5. Federal Transit Assistance for Large, Small, and Nonurbanized Areas

The Urbanized Area Formula Program, with its multiple tiers and formula factors, does not allocate funds on a strict per capita basis. The allocations are also targeted to urbanized areas, though the states do play a role in the allocations to urbanized areas under 200,000, as discussed above. This often raises questions about the shares of federal funding received by urbanized areas of different sizes. As discussed in the previous section, small transit intensive cities receive less formula funding relative to their service levels than do other small urbanized areas. More generally, however, how does funding for small urbanized areas compare to funding for large urbanized areas and to nonurbanized areas?

Exhibit 2 shows total FTA formula apportionments by urbanized area size for 1998-2000, including both the Section 5307 (Urbanized) and 5311 (Nonurbanized) programs. The majority of FTA formula funding is clearly targeted to transit operators in major urbanized areas (population over 1 million), who receive approximately two-thirds of total formula funds. Other large urbanized areas (200,000-1 million), small urbanized areas (50,000-200,000), and nonurbanized areas (under 50,000) receive decreasingly smaller shares by population size.

Exhibit 2 also compares these funding levels relative to population and transit service levels.5 In FY 2000, major urbanized areas received $21.27 per person in formula assistance, while small urbanized areas received $9.95 per person and nonurbanized areas just $2.09 per person. This great disparity in per capita funding, however, reflects the substantially greater transit service provision and usage in larger cities. On a service level basis, larger urbanized areas receive relatively less funding than do small urbanized areas.

Major urbanized area apportionments in 2000 amounted to 87.5 cents per vehicle revenue mile, 28.2 cents per passenger trip, and 5.4 cents per passenger mile, while small urbanized area apportionments were $1.30 per vehicle revenue mile, $1.08 per passenger trip, and 26.8 cents per passenger mile. Nonurbanized areas received slightly less per passenger ($1.04) than do small urbanized areas. For each size category, however, formula funding increased between 1998 and 2000, both in absolute dollar amounts and relative to population and service levels.

5.1 Small Transit Intensive Cities

Small urbanized areas as a group, then, receive a relatively large share of federal transit funding compared to their service levels, but do relatively poorly on a per capita basis. The issue for small transit intensive cities, however, is that they are not like other small cities, as they provide more transit service and carry more passengers than even much larger cities. How well do these cities do relative to other small urbanized areas and to urbanized areas in general in the distribution of federal funding?

In order to examine this issue, it is useful to look at funding from both the Section 5307 program and the Section 5309 Capital Program. The latter program is another significant source of federal transit funding. For example, in FY 2000, funding for Section 5307 programs totaled $2.77 billion, while Section 5309 funding totaled $2.50 billion. While most of these funds are designated for fixed guideway system modernization and expansion, a significant portion6 is available for bus capital needs. Section 5309 Bus program funds are available for use in both urbanized and nonurbanized areas. Could this be an additional source of funding for small transit intensive cities?7

Exhibit 3 compares data for 20 small transit intensive cities to totals for small urbanized areas and for all urbanized areas based on population and density levels, transit service levels, and Federal Formula and Capital funding levels8. Small urbanized areas as a group were also compared to urbanized areas as a whole on the same basis. Section 5309 data were tabulated using program obligations for the period 1995-999.

The 20 small transit intensive cities represented 9 percent of the total population in small urbanized areas. Their share of the population x density factor used in the urbanized area formula is slightly higher, reflecting the greater average density of these cities. The net effect is that these 20 cities received 10.2 percent of Section 5307 funding for small urbanized areas in recent years. 10 Such cities have a much larger share of transit service in small urbanized areas, however, befitting their designation as transit intensive. The 20 cities had some 27 percent of vehicle revenue miles and 39 percent of passenger miles in small urbanized areas in 1996-98. The small transit intensive cities received just under 24 percent of capital program funding in 1995-99. Thus, the 20 cities' share of capital funding is much closer to their share of transit service supply and consumption, though it is still slightly lower.

When compared to all urbanized areas, however, the small transit intensive cities do relatively well in receiving capital program funds. Their 4.2 percent share of capital program funding is well above both their population share (1.5 percent) and vehicle revenue mile and passenger mile shares (2.7 percent and 2.3 percent, respectively). This is due to the relative funding levels of small urbanized areas in general, whose share of capital program funding was close to their population share but well above their service level shares. This naturally raises the next question: what would be the result if formula funding for small urbanized areas were to be allocated in the same way as funding for large urbanized areas?
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5 The service level data used in each fiscal year's formula apportionments are derived from data in the reporting year two years prior. The funding ratios reported in Exhibit 2 are calculated in the same way. Thus, FY 2000 apportionments use 1998 data, FY 1999 uses 1997 data, and so on.

6 In FY 2000, funds for the Section 5309 Bus program totaled $540 million. Section 5307 funding allocated to small urbanized areas and through the bus tiers totaled $1.93 billion.

7 One of the comments submitted to this study, as noted above, was that increased earmarking of the Capital Program has reduced the availability of these funds to systems in small transit intensive cities.

8 The 20 cities examined were those that could be classified as transit intensive by at least 4 of the 8 criteria presented in Exhibit 1.

9 These tabulations used data from the annual Statistical Summaries of FTA's Grant Assistance Programs. Since appropriations under the Section 5309 program are generally less frequent and consistent than are formula program appropriations, a longer time frame was used in looking at capital program funding. Also note that obligations were used, rather than apportionments as in Exhibit 2. This is the only level at which capital program funding can be linked to particular urbanized areas.

10 Funding shares for the formula program, based on decennial census data, do not change year-to-year, nor does the small urbanized area share of the overall program, which is fixed in statute.