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55 CHAPTER 6 FUNDING SOURCES Fortunately, there are many sources of funding that may primary goals. For example, funds from FTA are generally be used to support the provision of transportation services used to fund public transit services, while Medicaid funds for transportation-disadvantaged individuals. Federal trans- from the CMS primarily support medical services, but may portation and human services agencies provide a level of also be used to fund transportation services needed to get assistance that has been estimated to be as high as $10 billion Medicaid recipients to those services. annually (10). Many states, in addition to administering fed- CTAA and ESPA in their 2002 compilation of such pro- eral funds for transportation services, make funds available grams found 70 different programs in 15 federal departments to transportation providers from sources such as sales taxes, and independent agencies that could be used to fund commu- motor fuels or vehicle taxes, or lottery revenues. At the local nity transportation, defined as "transportation services that level, funding sources for transportation services for the trans- address the transit needs of an entire community, including the portation disadvantaged may include revenues from general needs of both the general public and special populations" (11). or special taxes or grants from foundations or other private The following summary relies heavily on the CTAA/ESPA organizations. compilation, supplemented where appropriate from other The number and diversity of funding programs, however, sources such as information from funding agency websites may make the identification of suitable funding sources dif- and previous research reports. ficult. Moreover, the regulations attached to some programs The CTAA/ESPA compilation separated federal funding impose restrictions on eligible recipients, riders, or trip pur- programs into three categories: poses; prescribe planning processes; or set requirements for local matching funds. Such constraints may limit their use- 1. A program that routinely addresses or supports com- fulness to some transportation providers. munity transportation services To aid organizations that may be considering coordination 2. A program that has been used, in at least a few instances, or are looking for sources of funding for an ongoing effort, to support community transportation services this chapter has three sections: 3. A program that could support such services but does not have a documented history of such support Types of Funding: Describes the types of funding that are typically used to support the provision of trans- With several exceptions, programs in the first category portation services for the transportation disadvantaged, account for the great preponderance of the funding most likely from federal, state, regional/local, and private sources. to be used for coordinated transportation services. These 20 Funding methods, eligibility, and requirements are also programs are summarized in Table 4. discussed in this section as appropriate. Identifying Funding Sources: Provides guidance for iden- tifying funding sources to fit your organization's partic- Agency Programs ular needs. Practitioners' Advice and Other Resources: Lists other Although all the funding programs provide the potential resources for information about relevant funding for funding public transportation services, they may differ in programs. a number of important respects, as noted in Table 2 and the following paragraphs. TYPES OF FUNDING Funding Methods. The CTAA compilation identified six Federal Funding Programs basic funding methods or styles: There is a wide array of federal funding available for public 1. Formula or Block Grants. Funds are allocated on a for- transportation services, either in their own right or indirectly mula or block grant basis to states or other public agen- as an important ingredient of a nontransportation program's cies. Such funding can be categorical or block in nature.

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56 TABLE 4 Major federal funding sources for transportation services Program Name Funding Total FY 2003 Eligible Usesc Eligible Methoda Fundingb Recipientsd (millions) Department of Education Vocational Rehabilitation Grants Formula/block grants $2,481.0 O PB Department of Health and Human Services Supportive Services and Senior Formula/block grants $357.0 C/O NP/PB Centers (Title III-B) Alaskan Native/Native Hawaiian Subcontracts $25.7 C/O TR Elders (Title VI) Head Start Subcontracts $6,537.9 C/O/T NP/PB/TR TANF Formula/block grants $16,489.0 O PB Medicaid Formula/block grants $144,842.9 O FP/NP/PB/TR Department of Labor Senior Community Service Solicited grants $445.1 A/O NP/PB Employment Program (Title V) Workforce Investment Act Programs Formula/block grants $5,630.3 O/T PB/TR Department of Transportation Federal-Aid Highway Program Formula/block grants $31,178.0 A/C PB Federal Lands Highway Program Other $706.0 A/C/T PB/TR ITS Program Solicited grants $225.0 A/C/T FP/NP/PB/TR Transportation and Community and Designated/ $25.0 A/C PB System Preservation Program earmarked JARC Program Designated/ $125.0 C/O NP/PB/TR earmarked National Transit Planning and Other $49.1 T FP/NP/PB/TR Research Nonurbanized Area Formula Transit Formula/block grants $223.4 A/C/O NP/PB/TR Grants (Section 5311) Over-the-Road Bus Accessibility Solicited grants $7.0 C/O FP Program Statewide Transit Planning and Subcontracts $11.6 P/T PB Research Transit Capital Assistance for Formula/block grants $84.6 C NP/PB Elderly/Disabled (Section 5310) Transit Major Capital Grant Program Designated/ $2,841.0 C PB (Section 5309) earmarked Urbanized Area Formula Transit Formula/block grants $3,199.9 C PB Grants (Section 5307) Source: Building Mobility Partnerships: Opportunities for Federal Funding. Community Transportation Association of America. March 2002. aAn explanation of the funding methods listed is given in the text bFunding shown is for the total program, not just for transportation. For many programs, transportation is a relatively minor component. cEligible Uses: C = capital; O = operating; A = administrative; T = technical; P = planning. dEligible Recipients: PB = public body; NP = nonprofit; FP = for-profit; TR = tribal entity.

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57 Categorical grants have a narrow range of eligible public body such as a state, municipality, or transit authority. uses that permit funds to be used only for specific, Sometimes grants can be made to nonprofit agencies or com- narrowly defined purposes, e.g., for transportation oper- munity organizations. In addition, the initial recipient can ating expenses. Block grants have a broader range of often provide funds for transportation purposes through con- eligible uses that address a general rather than a specific tracts with nonprofit or for-profit service providers. problem area, e.g., the TANF program that allows funds In general, the programs provide funds to the suppliers of to be used for many different kinds of expenses as long the transportation service. In some instances, however, fund- as they are in support of the overall goals of the pro- ing is provided directly to the users of the services in the form gram. Organizations that wish to participate in this type of vouchers, transit passes, and so forth that can be used to of funding generally have to contact the state or public pay for rides on public transportation or by taxi. agency that administers these funds. An example of this type of grant is the nonurbanized area formula transit grants (Section 5311) that are allocated to states for Planning Requirements support of rural public transportation services. 2. Solicited Grants. These funds are awarded on a dis- Some funding programs require only the planning that cretionary basis, often through a competitive solicita- goes into preparing a good grant application. Other programs tion process. The federal agency usually announces the require participation in an elaborate planning process. For availability of such funds by posting a Solicitation for example, as discussed in Chapter 5, most projects funded by Grant Application (SGA). Examples are some of the the FTA must be included in either a metropolitan area's 3- to Workforce Investment Act grant funds administered 5-year TIP or a STIP. These plans are produced by a feder- by the Employment and Training Administration of ally required planning process coordinated by either the MPO the U.S. DOL. or the state, a process that involves local governments, trans- 3. Designated/Earmarked. These funds are usually ear- portation authorities and providers, and other important stake- marked by members of Congress as part of the legisla- holders including the public. tive process. Even though earmarked by Congress, it is often necessary to apply to the appropriate federal agency through a defined grant application process. To Matching Requirements obtain such funding, organizations should contact their Congressional delegation. Examples are the Section Most federal funding programs require local matching 5309 major capital grants for transit administered by funds. However, the amount of the required match can vary the FTA of the U.S. DOT. greatly. Funding provided by the FTA typically requires at 4. Subcontracts. Funds can only be obtained through least a 20% local match. Sometimes all or part of the local subcontracts, interagency agreements, or partnerships match can be in the form of in-kind services rather than in with existing grantees. Funds provided for transporta- cash. Some programs do not require matching funds. tion under the Head Start program of the DHHS are an example. 5. Other. A simple categorization of this program's fund- Federal Efforts to Overcome Funding-Related ing is not possible--additional information may be Barriers to Coordination obtained from the administering agency. An example is funds awarded under the National Transit Research and The wide variety of funding types, eligible uses and recip- Planning Program of the FTA. ients, and matching and planning requirements among federal 6. Loans. Funding is through federally sponsored loans. funding programs creates a challenge--it can be extremely Loans provided by the Small Business Administration difficult to develop a coordinated transportation system involv- are an example. ing several agencies, multiple funding sources with varying program requirements, and different kinds of riders. How- Eligible Uses. The various programs have a variety of eligi- ever, many service providers are finding ways to surmount ble purposes for which the funds can be used. For example, the barriers to such coordination, and many federal and state some programs fund only capital expenses such as the pur- funding agencies are making strong efforts to eliminate them. chase of buses or facilities. Other programs may fund only The following are some recent actions taken at the federal operating expenses such as driver salaries and fuel costs, or level in this effort. expenses such as administration, planning, or technical assis- tance. Some programs allow a great deal of flexibility as long Joint Efforts in Welfare Reform. An excellent example of as the use is in furtherance of the program's central goals. addressing barriers at the federal level is the effort by the U.S. DHHS, DOL, and DOT to make it possible for states, Eligible Recipients. The funding programs allow a variety tribes, and communities to respond to the transportation chal- of types of recipients. Most often, the recipient must be a lenges of welfare reform. This effort involves three specific

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58 funding sources that can be used to address the transportation To further its goals of eliminating duplication and overlap needs of individuals entering the workforce: (1) the TANF among federal transportation programs and services, facili- block grant program of DHHS; (2) the Welfare-to-Work tating use of the most cost-effective services available within (WtW) program of DOL; and, (3) the JARC grant program existing resources, and developing policies and procedures to administered by the U.S. DOT. The agencies issued joint enhance transportation services, the Council will identify laws, guidance on how these three programs can be used in com- regulations, and procedures that facilitate coordination as well bination to provide transportation services. as those that hinder it; recommend changes to streamline and States may use TANF block grants to finance transporta- coordinate federal requirements; and assess agency and pro- tion and other support services that will make it easier for gram efforts to reduce duplication and provide the most appro- welfare recipients to find and maintain employment or help priate, cost-effective transportation services. to achieve other goals of the welfare reform effort. In its JARC Grant Program, the FTA makes it clear that service and funding coordination is required. The use of a coordi- New or Proposed Federal Funding Opportunities nated human services/transportation planning process and financial commitments from both human services providers From time to time, new funding programs are established and transportation providers are factors in FTA's evaluation that complement the long-standing sources of funding for of grant applications for these funds. transportation services for the transportation disadvantaged. Other programs and legislative decisions, which are not sup- Formal Coordination Policies between the FTA and the ported by funding, may also touch upon coordination issues Administration on Aging. In January 2003, the FTA and or indicate areas of future federal priority. AoA executed an MOU designed to increase affordable mobil- In addition, legislative reauthorization of the transportation ity for older Americans by encouraging coordination between funding programs administered by agencies of the U.S. DOT, the transportation services supported by each agency's fund- which typically occurs at 5-year intervals for most major ing programs. programs, can lead to changes in funding levels, priorities, The objectives which the two agencies have agreed to and administrative requirements. work toward include the following: A few recent funding and policy developments, as well as reauthorization proposals, are discussed below. Promoting awareness of the transportation needs of older adults. Advanced Technologies. A promising new federal program Gathering information about existing and innovative in regard to the coordination of transit services concerns transportation services and coordination models. operational tests of advanced technologies in rural transit ser- Providing technical assistance and training to state and vice. The FTA, DHHS, DOL, and U.S. Department of Agri- local agencies to encourage the implementation of culture are jointly funding grants to local transit systems in promising coordination strategies, including the use of rural areas to implement advanced technologies and test their ITS technologies. performance and usefulness in transit service. Conducting outreach to other national, state, and local Grants will fund use of advanced technologies to demon- entities to identify issues of concern, possible solutions, strate and evaluate innovative approaches to integrating and future activities. Advanced Public Transportation System (APTS) technologies Coordinating funding for transportation and aging-related (also referred to as ITS technologies for transit, or Transit ITS) organizations so as to encourage coordination of trans- and available information technology systems to better coor- portation services and development of innovative ways dinate subsidized transportation services among multiple tran- of addressing mobility needs. sit operators in rural areas. Eligible recipients include com- munity groups and public and private transportation providers Executive Order on Human Services Transportation currently developing, operating, coordinating, or brokering Coordination. In February 2004, President Bush issued an rural transit services. Community Access Program grantees Executive Order on Human Services Transportation Coordi- may also apply, as may consortia or partnerships of eligible nation, reasserting the federal government's commitment to parties. improved mobility for transportation-disadvantaged citizens The FTA is serving as the lead agency in the administra- and more efficient use of transportation resources. The Exec- tion of this program. utive Order establishes a new Interagency Transportation Coordinating Council on Access and Mobility, composed of CTAA's Community Transportation Development Fund. representatives of the U.S. DOT, DHHS, and DOL; Depart- CTAA offers financial assistance through a loan program, the ments of Education, Veterans Affairs, Agriculture, Housing Community Transportation Development Fund, to provide and Urban Development, and the Interior; and the Attorney financial and technical assistance to various public trans- General and Social Security Commissioner. portation service providers, suppliers, and manufacturers. This

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59 fund is flexible and available to develop new products for than Medicaid-funded trips) from general revenue and the the special needs of potential borrowers in the public and extension of public transportation service hours. community transportation field. Negotiable loan financing is offered through the following products: Ticket to Work. Another federal program with potential implications for coordination is Ticket to Work. This pro- General fund financing gram is the centerpiece of the Ticket to Work Incentives The Transit Small Business Fund Improvement Act of 1999. The program is under the author- Micro-loans for transit software and hardware ity of the Social Security Administration (SSA). The SSA Transit operating loans contracts with national, state, and local service providers to Transportation and Railway Facilities Fund become Employment Networks (ENs). SSA beneficiaries Insurance and self-insurance funds with disabilities are eligible to receive tickets that can be used to obtain rehabilitation and employment services or a New Freedom Initiative. A new federal program that should job from any EN of their choosing. Any qualified state or be noted is the New Freedom Initiative, first announced by local agency or private entity that assumes responsibility for President Bush in February 2001. This program, included in the coordination and delivery of training/employment ser- the administration's proposal for legislation to reauthorize vices is eligible to be an EN. ENs are then reimbursed by federal transportation funding programs, is part of a nation- SSA for achieving predetermined results with beneficiary wide effort to remove barriers to community living for people ticket holders. with disabilities. The focus of the Ticket to Work program is primarily job training and the development of career paths and goals. The The U.S. DOT requested authorization in the amount of program does list transportation assistance, however, as one $145 million in FY 2004 for the transportation component of of the possible responsibilities that an EN can assume. This the New Freedom Initiative. Funds would be distributed to may provide an opportunity to target the market for coordi- states on a formula basis for the development and implemen- nated services, particularly as the Ticket to Work program tation of transportation services designed to increase access to expands in scope and funding. At this point the program has jobs and related services for people with disabilities. only been implemented in 33 states, with the remainder to be FTA has developed an internal working group to develop included in 2003. these programs. The Office of the Secretary, the FHWA, and others participate. Consultation with advocates for the trans- portation disadvantaged and other federal agencies has taken place to discuss program development and implementation. Reauthorization of Federal Funding Programs Reauthorization is the term used for the renewal of fed- Olmstead Decision. The U.S. Supreme Court ruled in 1999 eral laws that permit funds to be spent for particular pur- (E.W. & L.C. v. Olmstead) that providing services for people poses or programs. Reauthorization of the Older Americans with disabilities in an institutional setting while failing to Act occurred in 2000, after a delay of several years beyond provide those same services in a community setting is a vio- the expiration of the previous version. Reauthorization of the lation of the Americans with Disabilities Act. Most states Personal Responsibility and Work Opportunity Act, the leg- have formed task forces and commissions to assess what needs islation passed in 1996 that reformed the federal welfare sys- to be done to comply with Olmstead and many have already tem and created the TANF block grant program, is currently developed Olmstead plans. Although the Court's decision has underway. The legislation that contains authorization for all much more direct implications for the provision of human ser- U.S. DOT programs, TEA-21, expired on September 30, 2003, vices agencies' core mission services, some states have but has been extended several times by Congress. At the time looked at transportation as a means to comply with the ruling. this report was prepared, legislation reauthorizing the trans- In Missouri, for example, the state's Olmstead plan rec- portation programs was about to be taken under considera- ommends additional subsidies for the statewide paratransit tion by a Congressional conference committee. system, OATS, so that the system can serve all people with The changes that can be brought about by reauthorization disabilities regardless of age. This recommendation is one of can be significant. Authorized levels of funding may increase several developed by the state to address the Olmstead goal or decrease, existing programs may be consolidated, new of "ensuring the availability of community-integrated ser- programs may be created to address current priorities, and vices." Additional information on Missouri's progress is administrative requirements may be streamlined or revised. available on the state's Department of Labor and Industrial It is important for transportation providers and human ser- Relations website at http://www.dolir.mo.gov/. Other states vices agencies to keep up to date on a number of items: the have also identified increasing accessible transportation reauthorization schedules of relevant pieces of legislation, options as a component of their Olmstead plans, with recom- issues that are being debated, reauthorization proposals and mendations including the provision of transportation (other analysis, and opportunities to comment on proposed legislative

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60 changes. The easiest way to stay informed is to identify key Medicaid program, including such components as eligibility pieces of legislation that govern the funding programs that standards; the type, amount, duration and scope of services support your transportation services and regularly check the to be provided; rates of payment for services; and adminis- websites of the federal agencies that administer those pro- trative procedures. grams, as well as those of transit and human services indus- Funds are allocated to states on a formula basis and are dis- try associations and other stakeholders. tributed to a designated state Medicaid agency. Medicaid agencies are usually located in state departments of human services; health services; health care planning, administra- State-Level Funding Programs tion or financing; public health services; medical services; social services, or public welfare--they may have Medicaid As mentioned earlier, many of the main federal funding or Medical Assistance in their titles. programs that support transportation services distribute funds The federal share of the cost of medical services (including to states, often by formula, to pay for eligible services and transportation necessary to ensure access to those services) programs, oversee compliance with federal requirements, and may range from 50 to 83%. The nonfederal share of Medic- make grants to eligible local recipients. DOTs and depart- aid expenses is typically provided by state or county funds. ments of human services are the primary sources of funding In addition to supporting nonemergency medical trans- for transportation services for transportation-disadvantaged portation, Medicaid is a significant source of funding for individuals. organizations that operate day programs and other types of This section first provides a brief description of the major services for individuals with mental retardation or develop- federal programs that, as administered by the states, supply mental disabilities. Such organizations often provide trans- much of the funding that is used to support transportation ser- portation so that clients are able to attend programs. Service vices for the transportation disadvantaged. Selected exam- may be provided with agency-owned vehicles driven by pro- ples of innovative state programs that encourage coordinated gram staff or contracted to a local public, not-for-profit, or transportation services for the transportation disadvantaged for-profit transportation provider. Transportation is usually are then presented. A more comprehensive listing of selected one element of the services that are covered by the Medicaid state funding programs is provided in Appendix C on the funding the organization receives for a particular client (typ- accompanying CD-ROM. ically a set rate per day that the client attends the program). Budgets and funding for transportation services are not typ- ically separate from those of the other services the organiza- Federal Programs Administered tion operates. by State and Local Agencies Examples of approaches states have taken to the provision of Medicaid nonemergency transportation are provided in The primary sources of federal funding typically used to Figure 5. support transportation services for the transportation disad- vantaged include Medicaid, various transportation programs FTA's Section 5310 Program. This program, which is administered by the FTA, the TANF program, and Title III administered by state DOTs, authorizes capital grants to pri- of the Older Americans Act. An overview of each of these vate nonprofit organizations to assist in providing trans- funding programs is provided below. portation for the elderly or people with disabilities. Section It is important to note that states may administer the same 5310 funding provides up to 80% of all costs for equipment, federal program in very different ways. While the federal with a 20% match from nonfederal sources. Vehicles can be government has established broad guidelines for these pro- obtained by a wide range of agencies serving elderly or dis- grams that state government agencies must follow, it grants abled clients. the state agencies the flexibility to develop the specific pro- gram parameters that will best meet local needs. FTA's Section 5311 Program. The Non-Urbanized Area Formula Program, or Section 5311, makes funds available to Medicaid. Title XIX of the Social Security Act of 1965 estab- rural and small urban areas with populations under 50,000. lished the Medicaid program as a joint effort on the part of the The apportionments are made directly to individual states and federal and state governments to ensure health care services administered by the state's DOT. These funds may be for individuals and families who meet certain income and applied for either capital or operating purposes, providing resource requirements, or who belong to other needy groups. federal funding for up to 80% of capital projects and 50% of A critical component of achieving this goal is the provision operating projects. of transportation services that allow Medicaid recipients access to health care services. Transportation and the TANF Program. Government CMS, part of the federal DHHS, oversees the Medicaid initiatives to reform welfare policies have led to a new program. CMS issues general program guidelines and require- emphasis on transitioning welfare recipients from federal ments, but each state is responsible for the design of its own assistance to viable self-employment. Recognizing that

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61 State Medicaid agencies provide transportation services in a number of different ways. Some continue to purchase trips directly from qualified, authorized transportation providers (that may be for-profit, nonprofit, or public entities) on a fee-for-service basis. Other approaches include managed care models, brokerages, and coordination with public transit and human services agencies. Over the past 5 or 10 years, more states have implemented managed care approaches to the delivery of health care services. Some of those states, including Arizona and New Mexico, hold managed care organizations responsible for obtaining transportation services and reimburse them on a fee-for-service or capitated basis. In a Medicaid program using a capitation rate, managed care organizations are reimbursed a set amount that is based on a rate per Medicaid recipient per month; the amount is agreed upon and paid in advance and does not change regardless of the number of recipients that actually receive transportation service. The managed care organizations, in turn, typically contract with transportation providers and pay for service either on a fee-for-service or capitated basis. Under a managed care system, states also have the option of excluding transportation from the services that a managed care organization is required to provide or including it only for certain Medicaid recipients or geographic areas. According to a survey conducted in 2003 for the National Consortium on the Coordination of Human Services Transportation by the American Public Human Services Association, 21 states use brokers to manage their Medicaid transportation services. Some brokers are professional brokerage management firms (as in Connecticut and Georgia). State Medicaid agencies may also contract with local or regional public transportation providers to perform brokerage services; Massachusetts, Oklahoma, Oregon, and Rhode Island use this approach. Human services agencies and other nonprofit organizations may also serve as brokers, as they do in Vermont and Washington. Brokers may be responsible for transportation of Medicaid recipients in a designated region or throughout the state (as is the case in Oklahoma, Rhode Island, and Utah, for example). Brokers typically contract with a number of transportation providers and may also utilize the fixed-route services provided by the local transit agency or operate their own vehicles. For each Medicaid trip, the broker identifies the most appropriate and cost-effective provider, bills the Medicaid agency, and reimburses the provider. Use of a broker often results in improved service quality, better record- keeping, and lower costs (particularly if the broker performs centralized reservations and scheduling). For more information about brokerages, see Chapter 3. State Medicaid agencies also coordinate with public transportation providers by subsidizing use of fixed-route bus and rail services for Medicaid transportation. The most widely known example of a Medicaid bus pass program is in operation in Miami- Dade County, Florida. Administered by the Miami-Dade Transit Agency, the program has resulted in significant annual savings for Florida's Medicaid program. Figure 5. State approaches to Medicaid transportation purchases. transportation barriers are among the most significant to Contract with a private organization or service to refur- preventing a successful transition to employment, the bish previously owned cars and provide the cars to TANF TANF program allows significant federal funds to con- recipients or provide financing support that enables recip- tribute to removing transportation barriers. Specifically, the ients to purchase a car. TANF program has designated the following as appropriate Subsidize costs of transporting needy children to child uses of these funds for transportation, according to DHHS's care. website (12): However, certain restrictions do apply to the use of TANF Provide transportation allowances to cover incidental funds. Funds must be used only for programs and activities expenses and participation-related expenses for unem- that further the goals of the TANF program, which include ployed families. the provision of transportation service for use by eligible Provide transit passes or tokens. TANF recipients for work and work-related activities. Arrange with another agency to use its buses or vans or TANF funds may not be used to subsidize the use of such share in the costs of purchasing transportation services. transportation services by non-TANF individuals. If non- Invest in reverse-commute projects and other local ini- TANF individuals use a service provided with TANF funds, tiatives to improve the existing transportation network or if the TANF agency participates with another agency in so that needy parents can access jobs. the provision of transportation services, only the expenses Reimburse clients for mileage, auto repairs, or auto insur- associated with eligible TANF recipients' use of those ser- ance to facilitate finding employment and job retention. vices may be allocated to the TANF program.

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62 TANF funds also may not replace other federal funds that Amendments to the Older Americans Act--Coordinated normally would be used to provide those services. If funds Transportation Services. The 2000 amendments to the OAA from another federal agency, such as FTA, are currently include several provisions to promote coordination of trans- used to provide transportation services that will be used by portation services. Language in the section dealing with Title TANF recipients, TANF funds may not be substituted for III activities encourages local AAAs to coordinate with local those other funds. transportation providers, public transportation agencies, and local government entities. A new provision explicitly explains Funding Programs That Support Transportation for that Title III services may be provided to nonelderly individ- Older Adults. The AoA, another DHHS agency, is respon- uals if other sources of funding, such as Medicaid, are avail- sible for the administration of a number of programs autho- able to support those services. Title IV, which covers train- rized by the Older Americans Act. These programs support ing, research, and discretionary projects and programs, now a variety of services for seniors, especially those who are frail includes authorization for grants to public or private non- or vulnerable, including home-delivered and congregate profit organizations to design and implement health care ser- meals, preventive health care, in-home services, senior cen- vice projects for seniors in rural areas, which may encompass ters, transportation, ombudsman services, insurance and ben- a number of related services, including transportation. Grants efits counseling, and community service employment. AoA are also authorized for nonprofit organizations to provide also funds research, training, and demonstration projects. technical assistance to transportation providers and aging Title III of the Older Americans Act of 1965, which autho- organizations to "encourage and facilitate coordination of rizes state and community programs, supports programs and federal, state, and local transportation services and resources services that are intended to aid active seniors and those who for older individuals." Several specific examples of technical are at risk of losing their independence. assistance are included in the amendments. Title III funds are awarded to each state's designated Agency on Aging on a formula basis, according to the state's State Funding Sources senior population (people aged 60 years and older). Each Agency on Aging in turn distributes funds to the state's desig- State transportation funds derive primarily from two fun- nated AAAs for the development and implementation of pro- damental tax sources: sales taxes and fuel/vehicle taxes. grams and services to meet the needs of seniors in each local Some states have also incorporated lottery or casino rev- area or region. Funds are allocated among AAAs according to enues as a source for transportation funding. Some exam- intrastate funding formulas that are subject to approval at ples of these state funding sources are summarized in Table 5 the federal level. Factors such as geographic distribution of and described below. seniors and degree of economic and social need are taken into consideration in the development of these formulas. Individuals aged 60 years and older are eligible for ser- Sales Taxes vices provided with Title III funds, with priority given to California Local Transportation Fund (LTF): LTF rev- individuals with the greatest economic or social needs; low- enues are derived from 1/4 cent of the 7.25% retail income minority seniors and older individuals living in rural statewide sales tax and are returned to each county in areas are targeted in particular. proportion to the amount of tax collected in that county. Fees may not be charged for services, but seniors must be Indiana Public Mass Transportation Fund: Receives given the opportunity to make voluntary contributions toward 0.76% of the state's general sales and use tax revenue. the cost of the services they receive. The prohibition against Michigan Comprehensive Transportation Fund (portion): fees was retained in the 2000 amendments to the Older Amer- Michigan funds public transportation services through icans Act. the Comprehensive Transportation Fund, which is admin- States must provide funds to match the federal dollars in istered by the DOT. The fund is supported from a por- the following proportions: 25% for state administrative activ- tion of state motor fuel taxes, vehicle registration fees, ities, 25% for administration of the state plan, and 15% for and state sales taxes on automobiles and other auto- supportive services and multipurpose senior centers. related products. Supportive Services (Part B) is one of the types of programs and services that are funded under different parts of Title III. Title III-B covers supportive services in several categories, Motor Fuels/Motor Vehicle Taxes including access services, one of which is transportation. Transportation is often delivered by nonprofit or for-profit ser- California State Transit Assistance Fund: Established in vice providers. This is typical of other types of services for 1980 through the Transportation Development Act, the seniors that are developed and implemented by state and area Fund derives its income from the statewide sales tax on agencies on aging and financed with Title III-B funds. gasoline and diesel fuel. Assistance is allocated by for-

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63 TABLE 5 Selected state funding sources Sales Taxes Motor Fuels/Motor State Lottery and For Programs to Vehicle Taxes Casino Revenues Increase Coordination California--Local Arizona--portion of Arizona--Local Florida--Commission Transportation Fund: vehicle license tax, as Transportation for the Transportation 1 /4 cent from the 7.25% required to provide an Assistance Fund II: up Disadvantaged: statewide retail sales tax annual minimum of to $41 million from supported by $1.50 from $20.5 million in the state lottery fund each motor vehicle Local Transportation revenues registration Assistance Fund Indiana--Public Mass California--State Pennsylvania-- North Carolina-- Transportation Fund: Transit Assistance Lottery: all lottery Human Service 0.76% of state general Fund: portion of locally proceeds targeted to Transportation sales and use tax revenue collected statewide benefit elderly citizens; Management Program: sales tax on gasoline Shared-Ride/Free state funds ($2.4 million and diesel fuel Transit Programs in FY 2002) provided on (amounts vary provide free/reduced 75% state/25% local regionally) fares ($114.4 million in basis FY 2000-01) Michigan-- Florida-- New Jersey--Casino Ohio--Coordination Comprehensive Transportation Revenue Program: Program: state General Transportation Fund: Disadvantaged Trust portion of casino Revenue Funds ($1.3 portion of state sales Fund: $1.50 from each revenues ($24.9 million million in SFY 2003) taxes on automobiles and vehicle registration in FY 2003) provide up to 75% of related products--FY total direct operating 2004, 2005=6%; FY expenses to a maximum 2003, 2006 and of $75,000 for first 3 after=6.98% years, $50,000 in subsequent years Iowa--Highway Trust Fund: 1/20 of the first 4 cents, or 0.002 cents per dollar collected, of sales tax on motor vehicles and accessory equipment Michigan-- Comprehensive Transportation Fund (portion): portion of state motor fuel taxes-- FY 2004, 2005=6%; FY 2003, 2006 and after=6.98% South Carolina--State Mass Transit Funds: 0.0025 cents per gallon gasoline tax mula to each Transportation Planning Agency, the five in 1994, which allows donating an additional $1 (or county transportation commissions, and the San Diego more, in $1 increments) to the fund when renewing a car, Metropolitan Transit Development Board. Funds are truck or boat registration. Operating revenue ($271.0 mil- allocated 50% by population and 50% by operator rev- lion in 2001) included funding from agencies: enues from the prior fiscal year. Funds are allocated to Agency for Health Care Administration (Medic- operators within each county in proportion to each oper- aid): 30% ator's share of total revenues within the state. Local entities (government and nongovernment): 38% Florida Transportation Disadvantaged Trust Fund: The Commission for the Department of Children and Fam- fund receives $1.50 from every vehicle registration and ilies: 11% includes the Put Your Dollar to Work program enacted Transportation Disadvantaged Trust Fund: 9%

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64 Florida DOT: 5% The Lottery Programs for Older Pennsylvanians and Department of Elder Affairs: 3% Shared-Ride/Free Transit Program are available to senior Department of Labor and Employment Security: <1% citizens 65 years of age and older and received a total of Other federal/state programs: 4% $120.8 million in Lottery funds in fiscal year 2002 Iowa Highway Trust Fund: Iowa devotes 1/20 of the first 2003. The Shared-Ride Program offers door-to-door 4 cents (or 0.002 cents per dollar collected) of the sales shared-ride, demand-responsive services, for which rid- tax collected on sales of motor vehicles and accessory ers pay only 15% of the shared-ride fare. State Lottery equipment to support public transportation. In addition, proceeds are used to reimburse the participating ser- Iowa Code allows cities to levy a dedicated property tax vice provider up to 85% of the fare. In 20012002, the for transit of $0.95 per $1,000 assessed valuation. Other 59 Shared-Ride operators served all 67 counties in the local tax funding comes from General Fund levies and, state, provided approximately 6 million rides to seniors, sometimes, from trust and agency levies. and received $62 million in Lottery funds. The Free Michigan Comprehensive Transportation Fund (portion): Transit Program provides free transportation on local As described above, a portion of this fund derives from fixed-route bus, trolley, subway, elevated, and commuter motor vehicle taxes other than sales, such as registration rail services during off-peak hours weekdays and all day and motor fuel taxes. on weekends/holidays. Fifty-five programs provide ser- South Carolina State Mass Transit Funds: The state DOT vice in 50 counties. In fiscal year 2002-2003, 39.6 million receives the remainder of allocated highway and motor free rides were provided to seniors through this program. vehicle usage tax revenues to support transportation New Jersey Casino Revenue Program: The Senior Cit- activities such as construction and mass transit. izen and Disabled Resident Transportation Assistance Act, passed in 1984, enables NJ TRANSIT's Office of Special Services to apply a designated portion of the State Lottery and Casino Revenues state's casino revenues to the provision of transporta- tion services for seniors and people with disabilities. Of Arizona and Pennsylvania are two states that use state lot- the funds that are dedicated to transportation, a small tery revenues to support transit or transportation services for percentage is retained by NJ TRANSIT for upgrading the transportation disadvantaged. Similarly, New Jersey the accessibility of fixed-route systems and administra- makes casino revenues available for the provision of service tion of the program. However, most of the funds are to seniors and people with disabilities. distributed to the coordinated paratransit systems oper- ating in each county. Funds may be used for capital, oper- Arizona Local Transportation Assistance Fund II: Rev- ating, or administrative purposes. Transportation services enues from the Vehicle License Tax and excess Power- may include feeder service that connects users to rail or ball (lottery) monies go to this fund, which received an fixed-route bus services, or traditional local paratran- estimated $15.4 million for FY2001. A local match of sit services. at least 100% for cities and towns with a population greater than 50,000, and a match of at least 25% for all other cities and towns is required. Eligible uses are for State Programs to Increase Coordination transit only, except for communities receiving less than of Transportation Services $2,500, which may use funds for any local transporta- tion purpose. While many states encourage coordinated transportation Pennsylvania Lottery: Proceeds were initially targeted efforts, some states provide financial incentives for coordi- to provide property tax relief for the elderly. Since its nation initiatives. The following overview highlights several introduction in 1971 by a legislative act, Title 91, pro- examples. gram benefits funded by the Pennsylvania Lottery have expanded to include rent rebates, administered by the Florida's Commission for the Transportation Disadvan- Pennsylvania Department of Revenue, and free and taged (CTD) was created in 1989 when the Florida State reduced-fare transit for older Pennsylvanians and Legislature passed Chapter 427. The commission, whose reduced vehicle registration fees, programs adminis- members represent a variety of public agencies, citizens tered by the Pennsylvania DOT. The Pennsylvania and consumers, and transportation professionals, over- Department of Aging administers a co-pay prescription sees the coordination and delivery of transportation ser- drug program, and the Pharmaceutical Assistance Con- vices to transportation-disadvantaged individuals, as tract for the Elderly, and allocates funding for services well as local government, federal, and state funding for provided by AAAs, as well. The Pennsylvania Lottery such services. Transportation-disadvantaged individu- is the only state lottery that exclusively targets its pro- als include older adults, people with disabilities, low- ceeds to benefit older citizens. income individuals, and children at risk.

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65 The commission utilizes CTCs throughout the state to As of 2001, voters in 23 counties and 43 municipalities in implement its policies and procedures at the local level. Michigan that were served by public transit systems had CTCs can be public, nonprofit, or for-profit entities and approved local millages to support those systems (13). In are selected through public competitive bidding. They Massachusetts, RTAs rely on local property tax revenues to serve as transportation brokers for a designated service fund at least 25% of expenses remaining after federal grants, area and contract with transportation operators for the farebox receipts, and other revenues have been applied to the provision of service to transportation-disadvantaged annual operating deficit. individuals in that area. State and local agencies are Another approach to financing transportation services at required to participate in the coordinated system if they the regional or local level is to coordinate a variety of fund- receive local, state, or federal funds for the transporta- ing sources. While each source may be directed at serving a tion of transportation-disadvantaged people. These agen- specific type of trip or client group, combining the individual cies contract with each CTC. funding streams can form the financial basis for a cohesive LCBs identify local service needs and provide infor- transportation system. mation, advice, and direction to the CTCs on the coor- The LYNX system in Orlando, Florida, is one such sys- dination of services to be provided to the transportation tem. It serves the three-county Orlando urban area and has disadvantaged. Each county has an LCB, with member- been designated by the state as the CTC for that area. As ship that is similar to that of the CTD. CTC, it provides paratransit service for the Medicaid, Located within the Florida DOT, the CTD is sup- Transportation-Disadvantaged, and ADA programs. It does ported by the Florida Transportation Disadvantaged so by contracting with a regional transportation broker. It Trust Fund, which was described earlier. Trust fund pro- receives funding from the state from the Transportation Dis- ceeds are also used to subsidize transportation services advantaged Fund and from local human services agencies provided to individuals whose service is not covered by that contract for service from the broker. An unusual source another agency of funding for this service is the Transportation Disadvan- North Carolina's Human Service Transportation Man- taged Voluntary Trust Fund. Each time that a person in agement Program provides administrative assistance to Florida registers or renews a vehicle license, he or she may community transportation systems that provide only choose to check a box that contributes $1 to this fund. Money human services transportation or are located in one of collected in each county provides funding for transportation the state's urban areas. Funding ($2.4 million in FY services for the transportation disadvantaged in that area. 2004) is provided on a 75% state-25% local match ratio. The RIDES MTD in rural southern Illinois evolved from a Ohio's Coordination Program enhances and expands nonprofit organization to a state-funded agency. This system transportation through coordination in counties with no began as a small nonprofit organization (Golden Circle Senior public transportation system. Projects must demonstrate Citizens) that provided various transportation services for some level of interagency coordination in their local seniors in two counties. A succession of federal grant funds area to be eligible for funding and must designate a lead starting in the 1970s allowed it to gradually expand its ser- agency and start the project within 90 days of contract vices and open them to the general public. In 1990, the RIDES award. Applicants may apply for up to 75% of their total MTD was created under Illinois law and it took over the trans- direct operating expenses, to a maximum of $75,000 for portation operations of the nonprofit agency. The main pur- a 1-year period. A 25% cash match is required, and a pose of this move was to make the organization eligible for project may not receive funding at the $75,000 level for state funding that could only go to MTDs, thus providing a more than 3 years. Continuation grants are limited to more stable funding source than contracts with human services $50,000 per year, and there is no limit to the number of agencies. RIDES now serves nine counties and 70 to 80 human years a project may receive a continuation grant. Fund- services agencies. ing in the amount of $1.3 million was provided from State General Revenue Funds in Fiscal Year 2003. Human Services Contracting Regional and Local A common source of local or regional funds for transporta- Funding Strategies tion services for the transportation disadvantaged is through contracts with human services agencies. Often, human ser- In addition to funds that are available from federal and vices agencies provide transportation services directly because state programs, support for transportation services may be of a lack of transportation alternatives for their clients. For provided from regional or local sources. These may be from example, AAAs may operate van services to enable their the general fund of local or regional governments or gener- mobility-limited, senior clients to get to nutrition sites or activ- ated by a dedicated tax source, such as a local sales or prop- ities at the local senior center. Agencies that operate residences erty tax. Such regional or local funds are often used to pro- or programs for individuals with developmental disabilities vide the required match to federal assistance. may use program staff to transport clients to day programs.

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66 However, for such agencies, transportation is not their primary The federal Administration on Developmental Disabilities mission and they are often more than willing to contract for (ADD), part of the Administration for Children and Families such service if a suitable provider can be found. of DHHS, administers four grant programs created by the While the sources of funding for client services are likely Developmental Disabilities Assistance and Bill of Rights Act to be many of the federal and state programs previously of 2000 (the ADD Act). One of those programs funds state described, contracting with human services agencies is one councils on developmental disabilities, which work to make way for transportation providers to access those funds. independent living and community inclusion a reality for indi- Many community transportation systems began in this man- viduals with developmental disabilities. The ADD Act sets ner. Service was first provided by a human services agency for forth federal emphasis areas--employment, education, child its own clients. It might have done so with its own vehicles care, health, housing, transportation, recreation, and quality and drivers, or it might have contracted with a private trans- assurance. State councils focus on all or a subset of those. portation provider. The transportation provider may have The Illinois Council on Developmental Disabilities (ICDD) operated such service for more than one agency and soon the makes grants available to organizations and individuals for the nucleus of a more comprehensive service was formed. The purpose of implementing programs and services that address ability to use resources such as vehicles and drivers more its priority areas through periodic calls for investment. Cur- efficiently created a synergy that made it possible to serve rent investments of the council are contributing to projects more users than if the services had remained independent. designed to increase access to transportation service for indi- Later, federal or state transportation funding may have been viduals with developmental disabilities. Current projects added to the mix, thereby requiring that the service be made include the following: available to the general public. MetroLINK in Moline, Illinois, is expanding its trans- portation service area to include three rural counties, Funding from Client-Specific Agencies which will improve access for people with disabilities Organizations that focus on advocacy or the provision and others. Voluntary Action Center of DeKalb County is provid- of services for certain population groups may also be local sources of funding for transportation services. In Missouri, for ing additional transportation service on weekdays, serv- example, Senate Bill 40, enacted by the state legislature in ing destinations such as job sites, health care facilities, 1969, gives county residents the ability to dedicate tax rev- educational institutions, and shopping areas. enues to services for individuals with developmental disabili- Greater Peoria MTD is pursuing coordinated, regional ties. The Developmental Disabilities Resource Board (DDRB) transportation services in rural Peoria County. is the agency established in St. Charles County to oversee the programs and services provided for this group of county res- idents and their families. DDRB coordinates closely with the Foundation Funding St. Louis Regional Center, the local branch of the state agency Public and private foundations can be excellent resources responsible for services for the developmentally disabled for transportation funding, although they are not often con- (i.e., the Department of Mental Health, Division of Mental sidered by agencies looking for such funds. Foundation funds Retardation/Developmental Disabilities). typically fall into four categories, according to the Founda- DDRB distributes several million dollars of property tax tion Center's website (14): revenues annually to about 30 organizations for the develop- ment and operation of a variety of support programs and ser- Private foundation: a nongovernmental, nonprofit orga- vices.3 Many contracts between DDRB and service delivery organizations include transportation as an eligible expense, nization with an endowment (usually donated from a sin- either as an identifiable item separate from other services or gle source, such as an individual, family, or corporation) as part of a daily rate for services. In some cases, DDRB pro- and a program managed by its own trustees or directors. vides matching funds for capital purchases. Private foundations are established to maintain or aid Organizations are required to exhaust all other possible social, educational, religious, or other charitable activities funding sources before applying for assistance from DDRB. serving the common welfare, primarily through making Often, DDRB funds cover the gap between reimbursements of grants. from the St. Louis Regional Center (mainly federal and state Corporate grant-maker: corporate giving programs and Medicaid funds that allow individuals to reside at home company-sponsored foundations. Corporate giving pro- rather than in some type of facility) and the cost of providing grams are grant-making programs established and admin- services to the developmentally disabled population. istered within a for-profit business organization. They dif- fer from company-sponsored foundations (also referred 3 $0.16 for every $100 of assessed value is dedicated to programs and services for to as corporate foundations) in that the foundation, while individuals with developmental disabilities in St. Charles County. it derives it assets primarily from the for-profit business

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67 and may maintain close ties with the parent company, might be to jump-start a program that will later be funded by is an independent organization. A corporate-sponsored other sources, such as state or local funding. foundation has its own endowment and as such is sub- Additionally, many foundations are geographically focused ject to the same rules and regulations as other private in their support of nonprofit organizations. Thus, in looking foundations. Some companies make charitable contri- for support from public and private foundations, transporta- butions through both a corporate giving program and a tion providers may want to concentrate on ones that specifi- company-sponsored foundation. cally fund nonprofit organizations in their state or locality. Grant-making public charity: a nongovernmental public Moreover, most foundations will only fund nonprofit organi- charity that operates grants programs benefiting unre- zations that have 501(c)(3) status. lated organizations or individuals as one of its primary Table 6 lists just a few of the foundations that trans- purposes. There is no legal or IRS definition of a public portation providers may approach for funding transporta- foundation, but such a designation is needed to encom- tion initiatives, while the following paragraphs describe pass the growing number of grant-making institutions each foundation in more detail. It should be noted that this that are not private foundations. is by no means an exhaustive list of potential funding founda- Community foundations: 501(c)(3) organizations that tions, but rather is meant to give the reader an idea of the types make grants for charitable purposes in a specific commu- of programs funded by foundations, as well as the types of nity or region. The funds available to a community foun- guidelines generally imposed by foundations. Additional guid- dation are usually derived from many donors and held ance for finding potential foundations to fund transportation in an endowment that is independently administered; programs is provided later in this chapter. Resources that can income earned by the endowment is then used to make be helpful in identifying foundations that support transporta- grants. Although a community foundation may be classi- tion projects and preparing grant proposals are listed in Appen- fied by the IRS as a private foundation, most are classi- dix D and Appendix E on the accompanying CD-ROM. fied as public charities and are thus eligible for maximum tax-deductible contributions from the general public. The Bullitt Foundation. The Bullitt Foundation is focused on "protection and restoration of the environment of the Pacific Although few foundations specifically fund transportation Northwest" (14). Grantmaking activities are focused on non- projects, many provide support in areas that are directly or profit organizations that serve Washington, Oregon, Idaho, indirectly related to transportation, such as social welfare, British Columbia, western Montana, and the rain forest region health care access, smart growth, economic development, and of southern Alaska. Program areas include the following: environmental sustainability. In general, program goals and guidelines vary dramatically from foundation to foundation. Energy and climate change However, many foundations explicitly state that they will not Forests and land ecosystems fund capital or ongoing operating expenses. Thus, trans- Growth management and transportation portation providers are more likely to obtain funding for new Public outreach, education, and capacity building and innovative programs that fit into a foundation's program Rivers, wetlands, and estuaries goals than for general vehicle purchases or reimbursement of Sustainable agriculture operating expenses. An excellent use of foundation funding Toxic substances, mining, and radioactive waste TABLE 6 Selected foundation funding sources Foundation Eligible Recipients Eligible Grant Uses Related to Transportation Bullitt Foundation Nonprofit organizations Growth management and serving WA, OR, ID, transportation British Columbia, and parts of MT and AK Pew Charitable Trusts Nonprofit organizations Health and human services Meyer Foundation Community-based nonprofit Increasing the welfare of organizations low-income individuals and improving neighborhoods National Kidney Kidney disease patients and Support for kidney disease Foundation organizations providing patients and their families, services to these patients including transportation assistance