Appendix B

Examples of Formula-Based State Transit Funding Programs

The State of Ohio assists local transit operators through the Ohio Public Transportation Grant Program. The program provides assistance to local transit operators to meet the local match requirements of Federal Transit Administration grants under the Section 5307, 5311, and 5309 programs. Funding for the program totaled $38 million in FY2000, of which $25.5 million was allocated on a formula basis, with the remainder allocated for discretionary capital grants.

Formula funds are first distributed by fixed percentages to five categories of transit systems: Large Rail/Bus, Large Bus Only, Intermediate Bus, Small Bus, and Non-urbanized Bus. Within each category, funds are allocated on a formula using 3 factors:

Within the Small Bus Systems category, there is significant diversity between fixed route bus and demand response systems. To account for this, ridership levels and revenue service miles for demand response systems are multiplied by 2.8 and 0.83, respectively. These ratios are based on historic state data on relative costs per rider and per revenue mile between demand response and fixed route bus service.

state of Iowa provides capital and operating assistance to local transit operators through its State Transit Assistance (STA) Program. STA provides assistance through both a formula and a discretionary special projects program. The formula program has separate tiers for regional (rural, multi-county) systems and urban systems (cities over 20,000 in population, which includes both urbanized areas and nonurbanized areas).

Program funds are first divided between regional and urban systems on the basis of revenue miles. Within each group, funds are then allocated according to three formula factors:

The state also uses a formula to distribute the Governor's Apportionment for Section 5310 and Section 5311 funds. The Governor's Apportionment is first divided between regional and urban systems on the basis of the systems' total "Net Public Deficit." Funds are then allocated according to ridership and revenue miles. The factor weights are different for rural and urban systems:

Section 5307 funds for small urbanized areas are allocated on both a formula and discretionary basis. Eighty percent of the funds are allocated based on the federal formula apportionments for each small urbanized area, while the remaining 20 percent are allocated based on peer pool recommendations and on scoring through the state's Public Transportation Management System (PTMS).

The State of New York provides operating assistance to local transit operators through the State Mass Transportation Operating Assistance (STOA) Program. STOA funds are allocated both to "Specified" systems (large systems whose funding is a specific line item in the state budget) and "Formula" systems (other, smaller systems receiving funding on the basis of a formula). The formula program has separate tiers for Downstate (New York City metropolitan region) and Upstate systems. Formula funding is based on a fixed amount per vehicle revenue mile and per passenger, and is adjusted quarterly. For the quarter from July-September 1999, the rates were $0.405 per passenger and $0.69 per vehicle mile. The formula also has components for costs related to the implementation of the Americans with Disabilities Act of 1990 (ADA) (based on passengers and population) and for bus systems that interline passengers with commuter rail operations (50 percent of the lost revenue due to free rail/bus transfers). New York State also provides capital assistance for local transit operators. Capital assistance for non-Metropolitan Transit Authority operators has two components. The first provides 50 percent of the local match for FTA-funded capital projects, while the second provides additional capital assistance to local operators based on a state assessment of transit capital needs.