Public Transportation: Preliminary Information on FTA's 	 
Implementation of SAFETEA-LU Changes (27-JUN-06, GAO-06-910T).	 
                                                                 
The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) authorized a significant	 
level of investment--over $52 billion--for federal transit	 
programs. SAFETEA-LU also added new transit programs and made	 
changes to existing programs, including the New Starts and Job	 
Access and Reverse Commute (JARC) programs. The New Starts	 
program is a discretionary grant program for public		 
transportation capital projects. The JARC program is intended to 
improve the mobility of low-income individuals seeking work.	 
SAFETEA-LU authorized $8.6 billion for these two programs. The	 
Federal Transit Administration (FTA) manages both of these	 
programs. This testimony discusses GAO's preliminary findings on 
the (1) changes SAFETEA-LU made to the New Starts program, (2)	 
changes SAFETEA-LU made to the JARC program, and (3) issues that 
may be important as FTA moves forward with implementing the act. 
To address these objectives, GAO interviewed FTA officials,	 
sponsors of New Starts projects, and representatives from	 
industry associations and reviewed FTA's guidance on the New	 
Starts and JARC programs and federal statutes, among other	 
things. 							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-910T					        
    ACCNO:   A56007						        
  TITLE:     Public Transportation: Preliminary Information on FTA's  
Implementation of SAFETEA-LU Changes				 
     DATE:   06/27/2006 
  SUBJECT:   Evaluation criteria				 
	     Federal aid for transportation			 
	     Program evaluation 				 
	     Transportation					 
	     Program management 				 
	     DOT Job Access and Reverse Commute 		 
	     Program						 
                                                                 
	     FTA New Starts Program				 

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GAO-06-910T

     

     * Background
     * SAFETEA-LU's Changes to the New Starts Program Range from Id
          * FTA Has Started to Implement SAFETEA-LU Changes and Will Con
          * Small Starts Program Is Intended to Offer a Streamlined Proc
          * FTA Also Identified Possible Changes to the New Starts Progr
     * SAFETEA-LU Transformed the JARC Program from a Discretionary
          * SAFETEA-LU Created a Formula for Distributing JARC Funds and
          * FTA Has Developed Interim JARC Guidance and Plans to Issue F
     * Transparency, Communication, and Accountability Issues Will
          * Contact Information
     * Appendix I: FTA's Proposed Changes to the New Starts Program
     * Related GAO Products
          * New Starts reports and testimonies
               * JARC reports and testimonies
               * Other transit-related reports
               * Order by Mail or Phone

Testimony

Before the Subcommittee on Housing and Transportation, Committee on
Banking, Housing, and Urban Affairs, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:30 p.m. EDT

Tuesday, June 27, 2006

PUBLIC TRANSPORTATION

Preliminary Information on FTA's Implementation of SAFETEA-LU Changes

Statement of Katherine Siggerud Physical Infrastructure

GAO-06-910T

Mr. Chairman and Members of the Subcommittee:

We appreciate the opportunity to provide testimony on the Federal Transit
Administration's (FTA) implementation of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). As
you know, SAFETEA-LU authorized a significant level of investment-over $52
billion-for federal transit programs. This authorization provides funding
for fiscal years 2004 through 2009, adds new transit programs, and makes
changes to existing programs, including the New Starts and Job Access and
Reverse Commute (JARC) programs. The New Starts program provides much of
the federal government's share of new fixed-guideway investments. Through
the New Starts program, FTA identifies and selects new fixed-guideway
transit projects for funding-including heavy, light, and commuter rail;
ferry; and certain bus projects. The JARC program is intended to assist
low-income individuals in accessing employment opportunities by attempting
to fill gaps in public transportation services.

My testimony today examines the (1) changes SAFETEA-LU made to the New
Starts program, (2) changes SAFETEA-LU made to the JARC program, and (3)
issues that may be important as FTA moves forward with implementing the
act. My comments are based on our ongoing work for the Senate Committee on
Banking, Housing, and Urban Affairs and the House Committee on
Transportation and Infrastructure as well as our body of work on the New
Starts and JARC programs.1 We will complete our ongoing work and report in
full to the Committees later this year. For our ongoing work, we
interviewed FTA officials, sponsors of New Starts projects, a metropolitan
planning organization, and representatives from industry associations. We
also reviewed FTA's guidance on the New Starts and JARC programs, the
Advanced Notice of Proposed Rule Making (ANPRM) for the new capital
investment program for Small Starts-a subcategory of new fixed guideway
projects-and the public comments submitted to FTA's docket on these
documents. We also reviewed the provisions of SAFETEA-LU and of its
predecessor, the Transportation Equity Act for the 21st Century (TEA-21),
dealing with the New Starts and JARC programs, and attended FTA's New
Starts/Small Starts Seminar and Listening Sessions in March and June 2006.
We conducted our work from February 2006 through June 2006 in accordance
with generally accepted government auditing standards.

1TEA-21 required GAO to evaluate both the New Starts evaluation and rating
process and the JARC program on a regular basis. SAFETEA-LU continued
similar requirements. In particular, we are required to review the New
Starts evaluation and rating process each year and the JARC program
beginning 1 year after the enactment of SAFETEA-LU and every 2 years
thereafter. See the Related GAO Products at the end of this testimony for
a listing of previous reports on these programs.

In summary:

           o  The eight changes SAFETEA-LU made to the New Starts program
           range from establishing the Small Starts program to identifying
           new evaluation criteria. FTA has taken some initial steps to
           implement these changes, including issuing an ANPRM for the Small
           Starts program and guidance for the New Starts program, both in
           January 2006. The Small Starts program is a new component of the
           New Starts program and is intended to offer an expedited and
           streamlined application and review process for small projects. The
           transit community, however, questioned whether the Small Starts
           program, as outlined in the ANPRM, would provide such a process.
           In its January 2006 guidance, FTA also identified and sought
           public input on possible changes to the New Starts program that
           would have an impact on traditional New Starts projects, or large
           starts, such as revising the evaluation process to incorporate the
           new criteria identified by SAFETEA-LU. According to FTA, a
           potential challenge in moving forward is incorporating both land
           use and economic development criteria into the evaluation process,
           including developing appropriate measures for the criteria and
           avoiding duplication in counting benefits. To address this issue,
           FTA suggested combining land use and economic development into a
           single measure. However, in the comments submitted to FTA, members
           of the transit community repeatedly stated that land use and
           economic development should not be combined into a single measure
           and that they should receive the same weight as cost-effectiveness
           in the evaluation and rating process.

           o  SAFETEA-LU made a number of changes to the JARC program. One
           key change was to change JARC from a discretionary to a
           formula-based program. Whereas funds for JARC projects were
           congressionally designated in recent years, SAFETEA-LU's formula
           distributes funds to states and large urbanized areas.2 This will
           significantly change the allocation of JARC funds as some states
           and urbanized areas receive more funds than under the
           discretionary program, others receive less, and some areas will
           receive funds that had not received JARC funds in the past. Other
           key changes resulting from SAFETEA-LU include allowing JARC
           recipients to use a portion of funds for planning activities and
           removing a limit on the amount of funds available for reverse
           commute projects. To implement these changes, FTA began soliciting
           comments and input through public listening sessions and program
           notices in November 2005. FTA has released interim guidance for
           fiscal year 2006, is currently developing draft final guidance for
           the JARC program, and plans to issue final guidance later this
           year. Potential challenges that FTA faces in moving forward
           include issuing guidance in a timely manner so that recipients can
           implement JARC programs, and determining how to incorporate JARC
           recipients into FTA's oversight processes.

           o  Our past work suggests that transparency, communication, and
           accountability issues will be important as FTA moves forward in
           implementing SAFETEA-LU changes to the New Starts and JARC
           programs. Since 1998, we have issued numerous reports on these
           programs, and many of the reports contained recommendations to FTA
           on ways to improve the programs' implementation. For example, we
           have reported that FTA could increase the transparency of the New
           Starts program by obtaining public input on proposed policy
           changes before they are implemented. We have also reported that
           FTA could better measure the outcomes of the JARC program-an
           important step in holding the program accountable for results.
           SAFETEA-LU addressed some of these issues, and FTA has also taken
           steps to resolve some of them. For example, SAFETEA-LU requires
           FTA to publish for notice and comment any proposals that make
           significant changes to the New Starts program, which FTA did in
           January 2006. Members of the transit community and FTA officials
           have stated that they have been pleased with the review and
           comment process. Nevertheless, given the number of changes that
           are being made to both programs, continued focus on efforts to
           improve transparency, communication, and accountability will be
           important.

           SAFETEA-LU authorized over $52 billion for federal transit
           programs, including the New Starts and JARC programs, from fiscal
           year 2005 through fiscal year 2009. SAFETEA-LU authorized $7.9
           billion for the New Starts program and $727 million for the JARC
           program. Both of these programs are managed by FTA.

           The New Starts program is a discretionary grant program for
           investments in new fixed-guideway projects. Under the
           statutorily-defined evaluation process for the New Starts program,
           FTA identifies and selects fixed-guideway transit
           projects-including heavy, light, and commuter rail; ferry; and
           busway projects-for funding. FTA generally funds New Starts
           projects through full funding grant agreements (FFGA), which
           establish the terms and conditions for federal participation in a
           New Starts project and also define a project's scope, including
           the length of the system and the number of stations; the project's
           schedule, including the date when the system is expected to open
           for service; and the project's cost. To obtain an FFGA, a project
           must progress through a local or regional review of alternatives
           and meet a number of federal requirements, including providing
           information for the New Starts evaluation and rating process. As
           required by SAFETEA-LU, New Starts projects must emerge from a
           regional, multimodal transportation planning process. The first
           two phases of the New Starts process-systems planning and
           alternatives analysis-address this requirement. The systems
           planning phase identifies the transportation needs of a region,
           while the alternatives analysis phase provides information on the
           benefits, costs, and impacts of different corridor-level options,
           such as rail lines or bus routes. The alternatives analysis phase
           results in the selection of a locally preferred alternative-which
           is intended to be the New Starts project that FTA evaluates, as
           required by statute. After a locally preferred alternative is
           selected, project sponsors seek FTA's approval for entry into the
           preliminary engineering phase.3 Following completion of
           preliminary engineering and federal environmental requirements-and
           assuming New Starts requirements continue to be met-FTA may
           approve the project's advancement into final design,4 after which
           FTA may approve the project for an FFGA and proceed to
           construction, as provided for in statute. FTA oversees grantees'
           management of projects from the preliminary engineering phase
           through construction and evaluates the projects for advancement
           into each phase of the process, as well as annually for the New
           Starts report to Congress.

           To help inform administration and congressional decisions about
           which projects should receive federal funds, FTA assigns ratings
           based on a variety of financial and project justification
           criteria, and then assigns an overall rating. For the fiscal year
           2007 evaluation cycle, FTA used the financial and project
           justification criteria identified in TEA-21.5 These criteria
           reflect a broad range of benefits and effects of the proposed
           project, such as cost-effectiveness, as well as the ability of the
           project sponsor to fund the project and finance the continued
           operation of its transit system (see fig. 1). FTA assigns the
           proposed project a rating for each criterion, then assigns a
           summary rating for local financial commitment and project
           justification. Finally, FTA develops an overall project rating.
           Projects are rated at several points during the New Starts
           process-as part of the evaluation for entry into preliminary
           engineering and final design, and yearly for inclusion in the New
           Starts annual report that is submitted to Congress.

2For this testimony, the term "states" includes the District of Columbia,
American Samoa, Guam, the Northern Marianas, Puerto Rico, and the Virgin
Islands. Large urbanized areas are those areas with populations of 200,000
or more.

                                   Background

3During the preliminary engineering phase, project sponsors refine the
design of the proposal, taking into consideration all reasonable design
alternatives. This process results in estimates of the project's costs,
benefits, and impacts (e.g., financial or environmental). According to FTA
officials, to gain approval for entry into preliminary engineering, a
project must (1) have been identified through the alternatives analysis
process, (2) be included in the region's long-term transportation plan,
(3) meet the statutorily defined project justification and financial
criteria, and (4) demonstrate that the sponsors have the technical
capability to manage the project during preliminary engineering. Federal
New Starts funding may be used for preliminary engineering activities, if
so appropriated by Congress.

4Final design is the last phase of project development before construction
and may include right-of-way acquisition, utility relocation, and the
preparation of final construction plans and cost estimates.

5As will be discussed, SAFETEA-LU identified additional criteria for FTA
to use in its evaluation and rating process. However, according to FTA's
January 2006 guidance, FTA does not plan to change the current framework
and methodology for evaluating and rating New Starts projects (i.e.,
non-Small Starts projects) before publishing the new final rule for its
New Starts program, which is expected in January 2008.

Figure 1: New Starts Evaluation Process

More recent than New Starts, the JARC program was created in 1998 in order
to support the nation's welfare reform goals. Without adequate
transportation, welfare recipients face significant barriers in moving
from welfare to work. In 1998, we reported that three-fourths of welfare
recipients live in central cities or rural areas, while two-thirds of new
entry-level jobs are located in suburbs. Public transportation facilities
often offer limited or no access to many of these jobs.6 JARC, which is
administered by FTA, was designed to fill these gaps in transportation
services for low-income individuals.

JARC is intended to increase collaboration among transit agencies, local
human service agencies, nonprofit organizations, and others and to improve
the mobility of low-income individuals seeking work. Programs selected to
receive grants-including the expansion of public transportation routes,
ridesharing activities, and promotion of transit voucher programs-are
designed to assist low-income individuals in accessing employment
opportunities and related services, such as child care and training.

6GAO, Welfare Reform: Implementing DOT's Access to Jobs Program,
GAO/RCED-99-36 (Washington, D.C.: Dec. 8, 1998).

SAFETEA-LU's Changes to the New Starts Program Range from Identifying New
          Evaluation Criteria to Establishing the Small Starts Program

SAFETEA-LU made changes to the New Starts program that range from
identifying new evaluation criteria to establishing the Small Starts
program. FTA has taken some initial steps in implementing these changes,
including issuing an ANPRM for the Small Starts program and guidance for
the New Starts program, both in January 2006. The Small Starts program is
a new component of the New Starts program and is intended to expedite and
streamline the application and review process for small projects. The
transit community, however, questioned whether the program, as outlined in
the ANPRM, would streamline the process. In its January 2006 guidance, FTA
also identified and sought public input on possible changes to the New
Starts program that would affect traditional New Starts projects, or large
starts, such as revising the evaluation process to incorporate the new
evaluation criteria identified by SAFETEA-LU. FTA also identified possible
implementation challenges, including how to distinguish between land use
and economic development criteria in the evaluation framework.

FTA Has Started to Implement SAFETEA-LU Changes and Will Continue to Do So
through the Rulemaking Process

SAFETEA-LU introduced eight changes to the New Starts program, codified an
existing practice, and clarified federal funding requirements. These
changes range from the creation of the Small Starts program to introducing
new evaluation criteria. For example, SAFETEA- LU added economic
development to the list of criteria that FTA must use in the New Starts
evaluation process. In addition, SAFETEA-LU codified FTA's requirement
that project sponsors conduct before and after studies for all completed
projects.7 SAFETEA-LU also clarified the federal share requirements for
New Starts projects. In particular, SAFETEA-LU states that the federal
share for a New Starts project may be up to 80 percent of the project's
net capital project cost, unless the project sponsor requests a lower
amount. SAFETEA-LU also prohibits the Secretary of Transportation from
requiring a nonfederal share of more than 20 percent of the project's
total net capital cost. This language addresses FTA's policy of favoring
projects that seek a federal New Starts share of no more than 60 percent
of the total cost. FTA instituted this policy beginning with the fiscal
year 2004 evaluation cycle in response to language contained in
appropriation committee reports. Table 1 describes SAFETEA-LU provisions
for the New Starts program and compares them to TEA-21's requirements.

7A before and after study is similar to an outcome evaluation in that it
compares the forecasted benefits and costs of a project with the actual
benefits and costs of the project after the project is completed.

Table 1: Comparison of SAFETEA-LU's and TEA-21's New Starts Provisions

Provisions           SAFETEA-LU                   TEA-21                   
Establish the Small     o  Projects seeking less     o  Projects seeking   
Starts program          than $25 million in New      less than $25 million 
                           Starts funds will no         in New Starts funding 
                           longer be exempt from the    were exempt from the  
                           ratings process once the     ratings process.      
                           Small Starts final rule      o  No separate        
                           is issued.                   program for small     
                           o  Establishes a new         transit projects.     
                           capital investment        
                           program called Small      
                           Starts for projects that  
                           (1) are corridor based,   
                           (2) have a total project  
                           cost of less than $250    
                           million, and (3) are      
                           seeking less than $75     
                           million in federal Small  
                           Starts funding.           
Codify the before    Project sponsors with FFGAs  Not required under       
and after study      must conduct a study that    TEA-21, but FTA required 
requirement          (1) describes and analyzes   project sponsors to      
                        the impacts of the new fixed conduct a before and     
                        guideway capital project on  after study on completed 
                        transit services and transit projects.                
                        ridership, (2) evaluates the 
                        consistency of predicted and 
                        actual project               
                        characteristics and          
                        performance, and (3)         
                        identifies sources of        
                        differences between          
                        predicted and actual         
                        outcomes. Project sponsors   
                        must prepare an information  
                        collection and analysis      
                        plan, which must be approved 
                        prior to execution of the    
                        FFGA.                        
Revise New Starts    Overall project rating is    Overall project rating   
overall project      based on a 5-point scale of  was based on 3-point     
rating scale         "high," "medium-high,"       scale: "highly           
                        "medium," "medium-low," and  recommended,"            
                        "low." Projects are required "recommended," "not      
                        to receive a rating of       recommended."            
                        "medium" or higher to be     
                        recommended for funding.     
Identify reliability Requires Secretary to        Not required under       
of cost estimate and analyze, evaluate, and       TEA-21.                  
ridership forecast   consider the reliability of  
as a consideration   the forecasting methods used 
in evaluation        by New Starts project        
process              sponsors and their           
                        contractors to estimate      
                        costs and ridership.         
Add economic         Projects will be evaluated   Not required under       
development          based on a review of their   TEA-21.                  
criterion to         effects on local economic    
evaluation process   development.                 
Identify land use as Projects will be evaluated   Land use was not         
a specific           based on a review of their   identified as an         
evaluation criterion public transportation        evaluation criterion by  
                        supportive land use policies TEA-21. However, TEA-21  
                        and future patterns.         identified land use as a 
                                                     "consideration" in the   
                                                     evaluation process and   
                                                     FTA incorporated it into 
                                                     the evaluation process.  
Clarify nonfederal   The Secretary is not         Federal share could not  
financial commitment authorized to require a      exceed 80 percent. But,  
                        nonfederal financial         in response to language  
                        commitment for a project     contained in             
                        that is more than 20 percent appropriations committee 
                        of its net capital cost.     reports, FTA instituted  
                                                     a preference policy      
                                                     favoring projects that   
                                                     seek a federal New       
                                                     Starts share of no more  
                                                     than 60 percent of the   
                                                     total project cost       
                                                     beginning with the       
                                                     fiscal year 2004         
                                                     evaluation cycle.        
Establish incentives A higher share of New Starts No similar provision in  
for accurate cost    funding may be made          TEA-21.                  
and ridership        available to project         
forecasts            sponsors if project's cost   
                        is not more than 10 percent  
                        higher and ridership is not  
                        less than 90 percent of      
                        those estimates when project 
                        was approved for preliminary 
                        engineering.                 
Require FTA to       New Starts policy guidance   Not required under       
publish policy       must be published for notice TEA-21.                  
guidance             and comment no later than    
                        120 days after the enactment 
                        of SAFETEA-LU, each time     
                        significant changes are      
                        made, and at least every 2   
                        years.                       
Assess contractors'  The Secretary will submit an Not required under       
performance          annual report to             TEA-21.                  
                        congressional committees     
                        analyzing the consistency    
                        and accuracy of cost and     
                        ridership estimates made by  
                        contractors to public        
                        transportation agencies      
                        developing new capital       
                        projects.                    

Source: GAO analysis of SAFETEA-LU and TEA-21.

FTA has taken some initial steps in implementing SAFETEA-LU changes. For
example, in January 2006, FTA published the New Starts policy guidance
and, as will be discussed later, the ANPRM for the Small Starts program.
FTA will continue to implement the changes outlined in SAFETEA-LU through
the rulemaking process over the next year and a half. Specifically, in
response to SAFETEA-LU changes, FTA is developing a Notice of Proposed
Rulemaking (NPRM) for the New Starts and Small Starts programs. FTA plans
to issue the NPRM in January 2007, with the goal of implementing the final
rule in January 2008. Figure 2 shows a time line of FTA's actual and
planned implementation of SAFETEA-LU changes.

Figure 2: Time Line for Implementing SAFETEA-LU Changes to the New Starts
Program

Small Starts Program Is Intended to Offer a Streamlined Process, but Transit
Community Members Question Whether It Will Do So

A significant SAFETEA-LU change was the creation of the Small Starts
program. The Small Starts program is a discretionary grant program for
public transportation capital projects that (1) are corridor-based, (2)
have a total cost of less than $250 million, and (3) are seeking less than
$75 million in federal Small Starts program funding. The Small Starts
program is a component of the existing New Starts program, but, according
to the conference reports accompanying SAFETEA-LU, is intended to provide
project sponsors with an expedited and streamlined evaluation and rating
process. Table 2 compares New Starts and Small Starts program
requirements.

Table 2: Comparison of New Starts and Small Starts Program Requirements

Program                                                                    
requirements    New Starts                      Small Starts
Definition of   Total project cost is $250      Total project cost is less 
eligibility     million or more, or $75 million than $250 million, and     
                   or more in federal New Starts   less than $75 million in   
                   funding is sought.              federal New Starts funding 
                                                   is sought.                 
                   Provides funding for new fixed                             
                   guideway systems and            Provides funding for new   
                   extensions.                     fixed guideway systems and 
                                                   extensions, as well as     
                                                   corridor-based bus capital 
                                                   projects.                  
Project            o  Mobility improvements        o  Cost-effectiveness   
justification      o  Environmental benefits       (based on opening year  
criteria           o  Operating efficiencies       of service)             
                      o  Cost-effectiveness           o  Public               
                      o  Public transportation        transportation          
                      supportive land use policies    supportive land use     
                      o  Economic development         policies                
                      o  Reliability of               o  Economic development 
                      forecasting                     o  Reliability of       
                                                      forecasting             
Local financial    o  Stability and reliability    o  Stability and        
commitment         of financial plan for           reliability of          
criteria           capital costs                   financial plan for      
                      o  Stability and reliability    capital costs           
                      of financial plan for           o  Stability and        
                      operating and maintenance       reliability of          
                      costs                           financial plan for      
                      o  Level of non-New Starts      operating and           
                      funding                         maintenance costs       
                                                      o  Level of non-New     
                                                      Starts funding          
Project            o  Alternatives analysis        o  Alternatives         
development        o  Preliminary engineering      analysis                
process            o  Final design                 o  Project development  
                      o  Construction                 o  Construction         
Funding         Projects are required to sign   Project will use a Project 
instrument      an FFGA, which sets scope,      Construction Grant         
                   cost, and schedule, as well as  Agreement, which will be a 
                   maximum New starts share,       streamlined version of the 
                   source of other funds, and      FFGA.                      
                   schedule for obligating funds.  

Source: GAO analysis of New Starts and Small Starts requirements.

In January 2006, FTA published an ANPRM to give interested parties an
opportunity to comment on the characteristics of and requirements for the
Small Starts program. In its ANPRM, FTA suggests that the planning and
project development process for proposed Small Starts projects could be
simplified by allowing analyses of fewer alternatives for small projects,
allowing the development of evaluation measures for mobility and
cost-effectiveness without the use of complicated travel demand modeling
procedures in some cases, and possibly defining some classes of
pre-approved low-cost improvements as effective and cost-effective in
certain contexts. FTA also sought the transit community's input on three
key issues in its ANPRM, including eligibility, the rating and evaluation
process, and the project development process. For each of these issues,
FTA outlined different options for how to proceed, and then posed a series
of questions for public comment, including the following questions on the
rating and evaluation process:

           o  How should the evaluation framework for New Starts be changed
           or adapted for Small Starts projects?

           o  How might FTA evaluate economic development and land use as
           distinct and separate measures?

           o  How might FTA incorporate risk and uncertainty into project
           evaluations for Small Starts?

           o  What weights should FTA apply to each measure?

           FTA's ANPRM for Small Starts generated a significant volume of
           public comment. While members of the transit community were
           supportive of some proposals for the Small Starts program, they
           also had a number of concerns. In particular, the transit
           community questioned whether FTA's proposals would, as intended,
           provide smaller projects with a more streamlined evaluation and
           rating process. As a result, some commenters recommended that FTA
           simplify some of its original proposals in the final NPRM to
           reflect the smaller scope of these projects. For example, several
           project sponsors and industry representatives thought that FTA
           should redefine the baseline alternative as the "no-build" option8
           and make the before and after study optional for Small Starts
           projects to limit the time and cost of project development. In
           addition, others were concerned that FTA's proposals minimized the
           importance of the new land use and economic development evaluation
           criteria introduced by SAFETEA-LU, and they recommended that the
           measures for land use and economic development be revised.

           Since FTA does not plan to issue its final rule for the New Starts
           and Small Starts programs until early 2008, FTA issued proposed
           interim guidance for the Small Starts program in June 2006 to
           ensure that project sponsors would have an opportunity to apply
           for Small Starts funding and be evaluated in the upcoming cycle
           (i.e., the fiscal year 2008 evaluation cycle, which begins in
           August 2006). The proposed interim guidance describes the process
           that FTA will use to evaluate proposed Small Starts projects to
           support the decision to approve or disapprove their advancement to
           project development and the decision to recommend projects for
           funding, including whether proposed projects are part of a broader
           strategy to reduce congestion in particular regions. In addition,
           although not required by SAFETEA-LU, FTA introduced a separate
           eligibility category within the Small Starts program for "Very
           Small Starts" projects in the proposed interim guidance. Small
           Starts projects that qualify as Very Small Starts are projects
           that

           o  do not include the construction of a new fixed guideway,

           o  are in corridors with existing riders who will benefit from the
           proposed project and number more than 3,000 on an average weekday,
           including at least 1,000 riders who board at the terminal
           stations, and

           o  have a total capital cost of less than $50 million and less
           than $3 million per mile (excluding rolling stock).

           According to the proposed interim guidance on the Small Starts
           program, FTA intends to scale the planning and project development
           process to the size and complexity of the proposed projects.
           Therefore, Very Small Starts projects will undergo a very simple
           and streamlined evaluation and rating process. Small Starts
           projects that do not meet all three criteria for Very Small Starts
           projects will be evaluated and rated using a framework similar to
           that used for traditional, or large starts, New Starts projects.
           However, FTA officials have indicated that this evaluation and
           rating framework would be modified, for example, to include only
           those criteria listed in the statute. FTA is seeking public input
           on the Small Starts proposals contained in the proposed interim
           guidance through July 9, 2006. FTA plans to review the comments
           received and issue its final interim guidance for the Small Starts
           program by August 2006. This guidance will govern the program
           until the final rule is issued.

           FTA Also Identified Possible Changes to the New Starts Program in
			  Response to SAFETEA-LU as well as Implementation Challenges
			  
			  In response to SAFETEA-LU, FTA identified possible changes to the
           New Starts program that would affect traditional New Starts
           projects, or large starts, in its January 2006 guidance. According
           to FTA, some of SAFETEA-LU provisions could lead to changes in the
           definition of eligibility, the evaluation and rating process, and
           the project development process. In the guidance, FTA outlines
           changes it is considering and solicits public input, through a
           series of questions, on the potential changes. For example, FTA
           identified two options for revising the evaluation and rating
           process to reflect SAFETEA-LU's changes to the evaluation
           criteria. The first option would extend the current process to
           include economic development impacts and the reliability of cost
           and ridership forecasts. Specifically, FTA suggested that economic
           development impacts and the reliability of forecasts simply be
           added to the list of criteria considered in developing the project
           justification rating. The second option would be to develop a
           broader process to include the evaluation criteria identified by
           SAFETEA-LU and to organize the measures to support a more
           analytical discussion of the project and its merits. According to
           FTA, the second option would broaden the evaluation process beyond
           a computation of overall ratings based on individual evaluation
           measures and develop better insights into the merit of a project
           than are possible from using the quantified evaluation measures
           alone. (See app. I for a description of the different changes FTA
           is considering.)

           FTA also identified potential challenges in implementing some of
           SAFETEA-LU changes in its guidance. In particular, FTA described
           the challenges of incorporating and distinguishing between two
           measures of indirect benefits9 in the New Starts evaluation
           process-land use and economic development impacts.10 For example,
           FTA noted that its current land use measures (e.g., land use plans
           and policies) indicate the transit-friendliness of a project
           corridor both now and in the future, but they do not measure the
           benefits generated by the proposed project. Rather, they describe
           the degree to which the project corridor provides an environment
           in which the proposed project can succeed. According to FTA's
           guidance, FTA's evaluation of land use does not include economic
           development benefits because FTA has not been able to find
           reliable methods of predicting these benefits. FTA further stated
           that because SAFETEA-LU introduces a separate economic development
           criterion, the potential role for land use as a measure of
           development benefits becomes even less clear given its potential
           overlap with the economic development criterion. In addition, FTA
           noted that many economic development benefits result from direct
           benefits (e.g., travel time savings), and therefore, including
           them in the evaluation could lead to double counting the benefits
           FTA already measures and uses to evaluate projects. Furthermore,
           FTA noted that some economic development impacts may represent
           transfers between regions rather than a net benefit for the
           nation,11 raising questions as to whether these impacts are useful
           for a national comparison of projects. To address some of the
           challenges, FTA suggested that an appropriate strategy might be to
           combine land use and economic development into a single measure.

           We have also reported on many of the same challenges of measuring
           and forecasting indirect benefits, such as economic development
           and land use impacts.12 For example, we noted that it is
           challenging to predict changes in land use because current
           transportation demand models are unable to predict the effect of a
           transportation investment on land-use patterns and development,
           since these models use land-use-forecasts as inputs into the
           model. In addition, we noted that certain benefits are often
           double counted when evaluating transportation projects. In
           particular, indirect benefits, such as economic development, may
           be more correctly considered transfers of direct user benefits or
           economic activity from one area to another. Therefore, estimating
           and adding such benefits to direct benefits could constitute
           double counting and lead to overestimating a project's benefits.
           Despite these challenges, experts told us that evaluating land use
           and economic development impacts is important, since they often
           drive local transportation investment choices.

           FTA received a large number of written comments on its online
           docket in response to its proposed changes. (See app. I for common
           comments submitted for each proposed change.) While members of the
           transit community were supportive of some proposals, they
           expressed concerns about a number of FTA's proposed changes. For
           example, a number of commenters expressed concerns about FTA's
           options for revising the evaluation process, noting that both
           proposals deemphasized the importance of economic development and
           land use. Some commenters also noted that land use and economic
           development should not be combined into a single measure and that
           they should receive the same weight as cost-effectiveness in the
           evaluation and rating process.

           SAFETEA-LU Transformed the JARC Program from a Discretionary to
			  a Formula-based Program
			  
			  SAFETEA-LU made a number of changes to the JARC program, the most
           notable of which was the creation of a formula to distribute JARC
           funds. Whereas funds for JARC projects were congressionally
           designated in recent years, SAFETEA-LU's formula distributes funds
           to states and large urbanized areas. This is a significant change
           because some states and urbanized areas will receive substantially
           more funds than under the discretionary program, while others will
           receive substantially less. In addition, the formula program will
           result in some areas receiving JARC funds that had not received
           them in the past. Other JARC changes resulting from SAFETEA-LU
           include the ability to use a portion of JARC funds for planning
           activities and the removal of a restriction on the JARC funding
           available for reverse commute projects, which are designed to help
           individuals in urban areas access suburban employment
           opportunities. FTA has worked to develop guidance to help JARC
           recipients implement these changes by soliciting comments and
           input through program notices and listening sessions beginning in
           November 2005. FTA issued interim JARC guidance in March 2006 and
           is currently working to develop draft final guidance for the
           program.13 Final guidance for JARC is expected later this year.
           Two potential challenges for FTA as it moves forward will be to
           issue final JARC guidance in a timely manner and to determine its
           plan for oversight of the JARC program.

           SAFETEA-LU Created a Formula for Distributing JARC Funds and
			  Amended Other Key Aspects of the Program
			  
			  A key SAFETEA-LU change to the JARC program was the creation of a
           formula to distribute JARC funds. Under TEA-21, JARC was a
           discretionary grant program for which FTA competitively selected
           JARC projects and, more recently, awarded funds for
           congressionally designated projects. Under SAFETEA-LU, states and
           large urbanized areas have been apportioned funding for JARC
           projects through a formula based on the number of low-income
           individuals and welfare recipients in each area.14 This is a
           significant change because some states and urbanized areas will
           receive substantially more funds than under the discretionary
           program, while others will receive substantially less. In
           addition, the formula program will result in some areas receiving
           JARC funds that had not received them in the past. Forty percent
           of JARC funds each year are required to be apportioned among
           states for projects in small urbanized and other than urbanized
           areas, and the remaining 60 percent are required to be apportioned
           among urbanized areas with a population of 200,000 or more.15 The
           governor of each state must designate a recipient for JARC funds
           at the state level to competitively select and award funds for
           projects in small urbanized and other than urbanized areas within
           the state. In large urbanized areas, the recipient must be
           designated by the governor, local officials, and publicly owned
           operators of public transportation.

           In addition to creating a formula for distributing JARC funds,
           SAFETEA-LU also extended a JARC requirement related to coordinated
           planning to additional FTA programs and made a number of other
           changes to key aspects of the JARC program. In the past, JARC
           projects were required to be part of a coordinated public
           transit-human services transportation plan; a similar requirement
           is included in SAFETEA-LU. However, this requirement will apply in
           fiscal year 2007 to two other FTA programs that provide funding
           for transportation-disadvantaged populations.16 In addition,
           recipients in states and urbanized areas that select JARC projects
           must now certify that their selections were based on this plan.
           Another change resulting from SAFETEA-LU is the ability of a
           recipient to use up to 10 percent of its JARC allocation for
           administration, planning, and technical assistance,17 and the
           expansion of the definition of eligible activities to include
           planning as well as capital and operating activities. SAFETEA-LU
           also removed a restriction on the amount of funding available for
           reverse commute projects to help individuals in urban areas gain
           access to suburban employment opportunities. Table 3 compares key
           JARC provisions under SAFETEA-LU and TEA-21.

8FTA requires that the benefits and costs of the proposed New Starts
project be assessed in comparison with a baseline alternative defined as
the best that can be done without building a new fixed guideway. The
purpose of the baseline alternative is to distill the benefits (and costs)
of the proposed New Starts project from the benefits that could be
achieved through low-cost improvements, such as route realignments and
increases in service frequency, that would not entail the significant cost
of a New Starts project's infrastructure. FTA defines the no-build
alternative in two ways: (1) an alternative that incorporates "planned"
improvements that are included in the fiscally constrained long-range plan
for which need, commitment, financing, and public and political support
are identified and are reasonably expected to be implemented, or (2) an
alternative that adds only "committed" improvements together with minor
transit service expansions or adjustments that reflect a continuation of
existing service policies in newly developed areas.

FTA Also Identified Possible Changes to the New Starts Program in Response to
SAFETEA-LU as well as Implementation Challenges

9Direct benefits of transportation investments, such as lowered
transportation costs and improved access to goods and services, result in
individuals, households, and firms acting to take advantage of those
benefits. These actions can then lead to several types of indirect
benefits, such as increased property values and new development.

10SAFETEA-LU added economic development to the list of evaluation
criteria; it also identified land use as a specific evaluation criterion.
Under TEA-21, land use was not identified as an evaluation criterion, but
rather as a "consideration" in the evaluation process and FTA incorporated
it into the evaluation process.

11Indirect benefits, such as economic development, may represent transfers
of economic activity from one area to another; and, while, such a transfer
may represent real benefits for the jurisdiction making the transportation
investment, it is not a real economic benefit from a national perspective
because the economic activity is simply occurring in a different location.

12GAO, Highway and Transit Investments, Options for Improving Information
on Projects' Benefits and Costs and Increasing Accountability for Results,
GAO-05-172 (Washington, D.C.: Jan. 24, 2005).

SAFETEA-LU Transformed the JARC Program from a Discretionary to a Formula-based
                                    Program

13FTA refers to guidance for grantees and stakeholders as a "circular;" in
this testimony, we refer to FTA's draft and final circulars for JARC as
draft final guidance and final guidance.

SAFETEA-LU Created a Formula for Distributing JARC Funds and Amended Other Key
Aspects of the Program

14The SAFETEA-LU formula apportions JARC funds on the basis of "eligible"
low-income individuals in an area. Eligible low-income individuals are
defined in SAFETEA-LU as individuals whose family income is at or below
150 percent of the poverty line.

15In information on the JARC program, FTA refers to urbanized areas with a
population of 200,000 or more as large urbanized areas, urbanized areas
with a population of between 50,000 and 200,000 as small urbanized areas,
and rural and small urbanized areas with populations of less than 50,000
as other than urbanized areas.

Table 3: Comparison of SAFETEA-LU's and TEA-21's JARC Provisions

Provision         SAFETEA-LU                           TEA-21              
Distribute JARC      o  Requires the Secretary of         o  The Secretary 
funds by formula     Transportation to apportion funds    of               
                        among states and designated          Transportation   
                        recipients of large urbanized        required to      
                        areas through a formula that         conduct a        
                        considers the number of eligible     national         
                        low-income individualsa and          solicitation for 
                        welfare recipients in each state     applications for 
                        or large urbanized area relative     grants and to    
                        to other states or large             select grantees  
                        urbanized areas.                     on a competitive 
                        o  Sixty percent of JARC funds       basis.           
                        are apportioned to designated        o  The same      
                        recipients of urbanized areas        percentage of    
                        with a population of 200,000 or      JARC funds       
                        more, 20 percent are apportioned     allocated among  
                        to states for projects in            large urbanized  
                        urbanized areas with a population    areas, small     
                        of less than 200,000, and 20         urbanized areas, 
                        percent are apportioned to states    and other than   
                        for projects in other than           urbanized areas  
                        urbanized areas.                     as provided      
                                                             under            
                                                             SAFETEA-LU.      
Designate JARC    The governor must designate a        Not required under  
recipient         recipient at the state level to      TEA-21. Rather, FTA 
                     competitively select and award funds competitively       
                     for projects in small urbanized and  selected JARC       
                     other than urbanized areas, and      projects and more   
                     within each large urbanized area to  recently awarded    
                     competitively select and award funds funds for projects  
                     in that area.                        that were           
                                                          congressionally     
                                                          designated.         
Use coordinated      o  JARC projects selected for     JARC projects       
public               funding must be derived from a    required to be part 
transit-human        locally developed coordinated     of a coordinated    
services             public transit-human services     public              
transportation       transportation plan; designated   transit-human       
plan to select       recipients must certify that      services            
projects for         selected projects were derived    transportation      
funding              from this plan.                   planning process,   
                        o  Additional FTA programs that   but no requirement  
                        provide funding for services for  to certify that     
                        transportation-disadvantaged      selected projects   
                        populations also subject to this  were derived from   
                        requirement beginning in fiscal   this plan.          
                        year 2007.b                       
Use competitive   Designated recipients in urbanized   Secretary of        
selection process areas required to conduct a          Transportation      
                     solicitation for applications for    required to conduct 
                     grants in cooperation with the       a national          
                     appropriate metropolitan planning    solicitation for    
                     organization;c designated recipients applications for    
                     in states required to conduct a      grants and to       
                     statewide solicitation for           select grantees on  
                     applications for grants. Grants are  a competitive       
                     to be awarded on a competitive       basis. In practice, 
                     basis.                               however, projects   
                                                          were                
                                                          congressionally     
                                                          designated in       
                                                          recent years.       
Allow the use of     o  A recipient may use up to 10   No statutory        
funds for            percent of its apportionment to   provision for       
administration,      administer, plan, and provide     administration and  
planning, and        technical assistance for JARC     technical           
technical            projects.                         assistance under    
assistance           o  Planning is also included as   TEA-21.d Planning   
                        an eligible expense along with    and coordination    
                        capital and operating expenses.   activities were     
                                                          prohibited          
                                                          expenses.           
Provide for       States may transfer funds among the  No provision under  
transfers of JARC small urbanized area and other than  TEA-21.             
funds             urbanized area apportionments if the 
                     governor certifies that JARC         
                     objectives are being met in the      
                     specified area. States may also      
                     transfer funds from the small        
                     urbanized area and other than        
                     urbanized area apportionments to     
                     projects in any area in the state if 
                     it has a statewide program for       
                     meeting JARC objectives.             
Increase          JARC grants for capital projects may Grants for projects 
government's      not exceed 80 percent of the net     could not exceed 50 
share of capital  capital costs of the project; grants percent of the      
costs             for operating assistance may not     total project cost; 
                     exceed 50 percent of the net         no differentiation  
                     operating costs of the project.      among capital and   
                                                          operating projects. 
Remove limit on   No limit on the amount that can be   No more than $10    
reverse commute   used for reverse commute projects.   million could be    
project funding                                        used each fiscal    
                                                          year for reverse    
                                                          commute project     
                                                          grants.             

16"Transportation-disadvantaged populations" refers to populations that
lack the ability to provide their own transportation or have difficulty
accessing whatever conventional public transportation may be available.
FTA programs in addition to JARC that serve these populations are the
Elderly Individuals and Individuals with Disabilities program, which
provides formula funding for capital projects to assist in meeting the
transportation needs of the elderly and persons with disabilities; and the
New Freedom program, which provides formula funding for new public
transportation services and public transportation alternatives that assist
individuals with disabilities with transportation, including
transportation to and from jobs and employment support services.

17While TEA-21 had not included a statutory provision regarding a
percentage that could be used for administration and technical assistance,
FTA allowed JARC grantees to use up to 10 percent for these activities.

Source: GAO analysis of TEA-21 and SAFETEA-LU.

aEligible low-income individuals are those whose family income is at or
below 150 percent of the poverty line.

bFTA programs in addition to JARC that serve these populations are the
Elderly Individuals and Individuals with Disabilities program and the New
Freedom program.

cMetropolitan planning organizations are federally mandated regional
organizations responsible for comprehensive transportation planning and
programming in urbanized areas.

dFTA allowed JARC grantees to use up to 10 percent for administration and
technical assistance activities.

Some of these changes address issues that we have raised in past reports
on JARC and the coordination of transportation services for
transportation-disadvantaged populations.18 For example, in 2004 we
reported that a majority of the JARC grantees we spoke with supported a
proposal to use grant funds for administrative, planning, and technical
assistance activities, because these activities could increase
coordination with potential partners. In 2003, we also reported that some
federal and state officials believed that providing financial incentives
or mandates for coordination was one way to improve the coordination of
transportation services among federal programs. In addition, officials of
one metropolitan planning organization that we spoke to about changes to
the JARC program also note that the change to a formula program may better
facilitate cooperation between organizations. They explained that the
required coordinated plans for JARC projects became irrelevant in the past
when JARC funds were congressionally designated.

FTA Has Developed Interim JARC Guidance and Plans to Issue Final Program
Guidance Later This Year

FTA has been working to develop guidance to help JARC recipients implement
changes to the program. In November 2005, FTA published a notice of
changes for FTA programs, including JARC. This notice provided information
on the JARC program and solicited public comment on aspects of the program
such as technical assistance needs and the coordinated planning process.
FTA also held five public listening sessions across the country in
December 2005 on a number of programs, including JARC, to obtain comments
and input on the questions and issues that should be included in future
guidance. In March 2006, drawing on the information FTA received through
comments and the listening sessions, it released interim JARC guidance for
fiscal year 2006 and proposed strategies for fiscal year 2007, and sought
comments to assist in the development of program guidance.19 FTA received
more than 200 comments on this notice, and the comments addressed a
variety of issues, including the coordinated planning requirement for JARC
and other programs and the selection of designated recipients. For
example, several private operators of transportation services have
requested that FTA include language that private transportation operators
be involved in the coordinated planning process. A number of comments have
also addressed whether there would be a potential conflict of interest in
having a provider of transportation services also serve as the designated
recipient that will select JARC projects for funding. FTA officials have
indicated that they plan to address many of the issues raised in the
comments in draft final guidance for JARC that they plan to release later
this summer. FTA plans to solicit comments on the draft final guidance and
issue final guidance for JARC later this year. Figure 3 presents a time
line for FTA's implementation of changes to the JARC program.

18GAO, Job Access and Reverse Commute: Program Status and Potential
Effects of Proposed Legislative Changes, GAO-04-934R (Washington, D.C.:
Aug. 20, 2004). GAO, Transportation-Disadvantaged Populations: Some
Coordination Efforts Among Programs Providing Transportation Services, but
Obstacles Persist, GAO-03-697 (Washington, D.C.: June 30, 2003).

19The March 2006 notice also addressed the Elderly Individuals and
Individuals with Disabilities program and the New Freedom program.

Figure 3: Time Line for FTA's Implementation of SAFETEA-LU Changes to the
JARC Program

Through our preliminary work, we have identified two challenges that FTA
may encounter as it moves forward in its implementation of changes to
JARC. One potential challenge for FTA will be to ensure that it develops
JARC guidance in a timely manner so that JARC recipients can implement the
program. Officials from one metropolitan planning organization we spoke
with about JARC changes noted that the guidance will be important because
it will address questions that JARC recipients have raised about the
program's implementation and to which they have received conflicting
answers from FTA headquarters and regional staff. A publicly available
schedule of FTA deliverables related to SAFETEA-LU's implementation stated
that draft final guidance for JARC was anticipated between May and July
2006. However, FTA officials told us that they now expect to issue the
draft final guidance in late July or early August. This change reflects
FTA's extension of the comment period for the March 2006 notice by 1 month
to receive additional comments, and the submission of more than 100
comments on or after the last day of the comment period. The additional
comments raised a number of issues for FTA to consider, according to FTA
officials. While FTA has stated that criteria in the final guidance will
not apply retroactively to issued grants so that areas can proceed with
JARC projects, FTA officials as well as officials from an association that
represents metropolitan planning organizations have told us that some
recipients of JARC funds will likely wait for final program guidance
before proceeding. In addition, few states and urbanized areas have taken
formal steps to apply for fiscal year 2006 funds. As of late May, 5 states
had notified FTA of their designated recipient for JARC funding, and 1 of
the 152 urbanized areas that receive a JARC apportionment had obligated
fiscal year 2006 JARC funds, according to FTA officials.

Another potential challenge for FTA in moving forward will be to determine
its plan for overseeing the JARC program. FTA officials have told us that
they are still developing this plan, and that at a minimum they expect to
use routine grant management tools-such as progress reports and site
visits-to oversee JARC recipients. In its interim guidance, FTA also
indicates that it intends to use existing oversight mechanisms from the
federal urbanized area and nonurbanized area formula programs, such as
triennial reviews and state management reviews. However, FTA officials
acknowledge they need to determine how to incorporate JARC grant
recipients into these oversight processes.

Transparency, Communication, and Accountability Issues Will Continue to Be
                                   Important

Our past work suggests that transparency, communication, and
accountability issues will be important as FTA moves forward in
implementing SAFETEA-LU changes to the New Starts and JARC programs. Like
SAFETEA-LU, TEA-21 required GAO to regularly review the New Starts and
JARC programs. Since 1998, we have issued numerous reports on these
programs, and many of the reports contained recommendations to FTA on ways
to improve the implementation of these programs. SAFETEA-LU addressed some
of these issues, and FTA has also taken steps to resolve some of them.
Nevertheless, given the number of changes that are being made to both
programs, continued focus on improving transparency, communication, and
accountability will be important.

In our recent reports on the New Starts program, we noted several cases in
which FTA could have improved the program's transparency. Typically, these
cases dealt with FTA's decisions not to seek public input on proposed
policy changes before they were implemented. In our 2005 report, we found
that FTA had made 16 changes to the New Starts process since fiscal year
2001, but had not published information about the changes in the Federal
Register or instituted a rulemaking process for 9 of the changes;
moreover, for 6 of the 9 changes, FTA did not provide any avenues for
public review and comment.20 For example, during the fiscal year 2004
cycle, FTA instituted a preference policy in its ratings process favoring
current and future projects that do not request more than a 60 percent
federal funding share. However, FTA did not amend its regulations to
reflect this change in policy or its existing procedures, and the public
did not have an opportunity to comment on the impact of the change prior
to its adoption.

SAFETEA-LU addressed our past concerns about the transparency of the New
Starts program by requiring FTA to publish for notice and comment any
proposals that make significant changes to the New Starts program. FTA has
already implemented this requirement. For instance, earlier this year, FTA
gave the transit community an opportunity to review and comment on
proposed procedural changes (i.e., nonregulatory changes) to the New
Starts process as well as possible changes FTA was considering for the New
Starts program in the future. Although members of the transit community
expressed concerns about some of FTA's proposed changes in their comments,
project sponsors and industry representatives repeatedly told us that they
appreciated the opportunity to review and comment on the proposals. FTA
officials have also stated that they have been pleased with the review and
comment process, noting that it helps to ensure that FTA's guidance is
more complete, more responsive to stakeholders' needs, and more likely to
take into account on-the-ground realities.

We have also previously reported shortfalls in FTA's communication of New
Starts program changes to project sponsors that in several cases, have
resulted in implementation problems. For example, in our 2003 report,21 we
noted that a number of project sponsors were unable to calculate a valid
Transportation System User Benefits (TSUB) value, and as a result, their
projects received a "not rated" rating for the cost-effectiveness
criterion.22 Project sponsors commented that they would have benefited
from additional guidance and technical support on how to generate the
required data for the TSUB measure. Similarly, during the fiscal year 2005
evaluation cycle, FTA introduced a requirement for project sponsors to
submit a "make the case" document to articulate the benefits of a proposed
New Starts project. FTA officials intended to use the document to help
interpret data produced by the local travel forecasting models, but FTA
did not prepare any written guidance on what information to include or
provide report templates. Without such information, project sponsors
stated that they did not understand what should be included in the
document or how it would be used, and FTA officials later acknowledged
that many of the submissions did not meet their expectations.

20GAO, Public Transportation: Opportunities Exist to Improve the
Communication and Transparency of Changes Made to the New Starts Program,
GAO-05-674 (Washington, D.C.: June 28, 2005).

21GAO, Mass Transit: FTA Needs to Provide Clear Information and Additional
Guidance on the New Starts Rating Process, GAO-03-701 (Washington, D.C.:
June 23, 2003).

SAFETEA-LU addressed these communication problems by requiring that FTA
routinely publish policy guidance. Specifically, SAFETEA-LU requires that
FTA publish policy guidance for comment and response no later than 120
days after the enactment of SAFETEA-LU, each time significant changes are
made, and at least every 2 years. FTA responded to this requirement by
publishing policy guidance for the New Starts program in January 2006 and
soliciting public comments on the proposed changes outlined in the
guidance. Furthermore, in its January guidance, FTA included possible
long-term changes to the large starts component of the New Starts program
that FTA is considering. FTA stated that it hoped to use the policy
guidance as a forum for discussing possible changes with the transit
community so that FTA could take the community's comments into account
when developing the NPRM for the New Starts program. In addition, FTA held
multiple listening sessions across the country, during which officials
told project sponsors about proposed changes to the New Starts program and
their rationale for implementing these changes. Most of the project
sponsors and industry representatives we interviewed told us that they
appreciated FTA's efforts to solicit their feedback and to encourage an
open discussion about the proposed changes.

22FTA noted that the projects received "not rated" ratings because project
sponsors were not following FTA requirements for development of
alternatives, resulting in a misrepresentation of the projects' user
benefits.

Finally, we have identified steps for increasing the accountability of the
New Starts and JARC programs. For example, we previously reported that
outcome evaluations of completed transit and highway projects were not
usually conducted to determine whether proposed outcomes were achieved.23
We noted that because outcome evaluations are not usually completed,
agencies miss an opportunity to learn from the successes and shortcomings
of past projects to better inform future planning and decision making and
increase accountability for results. FTA also identified such evaluations
as an opportunity to hold agencies accountable for results and identify
lessons learned, and therefore, starting in fiscal year 2003, FTA required
project sponsors to complete before and after studies for completed New
Starts projects. SAFETEA-LU codified the requirement for before and after
studies, and required that these studies (1) describe and analyze the
impacts of the new fixed guideway capital project on transit services and
transit ridership, (2) evaluate the consistency of predicted and actual
project characteristics and performance, and (3) identify sources of
differences between predicted and actual outcomes. In addition, SAFETEA-LU
included several provisions, including the following, that emphasize the
accuracy and consistency of project cost and ridership estimates in the
New Starts process:

           o  SAFETEA-LU requires the Secretary of Transportation to consider
           the reliability of the forecasting methods used by New Starts
           project sponsors and their contractors to estimate costs and
           ridership as part of the New Starts evaluation process.

           o  SAFETEA-LU allows the Secretary of Transportation to provide a
           higher grant percentage than requested by the project sponsor if
           the net cost of the project is not more than 10 percent higher
           than the net cost estimated at the time the project was approved
           for advancement into preliminary engineering and the ridership
           estimated for the project is not less than 90 percent of the
           ridership estimated for the project at the time the project was
           approved for advancement into preliminary engineering.

           o  SAFETEA-LU requires the Secretary of Transportation to submit
           an annual report to congressional committees analyzing the
           consistency and accuracy of cost and ridership estimates made by
           contractors to public transportation agencies developing new
           projects.

           Likewise, we have raised issues associated with FTA's measurement
           of the JARC program's results and made recommendations for
           improvement. In April 2002, we testified that FTA had not yet
           completed its evaluation of the JARC program or reported to
           Congress,24 as TEA-21 required.25 We also expressed concerns about
           FTA's plan to evaluate the program using one performance
           measure-the number of accessible employment sites-because it would
           not allow FTA to fully address key aspects of the program or
           criteria for selecting grantees. We reiterated these concerns in
           our December 2002 report and recommended that FTA report to
           Congress on the results of its evaluation of JARC, as required by
           law, and consider as part of its evaluation of the effectiveness
           of the JARC program in meeting both of its goals.26 Our most
           recent review of the JARC program concluded that the data used in
           FTA's 2003 evaluation of the JARC program lacked the consistent,
           generalizable, and complete information needed to draw any
           definitive conclusions about the program as a whole.27 According
           to FTA, it has faced obstacles in evaluating the JARC program
           primarily because grantees have had difficulty collecting and
           reporting information on their programs. SAFETEA-LU requires the
           Secretary of Transportation to evaluate the JARC program and
           submit a report describing the results of this study to Congress
           by August 2008. Specifically, the Secretary must conduct a study
           to evaluate the effectiveness of the grant program and the
           effectiveness of recipients making grants to subrecipients. FTA
           has already begun to take some steps to meet its evaluation
           requirements, even prior to issuing its final program guidance.
           These steps may also address some of the concerns we previously
           raised about FTA's evaluation of the JARC program. For example,
           FTA has identified new performance measures and goals, developed a
           preliminary performance evaluation framework to guide its data
           collection efforts, and is currently in the process of researching
           options for simplifying its data collection system and reducing
           the reporting requirements for grantees.

           Mr. Chairman, this concludes my statement. I would be pleased to
           answer any questions that you or other Members of the Subcommittee
           may have at this time.

           Contact Information
			  
			  For further information on this testimony, please contact
           Katherine Siggerud at (202) 512-2834 or [email protected] .
           Individuals making key contributions to this testimony include
           Vidhya Ananthakrishnan, Nikki Clowers, John Finedore, Lauren Heft,
           Daniel Hoy, Jessica Lucas-Judy, Nancy Lueke, and Kimanh Nguyen.

           Appendix I: FTAï¿½s Proposed Changes to the New Starts Program
			  
			  In its January 2006 guidance, the Federal Transit Administration
           (FTA) identified possible changes to the New Starts program in
           response to the Safe, Accountable, Flexible, Efficient
           Transportation Equity Act: A Legacy for Users (SAFETEA-LU).
           According to FTA, some of SAFETEA-LU's provisions may lead to
           changes in the program's definition of eligibility, evaluation and
           rating process, and project development process. The following
           table summarizes the changes FTA has proposed in these three
           areas, FTA's rationale for the proposed changes, and the transit
           community's response to the proposed changes.

           

                                                         Comments submitted   
                                                         by the transit       
Proposed change           FTA's rationale for change  community            
Eligibility definition    
Definition of a fixed     A fixed guideway has     o  The current
guideway: FTA asks        not been specifically    definition of fixed
whether a Bus Rapid       defined in the           guideway works well;
Transit project is a      statute.                 thus, FTA should make
"fixed guideway" project                           no changes.
and whether it should                              o  A minimum percentage
fund high-occupancy                                of the guideway (e.g.,
vehicle (HOV) projects to                          30-75 percent) should
the degree that they                               be dedicated in order
provide benefits to                                for a project to get
public transit riders.                             funding.
                                                      o  HOV projects should
                                                      be funded by the
                                                      Federal Highway
                                                      Administration.
Project evaluation and                             o  
ratings process                                 
Evaluation framework: FTA The current              o  Both proposed
proposes two options for  evaluation framework     options raise concerns
revising the evaluation   might be improved        because they continue
framework. Option 1 would upon.                    to define
extend the current                                 cost-effectiveness only
framework to include                               in terms of mobility.
economic development                               o  Neither proposed
impacts and the                                    option gives enough
reliability of                                     weight to land use and
forecasting methods for                            economic development.
costs and ridership.                            
Option 2 would be a                             
broader framework that                          
incorporates the new                            
evaluation factors                              
specified by SAFETEA-LU                         
and, according to FTA,                          
organizes the measures to                       
support a more                                  
informative, analytical                         
discussion of the project                       
and its merits for New                          
Starts funding.                                 
Nature of the problem or  New Starts projects      o  Funding should be
opportunity evaluation    are intended to solve    available for projects
measure: FTA asks whether specific                 seeking to shape
measures that represent   transportation           economic development or
the nature of the problem problems, take           to provide a solution
or the opportunity the    advantage of             to mobility problems.
proposed projects are     opportunities to      
designed to address       improve               
should be included in the transportation        
evaluation framework, and services, or support  
how FTA should evaluate   economic development. 
or rate projects that                           
address significant                             
transportation problems                         
compared with projects                          
that take advantage of                          
opportunities to improve                        
service.                                        
Economic development      SAFETEA-LU identified    o  Station area
impacts measure: FTA      economic impacts as a    development benefits
identifies two options    new evaluation           better isolate the
for characterizing        criterion.               effect of the transit
economic development                               project. There are too
benefits: (1) regional                             many other variables
economic benefits and (2)                          associated with
station area development                           regional economic
impacts. FTA sought                                benefits.
comment on whether there                           o  FTA should use both
was preference for either                          regional and station
option, as well as on how                          area economic benefits.
to evaluate economic                               o  Land use and
development and land use                           economic development
as distinct and separate                           should be separate
measures.                                          measures and carry as
                                                      much weight as cost-
                                                      effectiveness.
                                                      o  Differentiating
                                                      between land use and
                                                      economic development is
                                                      difficult.
Mobility benefits         The measure of           o  FTA should continue
measure: FTA proposes to  mobility benefits        to work toward
measure mobility by using ought to capture as      capturing
a combination of user     many benefits as         transportation benefits
benefits per passenger    possible.                to highway users in a
mile and project                                   project corridor.
ridership. FTA also asked                          o  FTA should analyze
whether other measures of                          the impact of
mobility benefits could                            non-home-based trips,
be used.                                           trips generated by
                                                      special events, and
                                                      automobile trips not
                                                      taken because of
                                                      enhanced pedestrian
                                                      activity established in
                                                      a project corridor.
Mobility for transit      Since low-income         o  An implementation
dependents measure: FTA   populations and          difficulty would be the
proposes to measure       households without       inconsistencies in
mobility for transit      access to automobiles    regional travel demand
dependents by the share   depend critically on     models-that is, some
of user benefits accruing the public               models are based on
to the passenger in the   transportation system    income, others on
lowest income stratum     to provide basic         automobile ownership,
compared with the         mobility, access to      and some on both.
regional share of the     jobs, health care and 
lowest income stratum.    other critical        
FTA asked whether this    services, projects    
proposed measure would    that improve transit  
cause any implementation  services for these    
difficulties, and whether populations have      
there were other measures special merit.        
FTA should consider.                            
                             FTA's previous        
                             measure-percentage of 
                             low income households 
                             in the project        
                             corridor-is somewhat  
                             imprecise.            
Environmental benefits    SAFETEA-LU maintained    o  FTA should retain
measure: FTA proposes to  environmental            its current measure of
continue using the same   benefits as an           environmental benefits.
environmental benefits    evaluation criterion. 
measure, which uses the                         
projected change in                             
regional vehicle miles                          
traveled to estimate the                        
change in various harmful                       
types of vehicle                                
emissions and energy                            
consumption.                                    
Operating efficiency      The current              o  FTA should use the
measure: FTA proposes     measure-projected        cost-effectiveness
removing this measure as  systemwide change in     evaluation measure to
a separate evaluation     operating cost per       address the operating
criterion, relying        passenger mile-does      efficiency criterion.
instead on an evaluation  not distinguish among 
of cost-effectiveness to  proposed projects.    
address the statutory                           
criterion. According to                         
FTA, the impact of the                          
project on operating and                        
maintenance costs is                            
captured in the                                 
calculation of                                  
cost-effectiveness.                             
Cost-effectiveness        The current measure      o  Broadening the
measure: FTA proposes to  of cost-effectiveness    cost-effectiveness
broaden the current       does not capture         measure would increase
cost-effectiveness        non-transportation       the time and cost of
measure to include        benefits.                project development.
nontransportation                                  o  FTA should use the
benefits, such as                                  consumer price index,
economic development                               not the gross domestic
benefits, land use                                 product index, to
impacts, and mobility                              adjust the dollar value
benefits to transit                                of the
dependents. FTA also                               cost-effectiveness
suggests using two                                 threshold.
cost-effectiveness                              
measures-one for the                            
forecast year as is done                        
today and the second                            
calculated for the year                         
the project opens.                              
Financial capabilities    SAFETEA-LU identifies    o  It is unclear from
measure: FTA proposes     the following factors    the guidance who is
changing the way the      that FTA must use in     responsible for
financial rating factors  evaluating financial     assessing the
related to uncertainty    capability: (1) the      reliability of
are incorporated into the reliability of           financial forecasts.
evaluation process.       forecasting methods      o  The emphasis placed
Specifically, FTA         for costs and            on the reliability of
suggests using the        ridership, (2)           the financial forecast
project sponsor's ability existing grant           should correlate to the
to absorb funding         commitments, (3) the     stage of project
shortfalls and cost       degree to which          development.
overruns as an explicit   funding sources are   
measure of financial      dedicated, (4) debt   
risk.                     obligations of the    
                             project sponsor, and  
                             (5) the non-New       
                             Starts funding share. 
Reliability of forecasts  SAFETEA-LU requires      o  Proposal is
measures: FTA proposes to that the reliability     confusing.
assess the risk and       of the forecasting       o  Recent experience
uncertainty inherent in   methods used to          with risk assessments
project evaluation.       estimate costs be        suggests that the
Specifically, FTA plans   considered in the        proposal would require
to evaluate the           evaluation of New        substantial effort with
uncertainty associated    Starts projects.         little reduction in
with the nature and                                uncertainty.
severity of the problem,                           o  FTA should place
as well as individual                              significant weight on
measures of project merit                          the project sponsor's
and cost-effectiveness                             ability to enhance the
measures.                                          reliability of
                                                      forecasts through the
                                                      proven quality control
                                                      methods.
Development of project    SAFETEA-LU requires      o  Economic development
ratings: Currently, FTA   that the reliability     and land use should
develops separate ratings of the forecasting       receive the same weight
for project justification methods used to          as cost-effectiveness.
and local financial       estimate costs be     
commitment, and then      considered in the     
derives an overall        evaluation of New     
project rating from these Starts projects.      
component ratings using                         
decision rules. FTA                             
proposes to use a similar                       
process for rating                              
projects. However, FTA                          
states that the                                 
reliability of forecasts                        
needs to be incorporated                        
into the ratings process,                       
and suggests different                          
options for accomplishing                       
this, such as using                             
probability weightings or                       
using uncertainty                               
indicators to decide the                        
outcome for ratings at                          
the margins. FTA also                           
seeks input about the                           
weights that should be                          
assigned to each measure.                       
Project development                             
process                                         
Local endorsement of the  SAFETEA-LU requires that       o  Securing an    
financial plan: FTA       FTA ensure that proposed       endorsement will  
proposes to require that  New Starts projects are        be overly         
project sponsors specify  supported by an acceptable     burdensome and    
all proposed sources of   degree of local financial      delay project     
funding in the financial  commitment and resources.      development.      
plan, and that the                                       o  FTA should not 
sponsoring agency provide FTA has experienced            dictate when      
a letter endorsing the    situations in which a          project sponsors  
proposed financial        project's financial plans      receive financial 
strategies and amounts of state that local agencies      commitments.      
planned funding by those  will provide funding, but      o  Hard to fully  
agencies identified as    in reality those local         secure funding    
funding sources.          agencies do not support the    commitments in    
                             project plan.                  preliminary       
                                                            engineering and   
                                                            final design.     
Approval of the baseline  There has been significant     o  More clarity   
alternative: FTA proposes confusion over the             needed on how FTA 
to maintain the current   definition of the baseline     defines baseline  
approval process and      alternative.                   alternative.      
definition of the                                        o  Selection of   
baseline alternative.                                    baseline          
However, FTA asks whether                                alternative       
the baseline can be more                                 should not be     
clearly defined and                                      driven by FTA.    
whether there is a way to                             
report on the benefits of                             
the project including the                             
benefits attributable to                              
the difference between                                
the no-build and the                                  
baseline alternatives.                                
On-board transit survey:  Data on current ridership      o  Surveys are    
FTA is considering        patterns are essential to      expensive and may 
requiring that a recent   the development of reliable    be unnecessary in 
survey of transit riders  forecasts.                     some areas.       
be used to inform the                                    o  FTA should     
technical work completed                                 consider other    
during alternatives                                      means of          
analysis. FTA suggests                                   collecting data   
that "recent" could be                                   on ridership,     
defined as within the 5                                  such as           
years preceding a request                                electronic fare   
to enter preliminary                                     collection data   
engineering.                                             and small sample  
                                                            surveys.          
Preliminary engineering   Since the completion of        o  Need a clearer 
purpose and exit          preliminary engineering for    definition of     
criteria: FTA is          proposed projects              preliminary       
considering defining the  represents the completion      engineering phase 
preliminary engineering   of nearly all the steps        to help project   
phase as the process of   needed to make a final         sponsors target   
finalizing the project's  decision on the actual         resources.        
scope, cost, and          implementation of the          o  Design costs   
financial plan such that  proposed project, the          will be           
(1) all environmental     information for making that    frontloaded,      
impacts are identified    final decision must be         thereby           
and adequate provisions   reliable.                      increasing the    
are made for their                                       costs of          
mitigation in accordance                                 preliminary       
with National                                            engineering.      
Environmental Policy Act                              
(NEPA), (2) all major or                              
critical project elements                             
are designed to the level                             
that no significant                                   
unknown impacts relative                              
to their costs will                                   
result, and (3) all cost                              
estimating is complete to                             
a level of confidence                                 
necessary for the sponsor                             
to implement the                                      
financing strategy.                                   
Project reaffirmation by  Before a project is            o  Creates        
the metropolitan planning approved for advancement       another step that 
organization (MPO): FTA   into preliminary               will increase     
is considering requiring  engineering, the project       time and cost of  
that the sponsoring       must be adopted by the MPO     project           
agencies reaffirm their   into its long-range            development.      
adoption of the project   transportation plan.           o  Duplicates     
in its final              However, a project's scope     sponsors' ongoing 
configuration and costs   and costs may change during    work with the MPO 
into the MPO's long range the preliminary engineering    and provides no   
transportation plan as    phase. Thus, this              added certainty.  
part of the application   requirement would ensure       o  Will likely    
to advance the project to that a revised project         have limited      
final design.             still conforms to the MPO's    impact on local   
                             transportation plans and       financial         
                             financial investment           endorsement.      
                             strategies.                    o  Inconsistent   
                                                            with Federal      
                                                            Highway           
                                                            Administration    
                                                            regulations.      
New Starts funding share  SAFETEA-LU allows the          o  Incentive      
incentives: FTA asks how  Secretary to provide a         money should be   
it should implement the   higher grant percentage        invested back     
provision in SAFETEA-LU   than requested by the          into the New      
that would give FTA       project sponsor if (1) the     Starts program.   
discretion to provide a   net cost of the project is     o  Incentive      
higher percentage of New  not more than 10 percent       should focus on   
Starts funding than that  higher than the net cost       the project's     
requested by the project  estimated at the time the      outcomes like     
sponsor as an incentive   project was approved for       project impacts.  
to produce reliable       advancement into            
ridership and cost        preliminary engineering,    
estimates.                and (2) the ridership       
                             estimated for the project   
                             is not less than 90 percent 
                             of the ridership estimated  
                             for the project at the time 
                             the project was approved    
                             for advancement into        
                             preliminary engineering.    
			  
			  Source: GAO analysis of FTA guidance and public comments posted on
           FTA's docket.

           Related GAO Products
			  
			  New Starts reports and testimonies
			  
			  Opportunities Exist to Improve the Communication and Transparency
           of Changes Made to the New Starts Program. GAO-05-674 .
           Washington, D.C.: June 28, 2005.

           Mass Transit: FTA Needs to Better Define and Assess Impact of
           Certain Policies on New Starts Program. GAO-04-748 . Washington,
           D.C.: June 25, 2004.

           Mass Transit: FTA Needs to Provide Clear Information and
           Additional Guidance on the New Starts Ratings Process. GAO-03-701
           . Washington, D.C.: June 23, 2003.

           Mass Transit: Status of New Starts Program and Potential for Bus
           Rapid Transit Projects. GAO-02-840T . Washington, D.C.: June 20,
           2002.

           Mass Transit: FTA's New Starts Commitments for Fiscal Year 2003.
           GAO-02-603 . Washington, D.C.: April 30, 2002.

           Mass Transit: FTA Could Relieve New Starts Program Funding
           Constraints. GAO-01-987 . Washington, D.C.: August 15, 2001.

           Mass Transit: Implementation of FTA's New Starts Evaluation
           Process and FY 2001 Funding Proposals. GAO/RCED-00-149 .
           Washington, D.C.: April 28, 2000.

           Mass Transit: Status of New Starts Transit Projects With Full
           Funding Grant Agreements. GAO/RCED-99-240 . Washington, D.C.:
           August 19, 1999.

           Mass Transit: FTA's Progress in Developing and Implementing a New
           Starts Evaluation Process. GAO/RCED-99-113 . Washington, D.C.:
           April 26, 1999.

           JARC reports and testimonies
			  
			  Job Access and Reverse Commute: Program Status and Potential
           Effects of Proposed Legislative Changes. GAO-04-934R . Washington,
           D.C.: August 20, 2004.

           Welfare Reform: Job Access Program Improves Local Service
           Coordination, but Evaluation Should Be Completed. GAO-03-204 .
           Washington, D.C.: December 6, 2002.

           Welfare Reform: DOT Has Made Progress in Implementing the Job
           Access Program but Has Not Evaluated Impact. GAO-02-640T .
           Washington, D.C.: April 17, 2002.

           Welfare Reform: Competitive Grant Selection Requirement for DOT's
           Job Access Program Was Not Followed. GAO-02-213 . Washington,
           D.C.: December 7, 2001.

           Welfare Reform: GAO's Recent and Ongoing Work on DOT's Access to
           Jobs Program. GAO-01-996R . Washington, D.C.: August 17, 2001.

           Welfare Reform: DOT Is Making Progress in Implementing the Job
           Access Program. GAO-01-133 . Washington, D.C.: December 4, 2000.

           Welfare Reform: Implementing DOT's Access to Jobs Program in Its
           First Year. GAO/RCED-00-14 . Washington, D.C.: November 26, 1999.

           Welfare Reform: Implementing DOT's Access to Jobs Program.
           GAO/RCED-99-36 . Washington, D.C.: December 8, 1998.

           Welfare Reform: Transportation's Role in Moving from Welfare to
           Work. GAO/RCED-98-161 . Washington, D.C.: May 29, 1998.

           Other transit-related reports
			  
			  Highway and Transit Investments: Options for Improving Information
           on Projects' Benefits and Costs and Increasing Accountability for
           Results. GAO-05-172 . Washington, D.C.: January 24, 2005.

           Transportation Disadvantaged Populations: Some Coordination
           Efforts Among Programs Providing Transportation Services, but
           Obstacles Persist. GAO-03-697 . Washington, D.C.: June 30, 2003.

           Transit Labor Arrangements: Most Transit Agencies Report Impacts
           Are Minimal. GAO-02-78 . Washington, D.C.: November 19, 2001.

           Mass Transit: Many Management Successes at WMATA, but Capital
           Planning Could Be Enhanced. GAO-01-744 . Washington, D.C.: July 3,
           2001.

           Transit Grants: Need for Improved Predictability, Data, and
           Monitoring in Application Processing. GAO/RCED-00-260 .
           Washington, D.C.: August 30, 2000.

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23GAO, Highway and Transit Investments: Options for Improving Information
on Projects' Benefits and Costs and Increasing Accountability for Results,
GAO-05-172 (Washington, D.C.: Jan. 24, 2005).

24GAO, Welfare Reform: DOT Has Made Progress in Implementing the Job
Access Program but Has Not Evaluated the Impact, GAO-02-640T (Washington,
D.C.: Apr. 17, 2002).

25TEA-21 required DOT to evaluate the JARC program and submit a report to
Congress by June 2000.

26GAO, Welfare Reform: Job Access Program Improves Local Coordination, but
Evaluation Should Be Completed, GAO-03-204 (Washington, D.C.: Dec. 6,
2002).

27 GAO-04-934R .

(542095)

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Highlights of GAO-06-910T , a testimony for the Subcommittee on Housing
and Transportation, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate

June 27, 2006

PUBLIC TRANSPORTATION

Preliminary Information on FTA's Implementation of SAFETEA-LU Changes

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU) authorized a significant level of
investment-over $52 billion-for federal transit programs. SAFETEA-LU also
added new transit programs and made changes to existing programs,
including the New Starts and Job Access and Reverse Commute (JARC)
programs. The New Starts program is a discretionary grant program for
public transportation capital projects. The JARC program is intended to
improve the mobility of low-income individuals seeking work. SAFETEA-LU
authorized $8.6 billion for these two programs. The Federal Transit
Administration (FTA) manages both of these programs.

This testimony discusses GAO's preliminary findings on the (1) changes
SAFETEA-LU made to the New Starts program, (2) changes SAFETEA-LU made to
the JARC program, and (3) issues that may be important as FTA moves
forward with implementing the act. To address these objectives, GAO
interviewed FTA officials, sponsors of New Starts projects, and
representatives from industry associations and reviewed FTA's guidance on
the New Starts and JARC programs and federal statutes, among other things.

The changes SAFETEA-LU made to the New Starts program range from
establishing the Small Starts program to introducing new evaluation
criteria. FTA has taken some initial steps in implementing SAFETEA-LU
changes, including issuing an Advanced Notice of Proposed Rule Making
(ANPRM) for the Small Starts program and guidance for the New Starts
program in January 2006. The Small Starts program is intended to offer
small projects an expedited and streamlined application and review
process; however, the transit community has questioned whether the Small
Starts program, as outlined in the ANPRM, would provide such a process.
FTA's guidance for the New Starts program identified and sought public
input on possible changes to the program that would affect traditional New
Starts projects, or large starts, such as revising the evaluation process
to incorporate the new criteria identified by SAFETEA-LU.

SAFETEA-LU also made a number of changes to the JARC program. One key
change was to change JARC from a discretionary to a formula-based program,
which provides funds to states and large urbanized areas for JARC
projects. Other SAFETEA-LU changes include allowing JARC recipients to use
a portion of funds for planning activities and removing a limit on the
amount of funds available for reverse commute projects. To implement these
changes, FTA solicited comments and input through public listening
sessions and program notices. FTA has released interim guidance for fiscal
year 2006, is currently developing draft final guidance for the JARC
program, and plans to issue final guidance later this year.

GAO's past work suggests that transparency, communication, and
accountability issues will be important as FTA moves forward in
implementing SAFETEA-LU changes to the New Starts and JARC programs. Since
1998, GAO has issued numerous reports on these programs, and many of the
reports contained recommendations to FTA on ways to improve the
implementation of these programs. For example, GAO has reported that FTA
could increase the transparency of the New Starts program by obtaining
public input on proposed policy changes before they are implemented.
SAFETEA-LU addressed some of these issues, and FTA has also taken steps to
resolve some of them. For example, SAFETEA-LU requires FTA to publish for
notice and comment any proposals that make significant changes to the New
Starts program. Nevertheless, given the number of changes that are being
made to both programs, continued focus on efforts to improve transparency,
communication, and accountability will be important.

FTA officials provided technical comments on a draft of this testimony,
which were incorporated where appropriate.
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