Committee on Transportation, Housing and Urban Development, and Related Agencies

Statement of James S. Simpson
Administrator
Federal Transit Administration
U.S. Department of Transportation

Before the Committee on Transportation, Housing and Urban Development, and Related Agencies
United States House of Representatives
Hearing on the Federal Transit Administration FY 2008 Budget
April 17, 2007

Thank you, Mr. Chairman, for the opportunity to testify today on the President’s Fiscal Year (FY) 2008 Budget request for the Federal Transit Administration (FTA).  For FY 2008, FTA requests $9.42 billion in budget authority, a record level of funding. This level is $547 million or 6 percent above the $8.87 billion requested for FY 2007. 

Our budget request supports public transportation by providing stable, predictable formula funds to urbanized areas, significantly increasing funding for underserved rural communities, fully funding existing and new multi-year construction projects under the New Starts program, and improving transportation services to the elderly, low income, and persons with disabilities through coordinated planning and predictable funding.

Entrepreneurial Government

Before I go into the details of our budget, I want to briefly share my transit philosophy of “Entrepreneurial Government” and the “Inverted Pyramid.”   At FTA, I am committed to what I call "entrepreneurial government," which is creating a hybrid organization by drawing on the best practices of both the public and private sectors.

Entrepreneurial government means putting the customer at the top of the hierarchy.  At the top of the pyramid you have the American people; the transit rider (our customer); and the automobile user or non-transit user (our potential customer).  Next in the hierarchy are those who serve the riding public directly, such as bus drivers, mechanics, and station agents.  Next in the hierarchy are State and local officials who represent the needs and interests of our customers (the American people). They are followed by the transit authorities and suppliers to the industry.  At the bottom of the pyramid is the FTA.  We at FTA should be the foundation supporting everyone above, supporting those who are on the front line, and the public face of transit.

Having a “philosophy of service” and assuring that the service we provide is of top quality should be the primary objective of successful service providers - public or private.  I am passionate about transit because of the people it serves and the people that it should be serving - people who count on it to take them to work and school, or who discover new possibilities in life at the end of a subway or bus line. 

Top FY 2008 Priorities
 
Since my arrival in FTA, I have been impressed with the energy and dedication of FTA’s staff to making a difference.  I want to take this opportunity to focus on my top priorities and illustrate how our budget and staff resources work together to get results for the American taxpayer. The priorities include:

• Effective management and oversight of $9.3 billion in formula and capital investment grants, especially New Starts full funding grant agreements;
• Encourage and support Public-Private Partnerships in public transportation projects;
• Reduce congestion through Urban Partnership Agreements and Re-engineering New Starts Project Development and Delivery;
• Strengthen transit security and emergency preparedness through planning, training, and public awareness;
• Effective and timely implementation of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); and
• Attract and retain the best workforce with the skill-sets necessary to meet the challenges facing public transportation. 

FY 2008 Budget Request

The funding requested in this budget reflects the balance between the Administration’s determination to keep its commitments to support public transportation, especially to the people who depend on public transportation for basic mobility and the need to manage discretionary spending government-wide.  FTA’s budget is comprised of three General Fund accounts: Administrative Expenses, Research and University Research Centers, and Capital Investment Grants.  In addition, there is a stand alone Formula and Bus Grants account using revenues derived from the Mass Transit Account of the Highway Trust Fund.  The budget is also aligned with the Department of Transportation (DOT) Strategic Plan for 2006-2011, segmented by performance category and program activities.

Urbanized Area Programs

In FY 2008, $7.9 billion is requested in a solely trust funded account for Formula and Bus Grants.  This funding level is an increase of $609 million over the FY 2007 budget request.  This includes $4.3 billion for the Urbanized Area Formula, including Growing States and High Density States, and $1.6 billion for the Fixed Guideway Modernization Program to ensure that the Nation’s older fixed guideway systems continue to meet the transportation needs of the communities they serve.

Formula Grants funding can be used for all capital transit purposes and, in areas under 200,000 in population, for operating assistance.  Eligible capital expenses include: planning, bus, van, railcar, intelligent transportation systems (ITS), and equipment purchases; facility repair and construction, new technology introduction, and preventive maintenance.    These funds help communities reduce congestion, ensure basic mobility, promote economic growth and help meet the requirements of the Americans with Disabilities Act (ADA) and the Clean Air Act (CAA).

This request is consistent with the Administration's goal of ensuring that the Nation’s transit infrastructure is safe, efficient and cost-effective, thus attracting riders and maximizing the mobility, accessibility, economic, and environmental benefits of public transportation.  Eighty million Americans who live in transit-intensive urban areas directly benefit from transit.  In addition, many elderly, poor, and disadvantaged individuals in rural and small urban areas depend on public transit services for basic mobility to jobs, medical services, and social services.  Many of the 37 million Americans who live below the poverty level rely on transit as their only means of transportation.  Transit is also important to many of the 54 million Americans with disabilities.

An assessment of the Formula Grants programs completed as part of the FY 2006 Budget determined that these programs are effective at delivering transportation benefits in communities throughout the Nation.  FTA’s Formula Grants programs received a score of 92 out of 100 from the Office of Management and Budget’s Program Assessment Rating Tool. 

Bus and Bus-Facilities

FTA requests $927.6 million to provide investments in bus and bus-related capital projects that enhance the efficiency and safety of the Nation’s bus systems.  In FY 2008, FTA is proposing a clean fuels and electric drive bus deployment (hybrid-electric) program to encourage and provide incentives to transit agencies to procure low emission technology buses, including hybrid electric buses.  The FTA hybrid-electric program will develop a comprehensive approach to addressing existing barriers and challenges to the adoption and deployment of new low emission technology by a higher number of the Nation’s transit agencies. 
State Administered Grants

The important goal of improving mobility for the elderly, persons with disabilities, and individuals with low-incomes requires more flexibility and fewer funding constraints on communities.  FTA’s FY 2008 Budget requests $876.7 million for several transit programs administered primarily by States.  For the Nonurbanized Area Formula program, $506.5 million may be used to support intercity bus service, as well as to help meet rural and small urban areas’ transit needs, and includes funding for the new Growing States program.  A total of $127 million in formula grants for the Elderly and Individuals with Disabilities program will be apportioned to each State according to a legislatively required formula to assist in providing transportation to the elderly and individuals with disabilities.  The Budget includes $156 million for the Job Access and Reverse Commute program, apportioned to States by formula, for grants to non-profit organizations and local transit agencies.   These funds support transportation services for welfare recipients and low income individuals.  Funding for the New Freedom program totals $87.5 million and will provide additional support to overcome the significant transportation barriers facing millions of Americans with disabilities, seeking access to jobs and integration into the workforce.

Metropolitan and Statewide Planning

In FY 2008, FTA requests a total of $107 million for Metropolitan and Statewide Planning.  Funding will support implementation of the expanded analytic, environmental, transportation air-quality conformity, and evaluative work necessary to ensure that Federal and other transportation investments are cost-effective.  Metropolitan Planning Organizations (MPOs) and State departments of transportation use these funds for planning activities located in all 50 States, Puerto Rico, and the District of Columbia.  These funds also support planning activities for grants made by rural transit operators and tribal governments.  FTA and the Federal Highway Administration (FHWA) jointly carry out statutory planning requirements through MPOs, State DOTs, and transit operators as a condition of Federal assistance for most mass transportation and highway projects. 

Alternative Transportation in Parks and Public Lands

For FY 2008, $25 million is requested to enhance the protection of America’s national parks and public lands by improving the experience of those visiting our national parks, while ensuring transportation accessibility and mobility for all visitors, including individuals with disabilities.  FTA worked with the Department of the Interior and the U.S. Forest Service to implement this new program in FY 2006.  Investment in alternative transportation solutions in our national parks and public lands has many benefits, such as helping to relieve traffic congestion and parking shortages, enhancing visitor mobility, conserving sensitive natural, cultural, and historic resources, and reducing air pollution.

Clean Fuels, Over-the-Road Bus, and  Alternatives Analysis Grant Programs

The Clean Fuels Grant program is requested at $49 million to provide financing for the purchase or lease of clean fuel buses and facilities and modifying existing facilities to accommodate these buses.  This includes buses powered by compressed natural gas, biodiesel fuels, batteries, alcohol-based fuels, hybrid electric technology, fuel cell and certain clean diesel fuels (up to 25 percent of grants annually), and other low or zero emissions technology.

The budget also includes funding for the Over-the-Road Bus program of $8.3 million.  Funding will assist operators of over-the-road buses in financing the incremental capital and training costs of complying with the Department of Transportation’s final rule on accessibility of over-the-road buses required by the ADA. 

The Alternatives Analysis program is funded at $25 million and provides support for transit projects in early stages of development and to investigate transit alternatives to solving local transportation problems.   In addition, the National Transit Database (NTD) funded at $3.5 million is the primary national source for statistics on the transit industry and is used to allocate formula funds.  Over 650 transit agencies that receive FTA grants submit annual reports to FTA through this web-based reporting system.

Major Capital Investments

FTA requests $1.3 billion for New Starts projects in FY 2008 to fund approximately 15 existing, pending or anticipated full funding grant agreements (FFGAs).  The benefits of these projects cover 11 states and the District of Columbia.  The total cost of these projects exceeds $21.9 billion (total Federal, State, and local funds), with total Federal New Starts funding providing approximately $13.3 billion.  When completed, these projects can be expected to significantly reduce congestion and pollution, and to promote new economic activity throughout the Nation. 

Fiscal Year 2008 is the second year funding is authorized for the new Small Starts program and the Budget requests $100 million, the same amount as in FY 2007.  SAFETEA-LU requires regulations to implement the new Small Starts program, including the evaluation criteria for selecting projects and a new funding grant agreement.  FTA expects that new regulations will be finalized in early 2008, making it very difficult to award more than $100 million before the end of the fiscal year. 

FTA issued interim guidance on Small Starts in July 2006 that will guide the advancement of Small Starts projects until there is a final rule. Using this guidance, four Small Starts projects have been approved into project development and $52 million is included for these projects in FY 2008, leaving $48 million for other Small Starts projects. 

Research and University Research Centers

In FY 2008, $61 million is requested for transit research (the National Research and Technology program, Transit Cooperative Research Program, the National Transit Institute and University Research Centers).  

A total of $40.4 million is requested for the National Research and Technology program.  These funds support the goals of FTA’s Strategic Research Plan developed in consultation with the transit industry.  Proposed activities support the following five goals:  reduce congestion by increasing transit ridership; improve capital and operating efficiencies; improve safety and emergency preparedness; protect the environment and promote energy independence; and provide transit research leadership. The goals and objectives of FTA’s Transit Cooperative Research Program (TCRP), requested at $9.3 million, focus on issues significant to the transit industry with an emphasis on local problem-solving research. 

The FY 2008 Budget requests $4.3 million for the National Transit Institute (NTI) located at Rutgers University in New Jersey to develop and teach new techniques to improve transit workforce performance and enhance productivity in the workplace.  Funding for University Research Centers is requested at $7 million to provide continued support for research, education and technology transfer activities aimed at addressing regional and national transportation problems.

The Research Programs were recently evaluated by the OMB and received a score of 95 out of 100, demonstrating that these programs are effective in getting results and meeting FTA’s research goals.

Administrative Expenses

FTA is requesting $89.3 million in administrative expenses, $4.3 million above the FY 2007 Budget to help ensure it can effectively and efficiently fulfill its mission.  More than 85 percent of the administrative budget supports salaries and benefits for 517 full-time equivalent employees (FTE), rent, building maintenance, security and other essential services.  Another 12 percent funds essential information technology and financial management systems – the Transportation Electronic Award and Management (TEAM) grant system, the Delphi accounting system, and FTA’s Electronic Clearing-House Operation (ECHO) payment system.  The remaining 3 percent of the administrative expense budget funds travel, training, printing and supplies.

We appreciate your efforts in passing the Continuing Appropriation Resolution, 2007 at the President’s request of $85 million for Administrative Expenses.  Providing the aggregate amount of funds to operate the agency will allow us flexibility to operate more efficiently, within the requested funding categories.  We expect to meet the FTE level of 517 for the first time in several years.  We hope the Committee will support our efforts to improve overall management of our personnel and the related costs of operating our Agency by enacting the FY 2008 budget at the $89.3 million requested.
 
Building a Foundation for Congestion Relief and Public-Private Partnerships

FTA is increasingly working with our colleagues at the Federal Highway Administration (FHWA) to integrate transit and highway policies in metropolitan areas.  The opportunities to utilize new technologies, leverage private sector capital, and provide new choices to transportation system customers have expanded greatly in even the last five years.  As a country, we must begin to tackle the threat of declining system performance in creative ways if our transportation system is to continue providing our country with an international competitive advantage.  FTA is proud to be at the forefront of this creative thinking. 

In accord with the Department’s Six-Point Plan to help relieve congestion, FTA resources and staff are critical to supporting Urban Partnership Agreements that aim to demonstrate the successful integration of various congestion relief strategies.  Most central of these strategies is the nexus between deployment of congestion pricing on highways and the viability of commuter transit services.  It has been demonstrated in various parts of the world and in the U.S. that highway pricing can substantially improve throughput, improve transit performance and generate additional revenues for system re-investment.  Lower cost transit options such as Bus Rapid Transit do not require large up front capital expenditures and can provide substantial time savings and improved reliability to customers in a short period of time.  In addition, these services can be adapted quickly to address changing commuter trends. 
 
FTA is also a key player in the Department’s initiative to reduce barriers to private sector investment in the construction and ownership of public transportation services.  A Public-Private Partnership Pilot Program authorized by SAFETEA-LU provides FTA with the opportunity to work with the private sector on partnerships with transit agencies.  As has been demonstrated around the world and across all modes of transportation, innovative partnerships between the public and private sector can reduce taxpayer risk, speed up project delivery, ensure project costs are contained, and stimulate creative thinking about new approaches to project delivery and operations.  FTA will complete a study for Congress of the costs, benefits, and efficiencies of public-private partnerships in August 2007, and use the information to better understand how the private sector can be an integral partner in the construction and management of public transportation systems.  We will work with the States and transit authorities to develop strategies to overcome resistance to reform using education, demonstrations and relationship building with State agencies and private investors/developers.

Improve Structural Integrity and Operational Efficiency

Closely tied to improving congestion is the Department's goal of improving the structural integrity and operational efficiency of the Nation's transportation infrastructure.  In FY 2008, FTA's Formula and Bus Grants and Capital Investment Grants programs will provide $9.3 billion in capital resources for infrastructure investment.  FTA Formula Grant funding can be used for capital transit purposes (i.e., security, planning, introduction of new technology, bus, railcar, intelligent transportation systems (ITS) and equipment purchases, facility repair and construction, maintenance, and, in areas with population under 200,000, operating expenses).  The Capital Investment Grants (commonly called New Starts) program provides funding for fixed guideway modernization activities and construction of new, and extensions to existing fixed guideway systems.

The 2006 Status of the Nation's Surface Transportation System: Conditions and Performance Report reviews the condition of the Nation's highway and transit systems and projects the investment scenarios necessary to maintain and improve surface transportation in the United States.  The report estimates the transit investment scenario of $15.8 billion from Federal, State and local sources annually over the next 20 years to maintain the Nation's public transportation facilities and equipment in their current state of repair and to meet projected increases in travel demand.  A similar investment scenario to improve transit conditions to “good,” and to improve performance by reducing crowding and improving transit passenger travel speed is estimated at $21.8 billion from all sources.  The level of funding requested for FY 2008 along with State and local resources will maintain the condition of public transportation infrastructure and make some head-way to improve the performance of the Nation’s public transportation system.

Transit Security
 
FTA requests $46.6 million to support security activities in public transportation systems.  The security of our public transportation system remains a high priority of this Administration and the Department.  While the lead for transit security rests with the Department of Homeland Security, FTA has identified three priority areas with regard to security: 1) increase public awareness, so that passengers can identify suspicious or unusual behavior, communicate with transit officials, and exit safely in the event of an emergency; 2) ensure that local agencies have emergency plans in place and routinely practice them; and 3) train transit employees to deter, detect, mitigate and respond to a variety of emergency scenarios. 

Every workday, transit moves more than 14 million passengers.  In two weeks, transit moves more passengers than Amtrak carries in a year.  In one month, transit moves more passengers than U.S. airlines transport in a year.  Transit agencies across America have strengthened their security systems and enhanced their emergency response plans, and FTA has placed a high priority on increasing the security of our public transportation systems and ensuring that they are prepared for security threats and emergency situations.

Consistent with SAFETEA-LU, transit systems that receive formula funds (49 U.S.C. 5307) are required to use at least one percent of the amount each fiscal year on “public transportation security projects” unless they certify, and the Secretary of Transportation agrees, that the expenditure for security projects is unnecessary.  These funds contribute to a safer transit system by improving the condition of public transportation fleets, track and transit facilities.  This one percent requirement accounts for the majority of the $46.6 million mentioned above. 

In addition, SAFETEA-LU allows for investigations of safety hazards and security risks associated with a condition in equipment, a facility, or an operation financed under the Federal Transit Act.  In 2005, an annex to the memorandum of understanding (MOU) between the Secretary of Transportation and the Secretary of Homeland Security was completed.  The annex to the MOU includes: a process to develop security standards for public transportation; a method of direct coordination with public transportation agencies on security matters; and a formal and permanent mechanism to ensure coordination and involvement by the Department of Transportation.

Enhanced Coordination of Human Service Transportation

Consistent with the national commitment to improve coordination and access to specialized transportation, the President signed Executive Order 13330 on Human Service Transportation Coordination in February 2004, to improve human service transportation coordination for individuals with disabilities, older adults, and people with lower incomes.  The Executive Order established the Interagency Transportation Coordinating Council on Access and Mobility (CCAM) chaired by Secretary Peters and includes 11 Federal Departments representing 64 Federal programs that support transportation for people with disabilities, older adults, and individuals with lower incomes. 

During the past year, the Council adopted two new policy statements on coordinated planning and vehicle sharing, both intended to enhance efficiencies for human service transportation.  The Council also is in the process of finalizing performance measures and establishing cost sharing principles and selected eight communities to participate in the United We Ride-Mobility Services for All Americans Pilot Demonstration Project, to simplify access for consumers at the local level through the use of Intelligent Transportation Systems (ITS).  Other activities of the Council include technical assistance, training, and outreach for consumers, human service providers, transportation agencies, and policy makers.  Ongoing technical assistance, called “Help Along the Way,” is built on work of the Community Transportation Assistance Program, the Rural Transportation Assistance Program, and Easter Seals Project-Accessible Community Transportation In Our Nation (ACTION).

Project Oversight

FTA remains committed to completing New Starts projects on time and on budget.  Our successful oversight program works with transit agencies to identify potential problems before they grow into major crises.  The Department’s Inspector General has reported that FTA’s oversight program is “essentially a sound approach that can provide early warnings of cost, schedule, and quality problems.”

One tool we use to help ensure that projects meet their cost, schedule and transportation benefit expectations is a quantitative risk assessment.  These risk assessments help project sponsors identify the issues that could affect schedule or cost, as well as the probability that they will do so.  Utilizing the risk assessment tool, every project sponsor is required to identify the project’s key cost drivers; identify, quantify, and prioritize based on impact and probability the risks associated with potential cost increases and schedule delays; and develop contingency levels and risk mitigation plans sufficient to assure confidence in the project cost estimates.

Our budget requests that the oversight authority provided in law (49 U.S.C. 5327), be expanded to include FTA’s Job Access and Reverse Commute, New Freedom and National Research programs.  This expanded authority will ensure proper oversight of all FTA programs. 

In summary, the record demand for public transportation suggests that Americans want more and better public transportation alternatives.  Consistent with the President’s Management Agenda, FTA’s budget is citizen-centered, performance driven, and customer-focused.  This budget effectively supports public transportation throughout the Nation.  We are working with you and other public transportation stakeholders to implement SAFETEA-LU and the National Strategy to Reduce Congestion on America’s Transportation Network, which will significantly increase the quality of life of every person and every business in America. 

Mr. Chairman, we look forward to working with this Committee in support of public transportation in our great country.  Secretary Peters and I place high priority in achieving the goals set forth in our budget request.  Thank you again for the opportunity to testify on the FY 2008 Budget and other issues important to us.  I will be happy to respond to questions from the Committee.