projects, including a new Metrorail station at New York Avenue in the
District of Columbia, during fiscal years 1995 through 2005.
WMATA operates in a complex environment, with many organizations
influencing its decision-making and funding and providing oversight. WMATA
is governed by a board of directors-composed of individuals appointed by
each of the local jurisdictions WMATA serves-which sets policies and
oversees all of WMATA's activities, including budgeting, operations,
development, expansion, safety, procurement, and other activities. In
addition, a number of local, regional, and federal organizations affect
WMATA's decision-making, including (1) state and local governments, which
subject WMATA to a range of laws and requirements; (2) the National
Capital Region Transportation Planning Board of the Metropolitan
Washington Council of Governments, which develops the short-and long-range
plans and programs that guide WMATA's capital investments; (3) FTA, which
provides oversight of WMATA's compliance with federal requirements; (4)
the National Transportation Safety Board, which investigates accidents on
transit systems as well as other transportation modes; and (5) the
Tri-State Oversight Committee, which oversees WMATA's safety activities
and conducts safety reviews.
WMATA's combined rail and bus ridership totaled about 343.8 million
passenger trips in fiscal year 2005. WMATA operates the second largest
heavy rail transit system and the fifth largest bus system in the United
States, based on passenger trips, according to WMATA. WMATA's fiscal year
2005 budget is $1.29 billion. Of the total amount, about 76 percent, or
$977.9 million, is for operations, including maintenance activities, and
the remaining 24 percent, or $314.1 million, is for capital improvements.
WMATA obtains its funding from a variety of sources, including the
federal, state (Virginia and Maryland), District of Columbia, and local
governments; passenger fares; and other sources. In general, WMATA relies
on passenger fares and subsidies from its member jurisdictions to
WMATA Supports Federal Government Operations by Providing Transportation and
Security and by Supporting Emergency Preparedness
cover the majority of its operating costs.6 Its capital funds are obtained
from other sources, including the federal government and the state and
local jurisdictions that it serves. Of all WMATA's funding, less than 2
percent is from a dedicated source.
As the major transit agency in the national capital area, WMATA provides
transportation to and from work for a substantial portion of the federal
workforce and is also integral to the smooth transportation of visitors to
the nation's capital. WMATA also assists federal law enforcement agencies
by providing security for high-profile events and other security-related
expertise and services. Furthermore, the emergency transportation plans of
the District of Columbia and the Washington region both rely heavily on
Metrorail and Metrobus for transportation in an emergency scenario
requiring evacuation.
WMATA's Transit Services According to estimates prepared by WMATA, a
substantial share of Affect Daily Federal Metrorail's riders, particularly
at peak commuting periods, are federal Government Operations employees.7
Using data from its 2002 passenger survey (the most recent
data available), WMATA estimates that approximately 35 percent of all
6Metrorail has the second highest cost recovery ratio (revenues from fares
per total operating expenses) of any heavy rail system in the nation,
according to 2002 data, whereas Metrobus's cost recovery ratio is ranked
17th out of the largest 20 bus systems.
7WMATA's estimates do not include federal contractors and do not consider
the extent to which federal employees use Metrobus or MetroAccess
services.
Metrorail riders were federal employees in 2002.8 WMATA's estimates are
higher for peak9 period times, when the system faces capacity constraints:
according to the survey, approximately 41 percent of the morning peak
period riders and approximately 37 percent of the afternoon peak period
riders are federal employees. The federal employees who ride Metrorail to
and from work each day represent a substantial share of federal employees
in the Washington, D.C., region. Using an estimate based on its 2002
passenger survey data on the number of federal employees who are Metrorail
passengers, together with data from OPM on the number of civilian federal
employees in the Washington, D.C., region, WMATA estimated that in 2002,
approximately 40 percent of federal employees used Metrorail.
WMATA's operating status is an important factor in OPM's decisions about
the day-to-day operations of the federal government. OPM officials told us
that WMATA is a key stakeholder in OPM's decision to have an early
dismissal, late arrival, or closure of the federal government, since a
substantial portion of the federal workforce rides WMATA's transit system
to and from work. Those officials said that they are aware of WMATA's
operating constraints and take them into account when deciding to close
the federal government. However, the officials told us that OPM makes the
final decision and uses the safety of employees as the sole factor in its
decision. OPM officials further noted that the functioning of the federal
government is not dependent on WMATA's operating status and that employees
have other options, such as flexible work schedules and teleworking,
available should they not be able to get to their usual workplace.
8Like other estimates, WMATA's estimates are subject to various forms of
possible error that might cause the actual percentage of Metrorail riders
that are federal employees to differ from the estimated percentage. One
form is sampling error. Because WMATA surveyed a large sample of riders,
the sampling errors associated with its estimates are small. All the
estimates that we cite from WMATA's 2002 passenger survey have sampling
margins of error of less than plus or minus 0.5 percentage points at the
95 percent confidence level. As a result, based on sampling error alone,
the chances are 95 out of 100 that the actual percentage of Metrorail
riders that were federal employees in 2002 lies between 34 and 35 percent.
However, the practical difficulties of conducting any survey can introduce
errors from other sources, commonly referred to as nonsampling errors,
which may reduce one's level of confidence in the estimates. In
particular, the WMATA survey had an overall response rate of less than 28
percent. As response rates decrease, so does the likelihood that the
characteristics of the survey respondents represent those of the entire
universe of Metrorail riders.
9WMATA defines the morning peak period as 5:30 a.m. through 9:29 a.m. and
the afternoon peak period as 3:00 p.m. through 6:59 p.m.
Federal Guidance Provides Incentives for Federal Employees to Use Mass
Transit
Executive Order 12072, issued on August 16, 1978,10 instructs federal
agencies to consider such factors as the availability of public
transportation and parking as well as accessibility to the public when
evaluating and selecting federal facilities. The General Services
Administration (GSA)-which has overall responsibility for reviewing and
approving the acquisition of federal facilities-created a Site Selection
Guide11 for federal agencies that implements the provisions of this
executive order, as well as other public laws and executive orders. Within
the National Capital Region, the National Capital Planning Commission also
has review and approval authority over federal building construction,
renovations, and transportation plans in the District of Columbia, and it
has review authority only over federal sites in the Virginia and Maryland
areas of the region. Both GSA and the commission instruct federal agencies
to locate their facilities near mass transit stops whenever possible.
The Federal Employees Clean Air Incentives Act of 199312 also encourages
the federal use of mass transit, with specific provisions for the National
Capital Region.13 The purpose of this act was to authorize agencies to
create programs for federal employees to encourage their use of
alternatives to single-occupancy vehicles for commuting. Under the act,
the heads of agencies were authorized to establish programs for agency
employees that would provide, for example, transit passes, space for
bicycles, and nonmonetary incentives.
1043 F.R. 36869.
11U.S. General Services Administration, Site Selection Guide (Washington,
D.C.: March 2003).
12Codified at 5 USC S: 7905.
13Executive Order 13150, issued on April 21, 2000, implemented the act by
mandating that federal agencies establish a "transit pass" program for
federal employees in the National Capital Region and offer a program that
allows federal employees to exclude a portion of their income from taxes
for commuting costs, where such commuting includes mass transportation and
vanpools. Federal employees in the National Capital Area may personally
claim up to $1,260 per year in transit benefits for commuting purposes.
WMATA Provides Transportation to Special Events in the Nation's Capital
WMATA's services are integral to the smooth operation of the myriad of
special activities that occur in Washington, D.C., as the nation's capital
and its "seat of government." According to a visitor transportation survey
administered for the National Park Service, 61 percent of visitors used
Metrorail during their visit to Washington, D.C.14 In several instances,
ridership has been highest on days when events (1) were sponsored by the
federal government, such as the first and second inaugurations of
President George W. Bush and the grand opening of the National Museum of
the American Indian or (2) occurred in Washington because it is the seat
of government, such as political rallies. On June 6, 2004, the date of
former President Ronald Reagan's state funeral ceremony, WMATA marked its
highest ridership day ever, with more than 850,000 riders.
The federal government also relies on WMATA to provide transportation
services outside its normal hours and routes. Some examples follow:
o In May 2004, WMATA, along with other regional transit agencies,
provided buses to shuttle attendees from Metrorail stations to the World
War II dedication ceremony on the National Mall.15
o Metrobuses ran overnight between RFK Stadium and the U.S. Capitol for
2 nights in June 2004 to enable people to pay respects to former President
Ronald Reagan.16
o On Inauguration Day, in January 2005, WMATA opened Metro 2 hours early
and closed it 3 hours later than normal, at the request of the
Presidential Inaugural Committee.
14National Park Service, Visitor Transportation Survey (Washington, D.C.:
Nov. 2003).
15The American Battle Monuments Commission and Transportation Management
Services paid WMATA $223,320 for the use of 240 buses. WMATA charged these
organizations the standard charter bus rate of $310.50 for the first 3
hours plus $34.50 for each additional 30 minutes.
16The Ronald Reagan Presidential Foundation paid WMATA $16,110 for the use
of 20 buses. WMATA charged the foundation the standard charter bus rate.
WMATA Assists Federal Law Enforcement Agencies in Providing Security for
High-Profile Government Events
WMATA's Metro Transit Police supports the U.S. Secret Service by making
available its officers who have expertise in areas such as explosives
detection and civil disturbance management to help ensure a safe and
secure environment before and during events involving the President, the
Vice President, or high-level foreign dignitaries. For example, when
events are held in venues located above Metrorail stations, Metro Transit
Police's explosive ordnance detection team inspects the stations to ensure
they are free from explosives. The Metro Transit Police deployed its civil
disturbance team at the 2005 presidential inaugural parade at the request
of the Secret Service, which had received specific intelligence that
protestors might attempt to breach the parade route. The Metro Transit
Police received $299,371 in Department of Homeland Security (DHS) Urban
Area Security Initiative (UASI) grants for overtime associated with
providing security for the 2005 presidential inauguration. In commenting
on the importance of the Metro Transit Police's security expertise, Secret
Service officials told us that they consider the Metro Transit Police to
be a full law enforcement partner, along with the District of Columbia's
Metropolitan Police Department, the U.S. Capitol Police, and the U.S. Park
Police.
The Metro Transit Police also provides enhanced security throughout the
Metrorail and Metrobus system when DHS raises the threat level, which is
communicated through the Homeland Security Advisory System.17 Since DHS
implemented the color-coded system in March 2002, the Metro Transit Police
has spent about $2.7 million on overtime related to increased threat
levels, for such activities as increasing patrols of Metrorail stations,
trains, and buses. WMATA received $632,356 through a DHS UASI grant for
overtime costs in 2004; this grant was WMATA's first reimbursement for
costs associated with increased threat levels, according to a Metro
Transit Police official.
WMATA also supports federal law enforcement efforts by providing
Metrobuses to the U.S. Capitol Police to establish security perimeters,
block intersections, and reroute traffic for events that take place on the
grounds of the U.S. Capitol, such as presidential inaugurations and State
of the Union addresses, and at other locations where presidential and vice
presidential events occur. The Secret Service also uses Metrobuses
periodically to establish temporary security perimeters; for example, it
did
17The Homeland Security Advisory System is a threat-based system that DHS
uses to communicate to public safety officials and the public the
likelihood of a terrorist attack.
so along the 2005 presidential inauguration parade route. The law
enforcement agencies that use Metrobuses are charged the same standard
charter rate that WMATA charges all parties to rent its Metrobuses for
special events.
WMATA Supports Emergency Preparedness by Providing First Responder
Training, Early Warning Sensors, and Emergency Evacuation Infrastructure
First Responder Training
Early Warning Sensor Systems
WMATA supports homeland security efforts for the Washington region and the
federal government through a variety of efforts. It provides training for
local and federal first responders at its tunnel training facility and has
deployed early-warning systems to detect chemical and radioactive
contamination in some of its underground Metrorail stations. WMATA's
infrastructure is key to emergency evacuation of the region, including the
evacuation of workers in federal buildings concentrated in downtown
Washington, D.C.
WMATA's emergency response training facility in Landover, Maryland,
provides a realistic setting for fire, police, emergency, and transit
personnel to learn how to respond to events such as collisions, fires, and
weapons of mass destruction incidents that occur in a transit or tunnel
environment. The facility includes a 260-foot tunnel that houses two
subway cars positioned to resemble a wreck, as well as simulated
electrified third rail, cabling, and lighting that appear identical to
those in a real tunnel. Emergency personnel from across the region train
at the center. The training center's federal clients include the Federal
Bureau of Investigation's Hostage Rescue Team, the Federal Protective
Services, and the U.S. Marines' Chemical-Biological Incident Response
Force. Additionally, according to WMATA officials, FTA's Transportation
Safety Institute plans to use the Emergency Response Training Facility as
a host site for the counterterrorism training it plans to provide to
transit agencies' law enforcement and safety personnel. WMATA funds this
training facility entirely out of its regular operations budget.
WMATA is also introducing a training course on managing Metrorail
emergencies, which will address emergency management concepts, techniques
to respond to weapons of mass destruction attacks, and emergency traffic
control. The course, which WMATA is funding with a $335,261 DHS UASI
grant, will be available to first responders from the region, transit
agencies nationwide, and FTA.
Metrorail is equipped with a permanent chemical detection system to help
detect hazardous substances in selected stations in the Metrorail system.
This system, known as the Program for Response Options and Technology
(PROTECT), acts as an early warning to safeguard first responders,
Emergency Evacuation
employees, and Metrorail customers and is installed in selected locations
in underground Metrorail stations. WMATA had assistance from the U.S.
Departments of Transportation, Energy, and Justice in developing the
sensor system. It received $15 million in federally appropriated funds in
fiscal year 2002 and $1.4 million in additional funds in fiscal year 2004
through a direct grant from DHS's Office of Domestic Preparedness to pay
18
for the installation of the sensors.
Additionally, Metro Transit Police has distributed pager-sized devices to
about 100 officers to wear in the Metrorail system to detect radiation.
According to the Metro Transit Police, these pagers are worn mostly by
officers in the downtown core because this area is considered to be at
higher risk for attack. WMATA paid for about half of the radiological
pagers, and the Department of Energy furnished the remainder.
These early warning devices are important to the area's first responders
because if a high reading of a chemical or radioactive substance is
detected, it is considered a potential hazardous materials or "hazmat"
incident. In such an event, the portion of the Metrorail system involved
could be temporarily closed, affecting traffic in the area, and local
emergency management agencies would be notified and become responsible for
coordinating any additional response.
The local emergency response officials we interviewed generally prefer
using Metrorail and Metrobus in an emergency scenario that requires
evacuation because mass transit can move large numbers of people
efficiently and help keep roadways clear for first responders and other
emergency vehicles. To assist in coordinating evacuation planning across
jurisdictions, the region's metropolitan planning organization, the
Metropolitan Washington Council of Governments, has developed guidance on
emergency evacuation that includes the use of Metrorail and regular
Metrobus routes as well as Metrobuses on special evacuation routes. The
District of Columbia's emergency evacuation plans also rely heavily on
WMATA. Additionally, because the federal presence in the District is so
large, the District Department of Transportation consulted with federal
agencies in developing its emergency transportation plans.
18Department of Defense and Emergency Supplemental Appropriations for
Recovery from and Response to Terrorist Attacks on the United States for
Fiscal Year 2002, Public Law No. 107-117, Div. B, Ch. 4, 115 Stat. 2230,
2304.
Options for Addressing Anticipated Future Funding Shortfall Would Likely
Include both Local and Federal Contributions
Over the years, WMATA has faced funding challenges, and options have been
proposed to address them. Although WMATA has taken steps to improve its
management, such as prioritizing its planned capital improvements, it
lacks a dedicated funding source and must rely on variable, sometimes
insufficient contributions from local, regional, and federal organizations
to pay for its planned capital improvements. A report published by a
regional funding panel estimated that, over the next 10 years, under its
current revenue structure, WMATA will face a $2.4 billion budget
shortfall, due largely to expenditures planned for capital improvement
projects-an estimate that may not fully reflect the magnitude of the
anticipated budget shortfall. Proposed options would provide a dedicated
funding source, such as a local sales tax, and would increase federal
funding for capital improvements.
Estimated Costs of WMATA's Planned Capital Projects Exceed Anticipated
Funding
WMATA and others have projected continuing shortfalls in its capital and,
to some extent, its operating budgets. For example, in 2001, we reported
that WMATA faced uncertainties in obtaining funding for planned capital
spending for two of its capital programs, discussed below, the
Infrastructure Renewal Program (IRP) and the System Access and Capacity
Program (SAP).19 At that time, WMATA anticipated a shortfall of $3.7
billion in the funding for these programs over the 25-year period from
fiscal year 2001 through fiscal year 2025.
Since that time, in response to recommendations that we and others made,
WMATA created a strategic plan, which it issued in October 2002. In
November 2002, it documented and prioritized its planned capital projects
in a 10-year capital improvement plan that called for spending $12.2
billion over the period from fiscal year 2004 through fiscal year 2013.
Then, in September 2003, WMATA launched a campaign called "Metro Matters"
to obtain $1.5 billion in capital funding over a 6-year period to avert
what WMATA believed was a crisis in its ability to sustain service levels
and system reliability and to meet future demands for service. In
response, WMATA and its member jurisdictions approved a $3.3 billion
funding plan
19See GAO, Mass Transit: Many Management Successes at WMATA, but Capital
Planning Could Be Enhanced, GAO-01-744 (Washington, D.C.: July 3, 2001)
and Mass Transit: WMATA Is Addressing Many Challenges, but Capital
Planning Could Be Improved, GAO-01-1161T (Washington, D.C.: Sept. 21,
2001).
for fiscal years 2005 through 2010 to help pay for WMATA's most pressing
short-term capital investment priorities.20
As concerns about WMATA's anticipated funding shortfall grew, a regional
funding panel known as the Metro Funding Panel-cosponsored by the
Metropolitan Washington Council of Governments, the Greater Washington
Board of Trade, and the Federal City Council21-was convened in September
2004 to study the magnitude of the shortfall, identify sources of funding,
and evaluate options for generating additional revenues to address that
shortfall. The panel estimated that under its current revenue structure,
WMATA would have a total funding shortfall of about $2.4 billion for
fiscal years 2006 through 2015 for maintaining and upgrading its existing
system, assuming that Metro Matters was fully funded. As shown in table 1,
the panel attributed nearly 80 percent of the total estimated shortfall of
$2.4 billion to WMATA's capital activities (IRP and SAP) and the remainder
to operations activities associated with future capital projects as they
are completed.
20The $3.3 billion included $1.8 billion in previously pledged funding and
$1.5 billion in new commitments called for in Metro Matters. The $1.5
billion is largely funded by the local jurisdictions; however, it also
includes a request for about $260 million in federal appropriations over
the 6-year period, to be used for rail cars. WMATA officials told us that
the federal government has not acted on the additional funding request.
21The formal name of the panel is "Panel on the Analysis of and Potential
for Alternate Dedicated Revenue Sources for WMATA." See PB Consult, Inc.,
Report of the Metro Funding Panel (Washington, D.C.: Jan. 6, 2005).
Table 1: Components of the Metro Funding Panel's Estimate of WMATA's
Budgetary Shortfall, Fiscal Years 2006 through 2015
Dollars in millions
WMATA projects or activities
Infrastructure Renewal Program (IRP) projects
System Access and Capacity Program (SAP) projects
Operations activities associated with future operation of capital
projects- not including system expansion projects
Shortfall in fiscal years
2011 through 2013
2008 through 2015
2006 through 2015
Total amount of Percentage shortfall of total
$430.1 18
$1,450.5 61
$500.8 21
Total $2,381.4 100
Source: GAO analysis of information in Report of the Metro Funding Panel,
January 2005.
Funding for the following projects and activities is included in the
shortfall estimate:
o IRP projects: The IRP projects occur in fiscal year 2011 through 2013,
after the Metro Matters funding agreement expires. These projects, which
provide ongoing maintenance and renewal of the Metrorail and Metrobus
systems, include replacing and rehabilitating buses and rail cars,
rehabilitating escalators and elevators, rehabilitating Metrorail stations
and parking lots, renovating rail car and bus maintenance facilities, and
rehabilitating electrical systems, among other things.
o SAP projects: These projects, which are intended to increase the
capacity of the current Metrorail and Metrobus systems to handle increased
passenger levels, include the purchase of 130 new rail cars and 275 new
buses; a variety of improvements to four maintenance facilities, two
storage facilities, two new bus garages, and one replacement bus garage;
enhancements at Metro Center, Union Station, and Gallery Place Metrorail
stations; the construction of pedestrian connections between two pairs of
Metrorail stations (between Farragut North and Farragut West and between
Metro Center and Gallery Place); and 140 miles of bus corridor
improvements, such as signal priority for buses, route delineation
techniques using pavement materials and painted markings, and passenger
waiting area enhancements.
o Operating activities: Finally, the panel included a relatively small
portion of WMATA's operating budget in the shortfall estimate. This
portion
consists of some additional operating costs associated with some of the
capital projects. According to WMATA, these are mostly preventative
maintenance projects, such as bus engine overhauls, bus tire replacements,
bus parts, rail parts, and labor costs.
Appropriately, the panel's budgetary shortfall estimate did not include
the portion of WMATA's capital improvement plan that involves expanding
the system-by adding new rail lines, for example. The projects in this
portion of the plan, known as the System Expansion Program, are estimated
to cost roughly $6 billion. WMATA officials told us that these projects
would be paid for by the local jurisdictions and businesses where they
would be built, as well as by federal grants for new transit expansion.
In preparing its estimate of WMATA's budgetary shortfall, the panel did
not evaluate the need for, or priority of, individual projects in SAP and
IRP. Likewise, we did not independently assess the suitability of
including these projects, as a whole or individually, in the shortfall
estimate. However, when WMATA developed its 10-year capital improvement
plan in 2002, the projects were approved by its board of directors, which
includes representatives from all of WMATA's member jurisdictions. In
addition, the IRP projects and some of the projects in SAP have been
incorporated into the region's Constrained Long-Range Plan for
transportation improvements over the next 20 years by the Transportation
Planning Board of the Metropolitan Washington Council of Governments.
Estimates of the Magnitude of WMATA's Funding Shortfall May Not Be
Comprehensive
In estimating WMATA's budgetary shortfall, the panel did not include a
major cost category and, thus, may have significantly underestimated the
shortfall. The panel did not include the costs of providing paratransit
services as required under ADA. Compliance with the act's requirements may
result in significant costs over the next 10 years. The panel recognized
that including these costs, which are included in WMATA's operating
budget, would result in a greater budgetary shortfall. In fact, the panel
estimated the shortfall from MetroAccess, WMATA's paratransit system, at
about $1.1 billion over the 10-year period from 2006 through 2015, thus
raising the total anticipated shortfall to $3.5 billion for that period.
However, the panel stated that funding for these services should be
provided through a creative packaging of social service, medical, and
other nontransportation resources in the region, rather than by WMATA. We
believe that any estimate of WMATA's funding shortfall should include
Options for Addressing In our 2001 report and testimony,23 we noted that
WMATA's funding comes WMATA's Funding from a variety of federal, state,
and local sources, but that unlike most Challenges Would other major
transit systems, WMATA does not have a dedicated source of
nonfarebox revenue, such as a local sales tax, whose receipts areGenerally
Establish a Local automatically directed to the transit authority. As far
back as April 1979,Dedicated Revenue Source we reported on concerns about
the lack of a revenue source dedicated to and Include a Federal pay the
costs of mass transportation for the Washington region.24 Concerns
Contribution about WMATA's lack of dedicated revenues surfaced again in
reports the costs associated with MetroAccess because WMATA is required by
ADA to provide paratransit services.22
issued by the Brookings Institution in June 200425 and by the Metro
Funding Panel in January 2005.26 According to the Brookings report,
WMATA's lack of dedicated revenues makes WMATA's core funding uniquely
vulnerable and at risk as WMATA's member jurisdictions struggle with their
own fiscal difficulties. The Brookings report and the Metro Funding panel
report both state that the Washington region needs to develop a dedicated
source of revenue, and they evaluate the advantages and disadvantages of a
menu of revenue options that could support the dedicated revenue
source-specifically, gasoline taxes, sales taxes, congestion charges,
parking taxes, land-value capture,27 and payroll taxes.
Observing that WMATA has provided numerous benefits both to the Washington
region and the federal government over the years, the Metro Funding Panel
also concluded that WMATA will require a commitment of new revenue sources
to sustain those benefits. Accordingly, the panel
22The Metropolitan Washington Council of Governments is currently
evaluating how well the National Capital Region delivers paratransit
services to local constituents and the extent to which local agencies have
coordinated the provision of these services. In particular, the study will
seek more cost-effective ways to provide the service.
23GAO-01-744 and GAO-01-1161T.
24GAO, Issues Being Faced by the Washington Metropolitan Area Transit
Authority, CED79-52 (Washington, D.C.: Apr. 10, 1979).
25Robert Puentes, Washington Metro: Deficits by Design (Washington, D.C.:
Brookings Institution Series on Transportation Reform, June 2004).
26Report of the Metro Funding Panel (2005).
27Land-value capture is a tax arrangement under which incremental growth
in property tax receipts generated in the Metrorail service areas would be
shared with WMATA.
recommended, among other things, that (1) WMATA's compact jurisdictions of
Virginia, Maryland, and the District of Columbia mutually create and
implement a single regional dedicated revenue source to address WMATA's
budgetary shortfalls and (2) the federal government participate
"significantly" in addressing WMATA's budgetary shortfalls, particularly
for capital maintenance and system enhancement.
In the current situation of large budget deficits, any additional federal
funding for WMATA would need to be considered along with the many other
competing claims for federal resources. To the extent that the federal
government cannot provide significant additional support to WMATA, and
WMATA's current revenue structure continues to be insufficient to support
its planned capital projects, WMATA may need to reassess its capital
improvement plan to determine which projects could be undertaken within a
more constrained funding level. WMATA also may need to consider how it
will meet its obligations under ADA.
WMATA Is Subject to Oversight from Multiple Entities Whose Reviews Address a
Wide Range of Issues
WMATA is subject to oversight from multiple entities that have issued
numerous reports on the agency since 2003. The scope of the reports varies
and includes compliance reviews of specific statutory requirements,
monthly assessments of major construction projects, and reviews of WMATA's
overall bus and rail operations. Specifically, WMATA's Office of Auditor
General has issued nearly 500 reports, including internal and
investigative audits and reviews of contracts and pricing proposals. In
addition, an independent external auditor, which reports to WMATA's board
of directors, annually reviews WMATA's financial statements and related
internal controls. FTA oversees WMATA's major capital projects through its
project management oversight program and assesses its compliance with a
wide range of requirements through its Triennial Review process. In 2005,
at WMATA's request, transit industry panels conducted peer reviews of
WMATA's bus and rail operations. Details on these entities and the types
of oversight they provide are presented in table 2. All of these entities
included recommendations in their reports, and, in general, WMATA
implemented them or has plans to implement them. As part of our ongoing
work, we plan to analyze these reviews in greater detail, together with
other specialized FTA reviews and safety reviews conducted by external and
internal entities.
Table 2: Selected Entities Providing Oversight of WMATA
Number of
Oversight entity Type of oversight Subject of review reportsa
WMATA's Auditor Internal audits Cash processes and revenue sources,
reliability and effectiveness 39
General of WMATA's paratransit contractor, workers' compensation and
benefits programs, escalator and elevator maintenance contracts, inventory
management, and internal controls related to the budget and fixed assets
Investigative audits Preventing or detecting mismanagement, waste, fraud,
or abuse 18 within WMATA
Information technology Information technology systems that are under
development; 7 audits electronic collection of revenue (e.g. Smart Card,
MetroCheck sales, and Internet sales)
Contract audits Cost reasonableness of sole-source contracts, contract 404
modifications and cost-reimbursable tasks and contracts, oversight and
review of engineering firms
Control self-Quality of customer service within WMATA (designed to improve
20 assessments working relationships among departments within the agency)
Independent external Single Audit Act WMATA's financial statements and
internal controls related to these 2 auditor statements and to major
federal programs
FTA Project management Monthly reports on various aspects of major
capital projects, 125 oversight program including scheduling, budget, and
performance
Triennial Review Compliance with statutory and administrative requirements
in 23 areas
American Public Peer reviews WMATA's overall bus and rail operations
Transportation
Association (APTA)
Total
Sources: GAO analysis of data from WMATA, FTA, and APTA.
aNumbers are for reports issued since January 2003, except for the
Triennial Review, which was most recently completed for WMATA in September
2002.
WMATA's Auditor General
WMATA's Auditor General is responsible for planning and implementing
operational, financial, and information system audits, as well as for
carrying out investigations to prevent or detect mismanagement, waste,
fraud, or abuse. The Office of Auditor General also conducts audits of
contracts to ensure they are being done in accordance with WMATA policy
and cost-effectively. The Auditor General reports directly to the General
Manager/Chief Executive Officer and briefs the audit committee of the
board of directors quarterly. The Auditor General prepares an annual audit
plan that covers most aspects of the agency.
When deficiencies in a program are found, the Office of Auditor General
makes recommendations for corrective actions to be taken and follows up on
the implementation status of recommendations with the executive manager
responsible for the program or office to which the recommendations were
directed. If the recommendations are not implemented in a timely fashion,
the Chief Executive's office may intervene to ensure that appropriate
corrective action is taken. For the most part, WMATA management implements
these recommendations.
The following are examples of audit reports issued by the Office of
Auditor General in recent years:
o Contract/Procurement Oversight. Since January 2004, the Office of
Auditor General has issued five internal audit reports on contracting
processes and the documentation of contracting activities. Recommendations
were made to improve the documentation process, improve the administration
of the cost-estimating process, and develop procedures to document the
cost-estimating process.
o Information Technology (IT) Renewal Program. The IT Renewal Program is
a multiyear, multimillion-dollar initiative to renew WMATA's IT systems
for the next generation of service. The Office of Auditor General has
issued six reports during the past 3 years on the implementation of this
program, with suggestions for improving communication and ensuring that
appropriate security measures are in place.
o Audit of Cell Phone Usage. This review of employee cell phone plans
and usage made recommendations for more efficient and effective cell phone
use, which resulted in potential savings of approximately $300,000 per
year. Additional recommendations were made to improve the administration
of the cell phone program.
Single Audit Act WMATA is subject to federal financial reporting
requirements under the Single Audit Act as amended.28 Under this act,
nonfederal entities that expend more than specified amounts of federal
awards (currently $500,000) are subject to either a single audit or a
program-specific audit, which must be performed by an independent external
auditor in accordance with generally accepted government auditing
standards.29 The
2831 U.S.C. S:S: 7501-7507.
29GAO, Government Auditing Standards, GAO-03-673G (Washington, D.C.: June
2003).
purpose of the Single Audit Act30 was to streamline and improve the
effectiveness of audits of federal awards and to reduce the audit burden
on states, local governments, and nonprofit entities receiving federal
awards by replacing multiple grant audits with one audit of a recipient as
a whole (or, for entities receiving federal awards under one program, an
optional audit of that program only).
In conducting WMATA's annual audits under the act's requirements, an
independent auditor is required to (1) provide an opinion on WMATA's
financial statements and the Schedule of Expenditures of Federal Awards,
(2) report on WMATA's internal controls related to the financial
statements and major programs, and (3) report on WMATA's compliance with
laws and regulations that could have a material effect on WMATA's
financial statements and major federal programs.
For fiscal years 2003 and 2004, WMATA's independent external auditor31
found no reportable conditions or material weaknesses in WMATA's internal
controls over financial reporting and the major programs receiving federal
assistance.32 The independent auditor's reviews of WMATA's financial
statements and internal controls did, however, note several areas of
noncompliance related to requirements for grants for both years. When such
areas of noncompliance are found, the auditor recommends steps for WMATA
to take to correct the noncompliance. WMATA generally concurred with the
auditor's recommendations and agreed to implement them. The following are
examples of noncompliance
30The Office of Management and Budget's Circular No. A-133, Audits of
States, Local Governments, and Non-profit Organizations provides
implementing guidance for the act's requirements and sets forth standards
for obtaining consistency and uniformity for the audits of nonfederal
entities expending federal awards.
31See KPMG LLP, Washington Metropolitan Area Transit Authority, Single
Audit Report, Year Ended June 30, 2003 (Washington, D.C.: Sept. 26, 2003)
and KPMG LLP/F.S. Taylor & Associates, P.C., Certified Public Accountants,
Washington Metropolitan Area Transit Authority, Single Audit Report, Year
Ended June 30, 2004 (Washington, D.C.: Sept. 28, 2004).
32A reportable condition is a significant deficiency in the design or
operation of an internal control that could adversely affect the entity's
ability to record, process, summarize, and report financial data
consistent with the assertions of management in the financial statements.
A material weakness is a reportable condition in which the design or
operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements caused by
error or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions.
and recommendations for corrective action found at WMATA during fiscal
years 2003 and 2004:
o Property records for equipment purchased with a federal grant did not
include serial numbers or prices for the equipment-as required by federal
law.33 The auditor recommended that WMATA revise the records to
include the required information, and WMATA agreed to do so.
o WMATA did not correctly submit federal grant expenditure status
reports. The auditor recommended that WMATA revise and resubmit its
financial status reports to include total expenditures, which WMATA agreed
to do.
FTA's Project Management Oversight Program
FTA oversees the progress of WMATA's major capital projects through the
project management oversight (PMO) program, which we discuss in greater
detail later in this statement. To receive financial assistance, FTA's
grantees must develop and implement a project management plan that address
each project's scheduling, budget, performance, and other issues. FTA
retains engineering firms to review and recommend approval of the plans,
monitor the progress of each project against its plan, and issue monthly
monitoring reports. The purpose of the monthly PMO monitoring reports is
to determine whether the projects are proceeding in accordance with the
terms of the federal grant agreements, including whether they are meeting
standard project management requirements, such as having a project
management plan and a quality assurance plan, meeting schedule milestones,
and being on budget.
WMATA's major capital projects that are subject to PMO review collectively
represent a substantial portion of WMATA's capital budget. We reviewed PMO
reports that were issued from January 2003 through May 2005. During that
time, WMATA had seven capital infrastructure projects that were subject to
the requirements of the PMO program, including IRP, which, as discussed
earlier, provides ongoing maintenance and renewal of the Metrorail and
Metrobus systems; the rail car procurement program; and the construction
of the New York Avenue Metrorail station.34 The total
33See 49 C.F.R. 18.32(d)1.
34The other projects that were under review were Metro Matters, Dulles
Corridor rapid transit (which has received funding only for the
preliminary engineering phase and is being done in cooperation with the
Virginia Department of Rail and Public Transportation), the Addison Road
to Largo Town Center Metrorail extension, and the Branch Avenue storage
and maintenance yard.
cost of the projects under review was about $5 billion, according to data
provided by WMATA.
The monthly PMO monitoring reports that we reviewed identified concerns
and recommended corrective actions for each of WMATA's major projects
under review. The concerns most commonly cited in the reports were related
to schedules, project management plans, and quality assurance activities.
Details on these concerns-which WMATA has taken steps to address-follow:
o Schedules. The reports cited concerns pertaining to schedules for some
of the contracts within three of WMATA's projects. For the New York Avenue
Metrorail station and the Largo Metrorail extension, the reports stated
that individual components of the projects were behind schedule; however,
the two projects-as a whole-were both completed ahead of schedule. The PMO
reports also found that components of the rail car procurement program,
including the rehabilitation of the 2000/3000 Series rail cars and the
delivery of new 5000 Series rail cars, were behind schedule.
o Project management plans. The reports stated that WMATA needed to
submit or update project management plans for three of its projects-the
rail car procurement program, Metro Matters, and the Infrastructure
Renewal Program.
o Quality assurance activities. The reports stated that procedures
related to quality assurance required updating for three projects: Dulles
Corridor rapid transit, the Largo Metrorail extension, and the Branch
Avenue storage and maintenance yard. Some examples of quality assurance
activities include having (1) written procedures that describe how to
conduct reviews of contractor's quality programs and (2) quality control
coordination meetings with contractors.
FTA's Triennial Review
At least every 3 years, FTA is required to review and evaluate transit
agencies receiving funds under its Urbanized Area Formula Grant program.
The reviews focus on compliance with statutory and administrative
requirements in 23 areas, and if grantees are found not to be in
compliance, their funding can be reduced or eliminated.35 In 2002, FTA
found that WMATA was deficient in the following three areas:
35The 23 areas include legal, financial, technical, equal employment
opportunity, safety, security, and others.
o Technical. Grantees must implement the Urbanized Area Formula Grant
Program of Projects36 in accordance with the grant application master
agreement. WMATA had not been updating the milestones in its Milestone
Progress Reports, nor had WMATA been reporting all required information
for its Job Access and Reverse Commute grants.
o Buy America. Certain products used in FTA-funded projects must be
produced in the United States. WMATA's procurement files for buses and
rail cars did not include required certifications indicating that these
procurements complied with Buy America requirements.
o Half-fare. Grantees must offer reduced fares to elderly or disabled
riders or to those who present a Medicare card. WMATA's system maps
specified the base fare but did not indicate that a half-fare was
available.
FTA made recommendations for addressing the specific areas of
noncompliance; WMATA implemented the recommendations, and the findings
were closed in 2004.
Transit Industry Association Peer Reviews
The American Public Transportation Association (APTA) offers peer reviews
as a service to transit agencies to help enhance the efficiency and
effectiveness of their operations. At the request of transit agencies, the
association convenes panels of experts from within the transit industry,
who travel to the transit agency under review to physically tour the
operations, meet with staff and senior management, and review
documentation in order to develop findings and recommendations on the
transit agency's operations. Following the site visit, the peer review
panel issues a written report to the transit agency under review.
At WMATA's own request, APTA conducted peer reviews on WMATA's bus and
rail operations earlier this year, and WMATA is currently considering its
response to the recommendations made in the peer review reports.37 The
peer review panels developed recommendations to improve the
36The Urbanized Area Formula Grants Program provides transit capital and
operating assistance to urbanized areas with populations over 50,000. A
"program of projects" is a set of related projects with a common strategic
goal or aim.
37See American Public Transportation Association, Rail Operations Review
for the Washington Metropolitan Area Transit Authority (Washington, D.C.:
March 2005) and Bus Operations Review for the Washington Metropolitan Area
Transit Authority
(Washington, D.C.: June 2005).
effectiveness and efficiency of bus and rail operations in multiple areas,
including staffing, organization, maintenance and technology. For example:
o Findings and recommendations in the rail peer review report focused on
o the selection, training, and certification of employees, with
recommendations on improving training for track and train employees and
implementing a new reporting structure for the training department;
o operations, with recommendations on increasing reliance on line
supervisors in dealing with in-service problems and restructuring the
current organization to create distinct line ownership functions and
responsibilities; and
o track maintenance, with recommendations on recertifying track walkers
annually and increasing the number of track walkers to reduce the daily
inspection distance to industry standards.
o Findings and recommendations of the bus peer review report focused on
o operations and service, with recommendations for increased street
supervision and re-evaluation of bus route service;
o facility maintenance, with recommendations on consolidating bus shop
maintenance and improving follow-up procedures for bus defects;
o staffing and training, with recommendations on eliminating high
vacancy rates and improving training; and
o safety, with recommendations on adhering to basic safety programs and
enforcing personal protective equipment policies.
Additional GAO Work Remaining on WMATA's Oversight
As part of our ongoing work, we plan to analyze these reviews in greater
detail to determine whether, taken as a whole, they point to any systemic
problems and are sufficiently comprehensive to identify and address
overall management and operational challenges. We will also broaden the
scope of our analysis to include additional oversight reviews;
specifically, we plan to analyze FTA's in-depth reviews of program or
system compliance. These include, for example, financial management
oversight reviews, which assess grantees' financial management systems and
internal controls; procurement system reviews, which evaluate grantees'
compliance with federal procurement requirements; and drug and alcohol
oversight reviews, which assess grantees' compliance with FTA's
regulations on substance abuse management programs and drug and alcohol
testing for transit employees. We also plan to review safety audits of
WMATA that were conducted by internal and external entities, including the
following:
o WMATA's Office of System Safety and Risk Protection. This office,
which reports to the Department of Audit and Safety Oversight, performs
internal safety reviews of WMATA's operations.
o Tri-State Oversight Committee. This committee, which is the designated
state safety oversight agency for WMATA, requires WMATA to develop and
implement system safety and security program plans, report accidents and
unacceptable hazard conditions, and conduct safety reviews. The committee
meets with WMATA quarterly to discuss safety issues and has the authority
to mandate corrective action.
o APTA. APTA's bus and rail safety audits review the adequacy of transit
agencies' system safety program plans and the extent to which the plans
have been implemented.
o FTA. FTA performs audits of the Tri-State Oversight Committee to
determine whether the state oversight agency is carrying out its safety
oversight program and to examine ways in which the overall program can be
improved.
o National Transportation Safety Board (NTSB). NTSB has the authority to
conduct investigations of accidents and make recommendations. The NTSB is
currently investigating a November 2004 crash involving two Metrorail
trains; it expects to issue a report on the results of this investigation
in the fall of 2005.
In addition, we plan to review the role of WMATA's board of directors in
providing oversight of WMATA's management and operations. As noted earlier
in this statement, WMATA is governed by a board of directors- composed of
individuals appointed by each of the local jurisdictions WMATA
serves-which sets policies and oversees all of WMATA's activities,
including budgeting, operations, development, expansion, safety,
procurement, and other activities.
Spending Safeguards and Management Oversight Have Helped Recipients of Federal
Transportation Assistance Control Costs and Ensure Results
To control costs and ensure results-especially for high-cost
transportation infrastructure projects-Congress, the administration, and
GAO have long recognized the importance of instituting spending safeguards
and management oversight for the state and local governments and
transportation agencies that receive federal funding. For example, certain
federal policies have historically controlled the uses of federal
transportation funds, prohibiting the use of these funds for operating
expenses and requiring that the federal funds be matched to ensure the use
of some local funds for capital infrastructure projects. In addition, a
number of past, ongoing, and planned federal and local efforts provide
insight into the benefits of management oversight and how it can be
carried out. For example, in the 1980s, state legislation enhanced
opportunities for New York City's ailing Metropolitan Transit Authority to
generate additional revenue while providing increased oversight to ensure
accountability. Furthermore, FTA's PMO program is designed to help ensure
that grantees building major capital projects have the qualified staff and
procedures needed to successfully plan and carry out those projects. We
have also reported that safeguards should accompany any increased federal
funds provided to the District of Columbia to address the structural
imbalance between its costs and revenue-raising capacity. Finally, the
surface transportation reauthorization bills currently before Congress
include provisions to enhance management oversight controls for projects
receiving federal funds, including establishing a new program to monitor
the use of federal highway funds. Although we have not evaluated the
application of these oversight mechanisms to WMATA, we believe they
provide a number of options for Congress to consider as it weighs the
question of providing additional federal funding to WMATA.
Federal Programs Restrict Use of Funds for Operations and Encourage State
and Local Spending through Matching Requirements
The federal government has generally discouraged federal transit grants
from being used to fund transit operating expenses, although policy in
this area has shifted over time.38 Landmark legislation in 1964
established a program of federal capital expenditure grants to state and
local governments. 39 At that time, no grant money could be used for
operating expenses because of concerns that such grants would discourage
efficient operations of transit agencies and might even have the perverse
effect of rewarding inefficient operations with funding assistance.
However, that act was amended in 1974 to authorize federal subsidies to
pay transit
38For transit agencies that serve urbanized areas with populations of
200,000 or more. 39Urban Mass Transportation Act of 1964, Public Law No.
88-365, 78 Stat. 302.
operating expenses, reflecting the alternative concern that limiting
federal assistance to capital grants created incentives for local
governments to inefficiently waste capital, such as by prematurely
replacing buses. 40
During the 1990s, views on how federal transit grants could be used
shifted again, and limits were placed on the total amount of transit
formula grants that could be used for operating expenses. In 1998, with
the passage of the Transportation Equity Act for the 21st Century
(TEA-21), transit agencies serving urban populations of 200,000 or more
could no longer use funding from FTA's Urbanized Area Formula Grants for
operating expenses. According to FTA officials, this prohibition was
instituted in part because federal policymakers believed that the federal
government should pay only for the construction and maintenance of mass
transit systems, not for their operation. However, TEA-21 did allow
capital funds to be used for preventive maintenance, which included
routine maintenance on rail cars and buses-activities that were previously
classified as operations activities. After the events of September 11,
2001, we recommended a legislative exception to the prohibition on
operations funding that would allow transit agencies to use Urbanized Area
Formula Grants for security-related operating expenses.41 Transit agencies
can spend 1 percent of formula funds on security-related operating
expenses.
The federal government has also historically used matching requirements in
its transit and other transportation programs to stimulate local
investment in transportation infrastructure and equipment. Currently,
major capital transit investment programs-including the New Starts and
Rail and Fixed Guideway Modernization programs-provide grants that fund up
to 80 percent of a project's total costs while requiring a local match of
at least 20 percent.42
40The National Mass Transportation Assistance Act of 1974, Public Law No.
95-503, 88 Stat. 1565.
41GAO, Mass Transit: Federal Action Could Help Transit Agencies Address
Security Challenges, GAO-03-263 (Washington, D.C.: Dec., 2002).
42However, FTA continues to encourage project sponsors to request a
federal New Starts funding share that is as low as possible.
Assistance to the New York City Transit Agency in the 1980s Was Tied to
Oversight Requirements
o
o
o
During the late 1970s and early 1980s, the New York State Metropolitan
Transit Authority (MTA), which includes New York City Transit's subway and
bus systems and the Long Island Rail Road, was in a state of fiscal crisis
and operational decay. To help salvage the system, the state legislature
passed legislation43 that provided MTA with the flexibility to generate
additional revenue-through issuing bonds and notes and through the
creation of a special tax district-needed to rebuild its aging
infrastructure. The legislation also established several oversight bodies-
which are still in place at MTA today-to help ensure that MTA's funds
would be well spent. They are as follows:
The Metropolitan Transportation Capital Review Board. Appointed by the
governor and composed of two members recommended by the New York State
legislature and one each recommended by the governor and the mayor of New
York City, this board reviews and approves, once every 5 years, MTA's
capital program plans for transit and railroad facilities. The plans
include goals and objectives for capital spending, establish standards for
service and operations, and include estimated costs and expected sources
of revenue.
The MTA Committee on Capital Program Oversight. This standing committee of
MTA's board of directors has various oversight responsibilities, including
monitoring the (1) current and future availability of funds to be used in
the capital program plans and (2) contract awards made by MTA. The
committee issues quarterly reports on its activities and findings.
The MTA Office of the Inspector General. This office was created as an
independent oversight agency to investigate allegations of abuse, fraud,
and deficiencies in the maintenance and operation of facilities. The
Inspector General may also initiate other reviews of MTA's operations and
can recommend remedial actions to be taken by MTA and monitor their
implementation. The Inspector General is appointed by the governor and
submits annual reports of findings and recommendations to the governor.
MTA is required to report quarterly to the Inspector General on the
implementation status of all recommendations made in final reports.
43Metropolitan Transportation Authority and New York City Transit
Authority- Highways-Appropriations, ch. 314 (1981); N.Y.S. Public
Authorities Law, S: 1279 (1983); Metropolitan Transportation Authority and
N.Y.C. Transit Authority-Operating and Capital Needs, ch. 929 (1986); Mass
Transportation and Highways-Financing-Credit Against Mortgage Recording
Tax, ch. 13 (1987).
Since these oversight bodies were established, and with increased funding,
MTA has improved its on-time performance and reliability. For example, the
mean distance between failures has increased from less than 7,000 miles in
1981 to nearly 140,000 miles in 2003, according to MTA.
FTA's PMO Program Helps Protect Federal Funds Spent on Major Capital
Projects, Including WMATA's Projects
FTA's PMO program was established in the 1980s to safeguard the federal
investment in major capital transit projects, which require large
commitments of public resources, can be technically challenging, and often
take years to construct. This program provides a continuous review and
evaluation of the management of all major transit projects funded by FTA.
Through provisions such as the following, the PMO program is designed to
help ensure that grantees building major capital projects have the
qualified staff and procedures needed to successfully build the projects:
o To receive federal financial assistance, grantees must develop and
implement project management plans that address quality, scheduling, the
budget, and other issues.
o Contractors monitor grantees' projects to determine whether grantees
are progressing on time, within budget, and according to approved plans
and specifications.
o The contractors periodically report their findings and recommendations
for any corrective actions that may be needed.
In 2000, we reported and testified44 that FTA had improved the quality of
the PMO program since the early 1990s, when we designated it as high risk
because it was vulnerable to fraud, waste, abuse, and mismanagement.45 We
concluded that the program had resulted in benefits for both grantees and
FTA. Grantees have improved their controls over the cost, schedule,
quality, and safety of their projects. FTA has gained a better
understanding of the issues surrounding complex construction projects and
an increased awareness of potential problems that could lead to schedule
delays or cost increases. As contractors have brought cost and schedule
issues to FTA's
44See GAO, Mass Transit: Challenges in Evaluating, Overseeing, and Funding
Major Transit Projects, GAO/T-RCED-00-104 (Washington, D.C.: Mar. 8, 2000)
and Mass Transit: Project Management Oversight Benefits and Future Funding
Requirements, GAO/RCED-00-221 (Washington, D.C.: Sept. 15, 2000).
45The PMO program is no longer designated by GAO as high risk.
attention, FTA has taken actions to help protect the federal investment
and control projects' costs and schedules.
FTA officials told us that any additional federal funding provided to
WMATA would be subject to the PMO program's requirements only if those
funds were distributed to WMATA through the U.S. Department of
Transportation and FTA. Otherwise, WMATA's spending from the additional
funding would not likely be subject to any federal program oversight.
We Have Suggested Spending Safeguards for Any Increase in Federal Funds
Provided to Address the District of Columbia's Structural Imbalance
In June 2004, we testified on the structural imbalance between the
District of Columbia's costs and revenue-raising capability, stating that
if the federal government chooses to provide additional funding to the
District to compensate for this imbalance, the government should implement
safeguards to ensure that the funds are spent efficiently and effectively.
46 In that testimony, we stated that such safeguards should be written
into any legislation providing additional federal assistance to the
District and could include the following:
o District officials should be required to report to Congress on how
they plan to spend the federal assistance and regularly report on how it
is being spent.
o Congress may consider further specifying the types of projects for
which federal funds could be used or including a matching requirement to
ensure that some local funds continue to be used for infrastructure and
capital requirements.
Surface Transportation The House and Senate versions of the surface
transportation Reauthorization Bill Would reauthorization bill that are
currently in conference committee contain Enhance Management provisions
aimed at improving the financial integrity and project delivery Oversight
Controls for times for surface transportation projects that receive
federal financial
Projects Receiving Federal assistance. For example:
Funds o On the transit side, both the House and Senate versions of the
bill would increase the amount of funds available to the Secretary of
Transportation for management oversight of mass transportation
construction projects
46GAO, District of Columbia: Structural Imbalance and Management Issues,
GAO-04-908T (Washington, D.C.: June 22, 2004).
receiving federal funds.47 The funds would be used to review and ensure
compliance with federal requirements for project management. To support
the need for such enhanced oversight, the committee report accompanying
the House bill notes that comprehensive agency oversight, compliance
review, and technical assistance are necessary for all major grant
programs.48
o On the highway side, both versions of the bill49 would require the
Secretary
Concluding Observations
of Transportation to establish an oversight program for the Federal-Aid
Highway Program to promote the effective and efficient use of federal
highway funds. As part of this new oversight program, the Federal Highway
Administration (FHWA) would (1) review states' financial management
systems, (2) develop minimum standards for estimating project costs, and
(3) evaluate state practices for awarding contracts and reducing project
costs. In addition, highway projects receiving a certain amount of federal
assistance-$500 million or more in the House bill and $1 billion or more
in the Senate bill-would be subject to an increased level of FHWA
oversight, including submitting a project management plan and an annual
financial plan to FHWA documenting the project's procedures for managing
costs and schedules.
WMATA's service to the nation's capital and its associated additional
responsibilities need to be considered when determining whether a greater
federal role in providing financial assistance to, and oversight of, WMATA
is warranted. In the end, it is up to Congress to decide whether or in
what form to provide WMATA with additional federal funding in recognition
of its support of the federal government. In addition, if Congress decides
to provide WMATA with the additional funding, it is important for there to
be reasonable assurances that the funds will be spent efficiently and
effectively. WMATA is already subject to oversight from multiple entities,
but it is unclear whether this oversight is sufficient to provide such
assurances. WMATA's existing oversight could be supplemented by including
safeguards in any legislation that provides additional federal funding.
Our research has shown that a number of options are available
47H.R. 3 109th Cong., Engrossed House, S: 3026 (2005); H.R. 3, 109th
Cong., Engrossed Senate Amendment, S: 6025 (2005).
48House Report No. 109-12, at 421 and 422 (2005).
49H.R. 3, 109th Cong., Engrossed House, S: 1105 (2005); H.R. 3, 109th
Cong., Engrossed Amendment Senate, S: 1802 (2005).
for such safeguards, although we have not fully analyzed their
applicability to WMATA or their relative merits. The options include the
following:
o Require WMATA officials to report to Congress on how they plan to
spend the federal assistance and regularly report on how it is being
spent. For example, Congress could require officials to submit a plan to
Congress on how they intend to spend the federal assistance-before any
funds are obligated-and update this plan as circumstances or priorities
change.
o Further specify the types of projects for which federal funds could be
used or include a matching requirement to ensure that some local funds
continue to be used for infrastructure and capital requirements.
o Require that any additional funding provided to WMATA be administered
through DOT and FTA and therefore be subject to the PMO program.
o Institute additional oversight bodies for WMATA, either through or
independent of its board of directors.
GAO Contacts and Staff Acknowledgments
Mr. Chairman, this concludes my prepared statement. I would be pleased to
respond to any questions that you or the other Members of the Committee
may have.
For further information about this testimony, please contact me at (202)
512-2834 or [email protected]. Individuals making key contributions to
this testimony include Seto Bagdoyan, Mark Bondo, Christine Bonham, Jay
Cherlow, Elizabeth Eisenstadt, Edda Emmanuelli-Perez, Rita Grieco, Heather
Halliwell, Maureen Luna-Long, Susan Michal-Smith, SaraAnn Moessbauer,
Katie Schmidt, and Earl Christopher Woodard.
Appendix I: Objectives, Scope, and Methodology
To determine the Washington Metropolitan Area Transit Authority's (WMATA)
responsibilities for supporting the federal government, we interviewed a
wide array of federal and local officials including those from WMATA, the
Federal Transit Administration (FTA), the Office of Personnel Management,
the General Services Administration, the National Capital Planning
Commission, the Metropolitan Washington Council of Governments, the U.S.
Secret Service, the U.S. Capitol Police, and the District of Columbia
Department of Transportation. We reviewed federal guidance on employees'
use of, and the placement of federal buildings near, mass transit and
local and federal emergency planning guidance. We also used WMATA's
estimates of federal Metrorail ridership based on its 2002 passenger
survey. Through our review of the survey methodology, and use of other
corroborating evidence, we determined that the ridership estimates were
sufficiently reliable for our purposes.
To determine the current funding challenges facing WMATA and the options
proposed to address these challenges, we reviewed and analyzed the
budgetary shortfall estimate prepared by the Metro Funding Panel, budget
documents from WMATA, and prior GAO reports. We interviewed officials from
WMATA and local transportation experts who served on the funding panel.
To determine the entities that currently provide oversight of WMATA and
the focus of their recent reviews, we interviewed WMATA officials and
reviewed selected reports and audits that have been issued by WMATA's
oversight bodies since the beginning of calendar year 2003. Our review
included the following:
o WMATA Auditor General reports
o FTA's Project Management Oversight (PMO) program contractor reports
o FTA's most recent Triennial Review1
o The independent external auditor's review of WMATA's financial
statements and internal controls as required under the Single Audit Act
o The American Public Transportation Association's peer review reports
1The most recent Triennial Review of WMATA was in September 2002.
Although FTA carries out a number of reviews of transit agencies in
addition to the Triennial Review and the PMO reports, we selected the
Triennial Review because it covers grantees' compliance with a wide range
of statutory and administrative requirements, and we selected the PMO
reports because this program provides oversight of WMATA's major capital
projects, which represent a significant part of WMATA's budget. For this
statement, we did not analyze any oversight entities or reports related to
safety, such as those of the Tri-State Oversight Committee, the National
Transportation Safety Board, or the American Public Transportation
Association. We plan to address these, as well as FTA's additional
compliance reviews, as part of our ongoing work.
To identify applicable examples of spending safeguards and management
oversight of any additional federal assistance provided to WMATA, should
Congress decide to provide such assistance, we reviewed prior GAO work on
surface transportation funding and management oversight, as well as other
documents on transportation planning and finance, and interviewed
officials with expertise in the transit industry, transportation finance,
and transportation planning.
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