Highway Funding: The Federal Highway Administration's Funding
Apportionment Model (Letter Report, 06/05/97, GAO/RCED-97-159).
Pursuant to a congressional request, GAO reviewed the Federal Highway
Administration's (FHwA) funding apportionment model.
GAO noted that: (1) FHwA's new apportionment model matches the highway
funding formula contained in the governing legislation; (2) the model
captures the structure of the overall apportionment process, accurately
representing the interrelationships among programs and equity categories
and how each builds on the other; (3) the model is internally consistent
to the extent that the various parts of it work well together and that
the operation of one part does not adversely affect another part; (4)
furthermore, the model is adaptable to reflect the provisions of new
highway funding proposals; (5) however, the model is complex because of
the complexity of current law, and this complexity does not lend itself
to the widespread use of the model by staff not trained in its structure
and programming language; (6) furthermore, as with any model, the
precision of its estimates will depend on the accuracy of the data and
subroutines that are used for alternative legislative proposals; and (7)
however, GAO found that the FHwA office responsible for overseeing the
model does not verify new input data, nor does it have staff with the
technical expertise to verify the accuracy of new subroutines developed
by the contractor.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-97-159
TITLE: Highway Funding: The Federal Highway Administration's
Funding Apportionment Model
DATE: 06/05/97
SUBJECT: Federal aid for highways
Computer modeling
Quality assurance
Future budget projections
Data integrity
Appropriation acts
Computer software verification and validation
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Report to Congressional Committees
June 1997
HIGHWAY FUNDING - THE FEDERAL
HIGHWAY ADMINISTRATION'S FUNDING
APPORTIONMENT MODEL
GAO/RCED-97-159
Highway Funding
(342937)
Abbreviations
=============================================================== ABBREV
ISTEA -
FHWA -
Letter
=============================================================== LETTER
B-276879
June 5, 1997
The Honorable John H. Chafee
Chairman
The Honorable Max Baucus
Ranking Minority Member
Committee on Environment and Public Works
United States Senate
The Honorable Bud Shuster
Chairman
The Honorable James L. Oberstar
Ranking Minority Member
Committee on Transportation and Infrastructure
House of Representatives
The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA),
which authorized $155 billion from 1992 through 1997 for surface
transportation programs, is due for reauthorization in fiscal year
1997. As part of the reauthorization debate, a number of legislative
proposals have been made to alter the existing formula by which
federal-aid highway funds are apportioned to the states. The current
formula determines the distribution of funds for 13 funding
categories. These categories include eight individual programs and
five separate mechanisms for increasing individual states' funding in
order to achieve certain goals for equity among the states.\1 The
formula has evolved over many decades as new programs and
apportionment factors have been layered on top of existing rules.
The result is a complex, multistep process in which calculations
occur in a strict sequence, incorporating one or many apportionment
factors.\2
Altering the existing formula will affect the distribution of highway
funds among the states. Accurate estimates of the impacts of funding
under the various proposals are imperative to support the Congress's
decision-making process. Therefore, the Federal Highway
Administration (FHWA) has developed and is operating, through the use
of a contractor, a new apportionment model to estimate the expected
distribution of federal-aid funds under the proposals.\3 Because of
the importance of the accuracy and reliability of these estimates,
you asked us to validate the model. We agreed with your offices to
examine whether the model matches the current highway funding formula
and whether it is adaptable to a variety of reauthorization
proposals.
--------------------
\1 Equity adjustments ensure a level of federal-aid highway funding
to states beyond that provided by the states' basic program
apportionments and are intended to address concerns about such things
as states' share of highway user tax contributions or other
considerations.
\2 For more detail on the apportionment process, see Highway Funding:
Alternatives for Distributing Federal Funds (GAO/RCED-96-6, Nov. 28,
1995).
\3 This new model is only used to estimate the apportionments that a
state might receive if a particular proposal were adopted. Once new
legislation is signed into law, a separate model will be developed
that actually establishes the apportionments (and set-asides)
required by the new legislation.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
FHWA's new apportionment model matches the highway funding formula
contained in the governing legislation. The model captures the
structure of the overall apportionment process, accurately
representing the interrelationships among programs and equity
categories and how each builds on the other. The model is internally
consistent to the extent that the various parts of it work well
together and that the operation of one part does not adversely affect
another part. Furthermore, the model is adaptable to reflect the
provisions of new highway funding proposals. However, the model is
complex because of the complexity of current law, and this complexity
does not lend itself well to the widespread use of the model by staff
not trained in its structure and programming language. Furthermore,
as with any model, the precision of its estimates will depend on the
accuracy of the data and subroutines that are used for alternative
legislative proposals.\4 However, we found that the FHWA office
responsible for overseeing the model does not verify new input data,
nor does it have staff with the technical expertise to verify the
accuracy of new subroutines developed by the contractor.
--------------------
\4 A subroutine is a sequence of computer instructions, written in
the model's programming language, that actually does the
apportionment calculations for a specific highway program.
BACKGROUND
------------------------------------------------------------ Letter :2
Each fiscal year, FHWA apportions highway funds to the states on the
basis of the governing laws--specifically, provisions of title 23 of
the United States Code and uncodified sections of both ISTEA and the
National Highway System Designation Act of 1995. During the
reauthorization process, the Congress reviews the continuing need for
each highway spending program and the appropriateness of the
apportionment formula. FHWA assists the Congress in its
deliberations on the impact and equity of alternative proposed
formulas by estimating for each state the apportionment that would
flow from each of the alternatives. Producing these estimates can be
complex and time-consuming.
To improve its responsiveness to the Congress and ensure the accuracy
of its estimates, FHWA contracted for the development of a general
apportionment model. FHWA's contractor based the model on current
law, but the model must be adapted at each use to match the
provisions of the particular formula proposal. The new model was
intended to improve on the existing one that had been used for a
number of years to make apportionment estimates for policy
decision-making. The new model currently is being used to provide
the information that the Congress needs in reauthorizing surface
transportation programs.
THE MODEL ACCURATELY REPLICATES
THE PROVISIONS OF THE CURRENT
FORMULA
------------------------------------------------------------ Letter :3
We found that the new model matches the provisions of current law.
The model captures the structure of the overall apportionment
process, accurately representing the interrelationships among
programs and equity categories and how each builds on the other.
Furthermore, the model is internally consistent to the extent that
the various parts of it work well together and that the operation of
one part does not adversely affect another part.
FHWA told us that transportation interest groups, state departments
of transportation, and congressional staff have indicated that they
would like copies of the model for their own use and modification.
However, current law relating to highway apportionments is complex
because of the number of interrelated programs, apportionment
calculations, and equity adjustments. Estimating these
apportionments requires a complex model, which makes it difficult for
anyone not very familiar with the model's structure, calculation
processes, and programming language (Visual Basic) to use or modify
the model accurately. FHWA expressed concern that different users
could produce different apportionment estimates for the same
legislative proposal. These different estimates may not be easy to
reconcile without a detailed analysis of the model's subroutines. We
believe that FHWA's concern is valid in light of the complexity of
the law and model. Therefore, FHWA needs to maintain accountability
for the model to help ensure that the estimates used during
reauthorization are consistent.
THE MODEL IS ADAPTABLE FOR NEW
LEGISLATIVE PROPOSALS
------------------------------------------------------------ Letter :4
Because the model is based on current law, it can be used to generate
a baseline forecast of future apportionments. Although this
capability is a necessary starting point, the primary purpose of the
model is to estimate apportionments for prospective changes to
current law. Therefore, the model must be readily adaptable and
flexible enough to reflect the provisions of a variety of proposed
reauthorization bills.
To test this capability, we modified and added subroutines to the
baseline model to reflect the provisions of a specific proposed
formula that was under discussion at the time of our review. We
found the model well-suited to the task. As a result of our work, we
have made some suggestions directly to the designers of the model for
technical changes that may improve the model's flexibility and FHWA's
ability to verify modifications. The model's designers agreed with
our suggestions and plan to make the changes.
INACCURATE DATA COULD AFFECT
THE MODEL'S PRECISION
------------------------------------------------------------ Letter :5
As with any model, the precision of the model's estimates depends on
the accuracy of the input data that are entered into the model. The
data must be accurate and based on correct weights. For instance,
existing law requires that 55 percent of the funds for the Interstate
maintenance program be apportioned on the basis of Interstate lane
miles and that 45 percent be apportioned on the basis of vehicle
miles traveled on the Interstate. Once the type of data and weights
are determined, each state's share of federal-aid highway funds must
be calculated.
Individual FHWA offices, which are responsible for producing data
used to actually apportion federal highway funds, are required to
certify that the data are correct. The office within FHWA that
oversees the model and its contractor use this same information when
it is applicable to alternative model estimates. However, when a
proposed formula requires data not used for distributing federal
highway funds, the new data do not receive a similar level of
scrutiny. Currently, there is no internal certification by FHWA that
such new data are accurate.
The precision of the model's estimates also depends on the accuracy
of the modifications made to the model to match the various proposed
formulas. Every time new estimates are produced, there is a
potential for introducing undetected errors into the model.
Therefore, for FHWA to have confidence in the model's modifications,
there must be some method, independent of the contractor, for
ensuring that the subroutines accurately reflect the proposed formula
and that the structure of the model remains internally consistent.
While the office within FHWA that oversees the model has staff that
reviews the results of the model's various analyses, this office does
not currently have staff that can verify the accuracy of new
subroutines.
CONCLUSIONS
------------------------------------------------------------ Letter :6
FHWA and its contractor have produced a model that incorporates the
current complexities of the highway apportionment process.
Furthermore, the model can be adapted with varying degrees of
difficulty for new proposals, depending on their complexity and level
of divergence from existing law. However, strong quality assurance
measures are needed to help ensure that reliable results are produced
when changes to the input data and the model are made to reflect new
proposed formulas. Maintaining accountability for the model within
FHWA would help to ensure that the estimates used during
reauthorization are consistent.
RECOMMENDATION
------------------------------------------------------------ Letter :7
To ensure the accuracy of the model's estimates and to provide the
Congress with confidence in the model's results, we recommend that
the Secretary of Transportation direct the Administrator, FHWA, to
establish a quality assurance process to ensure the integrity of any
changes to the model's input data and validation of any changes to
the model, including new subroutines developed for the model.
AGENCY COMMENTS
------------------------------------------------------------ Letter :8
We provided copies of a draft of this report to the Department of
Transportation for review and comment. We met with Department
officials--including the Deputy Assistant Secretary for Budget and
Programs in the Office of the Secretary and the Director of FHWA's
Office of Budget and Finance. The Department agreed with the facts
presented as well as the recommendation and indicated that it would
be responsive to the recommendation. Technical comments provided by
the Department have been incorporated where appropriate.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9
To validate FHWA's apportionment model, we first studied its
structure, including the spreadsheets, the main calculation module,
and the calculation subroutines. As part of our examination, we
verified the internal consistency of the model, including the
structural relationships, the use of input data, and the reporting of
results. We next studied title 23 of the United States Code, ISTEA,
and the National Highway System Designation Act of 1995. We then
cross-checked the model and subroutines with the specific applicable
sections of the laws, ensuring that all aspects of the model were
contained in the laws and that all relevant provisions of the laws
were contained in the model. Our assessment of the model, however,
provides no basis for validating any future changes to it.
To test the model's adaptability, we modified its subroutines to
match the provisions of one of the legislative proposals under
consideration at the time of our review, the ISTEA Integrity
Restoration Act (STEP-21). Finally, we resolved with the model
designers and FHWA all of the uncertainties that arose during our
review.
As agreed with your offices, we did not verify the accuracy of the
input data that various units within FHWA supply as calculation
factors for the model. We conducted our review from February through
May 1997 in accordance with generally accepted government auditing
standards.
---------------------------------------------------------- Letter :9.1
As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report for
30 days. At that time, we will send copies of the report to the
Secretary of Transportation; the Administrator, FHWA; and other
interested parties. We will also send copies to others upon request.
If you have any questions, please call me at (202) 512-3650. Major
contributors to this report are listed in appendix I.
Phyllis F. Scheinberg
Associate Director, Transportation Issues
MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I
Mark Dayton
Gary L. Jones
SaraAnn W. Moessbauer
Yvonne C. Pufahl
*** End of document. ***