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Chapter 6.6: Funding Sources

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The identification of potential funding sources for providing transportation alternatives can be complex and burdensome for some planners. The following is an inventory of available funding sources. The sources are categorized by funding source (federal, state, local, private, and non-profit). The federal funding sources are subcategorized by the funding program's applicability to job access (Most Applicable, Somewhat Applicable, and Less Applicable).

Federal Funds - Most Applicable

Below are the three primary sources of currently available federal funding for welfare-to-work transportation.

Jobs Access and Reverse Commute (Access to Jobs) Grant Program: The Transportation Equity Act for the 21st Century (TEA-21) authorizes the U.S. Department of Transportation to provide $150 million in competitive grants to support the development of transportation services for low income individuals to jobs and job-related activities. However, in FY 2000 Congress provided $75 million the TEA-21 guaranteed level.

Temporary Assistance for Needy Families (TANF): The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) authorizes the U.S. Department of Health and Human Services to provide TANF grants to the States. This is an annual $16.4 billion block grant program.

Welfare-to-Work (WtW) Grants: The Balance Budget Act of 1997 authorizes the U.S. Department of Labor to provide WtW grants to States and local communities to create additional job opportunities for the hardest-to-employ recipients of TANF. This is a $3 billion ($1.5 billion in FY98 and $1.5 billion in FY99) competitive grant program. Funds must be used to help move eligible individuals into jobs. The states are recipients of the grants while local Private Industry Councils (PICs) administer the grants.

The Federal Transit Administration, the U.S. Department of Health and Human Services, and the Department of Labor recently issued guidance on the use of TANF funds and Welfare-to-Work funds for transportation needs. The joint guidance notes several allowable uses:

  • Contracting for shuttles, buses and carpools.
  • Purchasing vans, shuttles and minibuses.
  • Purchasing rider slots, passes or vouchers.
  • Facilitating the donation and repairs of older vehicles.
  • Providing loans to eligible individuals for lease or purchase of vehicles.
  • One time or short-term payments for automobile repairs and insurance.
FTA Access to Jobs grants may be used for:
  • Capital and operating costs.
  • Promoting the use of transit by workers with non-traditional work schedules.
  • Promoting the use of vouchers for recipients.
  • Promoting the use of employer-provided transportation.
  • Reverse commute transportation.
  • Subsidizing the purchase or lease of vehicles or services.

The following information highlights many of the currently available federal funding sources for welfare-to-work transportation.

Federal Funds - Possible Applicability

These funding sources could be used for job access transportation programs, but they are not as clearly linked to access programs as those in the first category. Transportation programs may be competing with non-transportation programs for these funds or the funding agencies may have limited ability to divert these funds from existing programs. The following sources, furthermore, are already being used by MPOs or transit organizations for other programs. Planners should consider pursing partnerships with agencies already receiving these funds.

Intermediary Relending Program (IRP): IRP is a program of revolving loans that finance businesses and community development projects in rural communities and towns with less than 25,000 population. Nonprofits, public bodies, Indian tribes, and cooperatives are eligible. Transportation is among the eligible uses of borrowed funds. Funding Level: $371.5 million.

Community Transportation Development Fund (CTDF): CTDF can assist rural communities in improving or expanding local transit services, purchasing vehicles, building facilities and promoting economic development. Available Fund: $2.1 million.

Business and Industrial Guaranteed Loan Program: The Business and Industrial Loan program of direct and guaranteed loans is designed to create and save rural jobs and to improve the economic and environmental climates of rural communities under 50,000 population. This may include financing for transportation-related facilities, vehicle acquisition or other infrastructure investments. Any legally organized entity is eligible. Funding level: $738.2 million.

Rural Business Enterprise Grants (RBEG): RBEG supports rural economic and community development projects, including transportation facilities, infrastructure improvements, and the capital costs of transportation services. Funding level: $41 million.

Rural Economic Development Loans and Grants: Grants are targeted to certain purposes such as community development, medical care, educational technology, job training, business incubators and technical assistance, and can be used for transportation activities that fit with those purposes. Funding level: $32.3 million.

Rural Empower Zones/Enterprise Communities: The Rural EZ/EC program is an initiative that is designed to help distressed areas improve themselves through a comprehensive, coordinated approach integrating local initiatives with federal support.

Vocational Rehabilitation Grants: Funds are provided to state rehabilitation agencies on a formula basis to provide a full range of rehabilitative services to eligible individuals with disabilities.

Centers for Independent Living: This program provides support to local nonprofit centers for independent living, enabling them to provide training, counseling, advocacy and supportive services to individuals with significant disabilities. Transportation services are provided through this program. Funding level: $42.8 million.

Bridges to Work: Demonstration program to connect inner-city residents with suburban employment opportunities by providing job placement, transportation services, and other support services. This program is on going in five cities.

Community Development Block Grants: Some communities have used CDBG funds to assist in the construction of transportation facilities, operating expenses and vehicle acquisition for community transportation services. Funding level: $4.6 billion.

Community Services Block Grant: Under this program, states and Indian tribes receive funding to provide a broad range of social services for low income persons. Transportation services are provided by many of these local programs. Funding level: $490.6 million.

Welfare to Work: Eighty percent of the funding in the welfare to work grants will fund supportive services and economic development efforts that will enable residents of public housing developments to become self-sufficient, including employment training, counseling, transportation and child care. Public housing authorities are eligible applicants. Funding level: $31 million.

Medicaid: Medicaid is a jointly-funded, Federal-State health insurance program for certain low-income and needy people that varies considerably from State to State, as well as within each State. States have some discretion in determining which groups their Medicaid programs will cover and the financial criteria for Medicaid eligibility. To be eligible for Federal funds, States are required to provide Medicaid coverage for most individuals who receive Federally assisted income maintenance payments, as well as for related groups not receiving cash payments.

Center for Mental Health Services (CMHS): Leads Federal efforts to treat mental illnesses by promoting mental health and by preventing the development or worsening of mental illness when possible. CMHS works with Federal agencies and private sector organizations whose programs and policies enhance mental health services delivery and advance policy development.

Administration on Aging (AoA): AoA supports a nationwide aging network, providing services to the elderly, especially to enable them to remain independent. AoA supports "meals on wheels," helps provide transportation and at-home services, supports ombudsman services for elderly, and provides policy leadership on aging issues.

Federal Funds -Limited Applicability

Following are funding sources that could leverage transportation programs for improving access, but only under particular kinds of efforts and in partnership with certain agencies. Application for use of these funds is useful only when an existing agency receiving the funds agrees to partner in a project.

Even Start: Transportation services may be included if necessary to ensure participation in the adult literacy component of this program. Funding level: $101 million.

Education for Homeless Children and Youth: Funds from this program are used to overcome all identified barriers to homeless children's participation in public education, and may be used to provide transportation to homeless children not participating in appropriate public education programs. Funding level: $23 million.

Social Services Block Grants: Funds may be used for transportation projects that improve the delivery and effectiveness of human services programs.

Substance Abuse and Mental Treatment for Rural and Remote Persons: The program supports six project sites, each of which integrates substance abuse treatment, health and social services, and related services including transportation.

Supportive Housing (Homeless) Demonstration Program: Transportation to link supportive housing residents with other necessary services may be funded.

Urban Empowerment Zones Enterprise Communities: To be designated an urban EZ/EC, an area had to submit a strategic plan for revitalization, which could incorporate strategies for addressing transportation needs and services.

Tenant Opportunities Program: Funding is allowed for transportation if public and Indian housing resident organizations are involved in job training. Funding level: $5 million.

Trade Adjustment Assistance: This is primarily a program of temporary benefits to workers whose employment has been adversely affected by increased imports. It also provides benefits for job training and necessary related services, specifically including transportation to training programs. Funding level: $8.5 million.

Employment Training Research and Demonstration Programs: Transportation services that are part of these projects will be supported. Funding level: $10.2 million.

Highway Planning and Construction: The program of federal aid for highways has many components, most of which can only be used for highway construction and rehabilitation projects. However, funding is available to Metropolitan Planning Organizations and states for planning activities including those addressing welfare to work. Funding for other related activities such as ridesharing programs are also available. Funding level: $19.7 billion.

FTA Section 5309 Capital Investment Program: This program provides capital assistance for new rail systems, modernization of existing rail systems, and for new and replacement buses and facilities. Funding level: FY 2000 - $2.5 billion.

FTA Section 5303 Metropolitan Planning Grants: This program provides formula funding for transportation planning activities in metropolitan areas.

FTA Section 5307 Urbanized Area Formula Program: This program provides funding to areas with population of 50,000 or greater. Funds may be used to support either transit capital, planning, or operating expenses, although there is a statutory maximum of available operating assistance. Funding level: FY 2000 - $2.8 billion.

FTA Section 5311 Non-urbanized Area Formula Program and the Rural Transit Assistance Program (RTAP): This program provides formula funding to states for the purpose of supporting public transportation in areas of less than 50,000 population. The Rural Transit Assistance Program (RTAP) provides formula funding to states for rural transit training and technical assistance. Funding level: FY 2000 - $193.6 million, $5.2 million for RTAP.

National Planning and Research Program: This program provides support for public transit research, demonstrations and special projects that are in the national interest, such as advanced technology, transit finance initiatives, transit accessibility, human resource training and development and information initiatives including the RTAP National Transit Resource Center. Funding level: FY 2000 - $29 million.

State Planning and Research Program: This program provides formula funding to states to carry out public transportation planning, research, demonstration and technical assistance activities. Funding level: FY 2000 - 10.4 million.

State Funds

State funding sources will vary from state to state. Listed below are some general sources of funds that are common to most states.

Legislatures: State Legislatures can appropriate state money for transportation.

Departments of Human Services: State departments of human services can allocate federal TANF dollars and state maintenance-of-effort (MOE) dollars for transportation initiatives.

Public, Public-Non-Profit, and Public-Private Partnerships: States can utilize existing vehicles that are not public transit vehicles for senior citizens, people with disabilities, Head Start programs, paratransit vehicles, and public schools. TANF funds can be used to expand existing services run by other agencies, thereby increasing the availability of service to both TANF and non-TANF clients.

Local Funds

Similar to state funding, local funds are varied. Local sources of funds are generally smaller amounts than federal or state sources, but local planners may have greater control over how the dollars are spent. Listed below are some examples of local programs and local funding that could leverage other sources of funds.

Guaranteed Ride Home Program: Through this program, some transit agencies and private employers offer a guaranteed ride home to employees faced with home emergencies or illness.

Ridesharing/Vanpooling Program: Through this program, states, metropolitan planning organizations, and employers can organize carpools or vanpools among the existing workforce to assist new workers in getting to work.

Counties: Grants to counties can be used for the start-up of pilot projects and for initiating contracts with current transit systems.

Private Funds

Private and employer-based funding is often linked to governmental tax benefits or collaborative efforts between businesses and government. Listed below are examples of resources that may be available to planners.

Commuter Choice Program (Transit Benefit Program): This program is designed to improve air quality, reduce traffic congestion, and conserve energy by encouraging employees to commute by means other than single occupancy vehicles. The employer may provide up to $65 in benefits per month tax free to those employees who commute to work by transit or vanpool. They can also provide up to $175 per month tax free in employee parking benefits.

Employers: There are several ways employers subsidize transportation for the target population. In the past, they have purchased bus passes, provided weekend services and off-hour bus services, and subsidized bus routes.

Communities: The U.S. Housing and Urban Development (HUD) allocates resources to community programs that are traditionally focused on housing and support services. Transportation is included in support services and this money could be used to transport recipients of HUD-funded programs to jobs.

Commuterbucks Program: This is a vanpool voucher program run by VPSI, Inc., a national company, that simplifies the administrative burden for employers. Employers purchase vouchers for employees to use towards VPSI service fares.

Non-Profit Funds

A number of non-profit agencies and foundations provide funding or implementation assistance for specific missions, geographic areas, or assistance to specific populations. Non-profit organizations will vary by locality. Some examples are listed below.

The McKnight Foundation: This foundation provides grants for access-to-jobs programs.

Volunteer and Faith-Based Community: The Charitable Choice provision in PRWORA allows TANF funds to be paid to charities, religious groups and other private organizations to provide transportation services. Such groups can use these dollars to leverage other funds.

Final Report
May 2001

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Commitment to Accessibility: DOT is committed to ensuring that information is available in appropriate alternative formats to meet the requirements of persons who have a disability. If you require an alternative version of files provided on this page, please contact