Independent Report Outlines Scenarios for Chicago RTA Transit Funding

October 17, 2013

Delcan Corporation, in partnership with The Eno Center for Transportation and TranSmart, today released Determining the Equitable Allocation of Public Funding for a Regional Transportation System. This independent report assesses transit funding practices in Northeastern Illinois and outlines possible alternative ways to allocate available transit funds among the region’s three Service Boards: the Chicago Transit Authority (CTA), Metra and Pace.  The report analyzes the allocation of regional sales taxes used to support operating costs and capital funds including federal grants and state and regional bonds.

Already the third largest transit market in the United States, the Northeastern Illinois region has relied on fixed allocation formulas, some of which have been in place for 30 years despite changes in population, jobs, and the demand for transit service within the region.  

The five-month study was conducted as an independent effort with input from the Regional Transportation Authority (RTA), the region’s three Service Boards plus other regional stakeholders.

In addition to meetings with stakeholders including each of the Service Boards, Delcan reviewed regional economic trends and analyzed the historical allocation of funds among the Service Boards.  In addition, a peer analysis was conducted to understand how other metropolitan regions address the challenge of funding allocation. Five regional case studies were prepared covering New York, Philadelphia, San Francisco, San Diego and Seattle. These studies looked not only at funding allocation methodologies, but also institutional structures and sources of revenue and their related allocation restrictions.

Major conclusions include:

• The funding allocation process should emphasize regional goals;
• Changes in how funds are allocated should not be viewed in isolation, but rather as part of the efforts to improve regional governance, planning and coordination of public transit service in the RTA region; and
• Any change in how funds are allocated should involve a process that is transparent, targeted, objective and that demonstrates results.

The report presents eight allocation scenarios (with the pros and cons of each).  

The eight scenarios presented for the region’s consideration and action are:

1. Status Quo: This provides a benchmark. Governance structure, funding process and allocation rules would continue as at present.
2. Decentralized/Service Board Focus: This scenario calls for a weakened organizational structure for RTA with budget savings used to support transit operations at the Service Boards.
3. New Fixed Formulas: Capital funds would be allocated in proportion to the costs to reach a “state of good repair” – although resources fall well short of meeting that goal. Operating funds would be allocated based on three performance measures: vehicle revenue miles, passenger revenue miles and route miles.
4. Competitive Program: While the bulk of funds would be allocated according to the formulas used in Scenario 2, a portion of funds would be part of a competitive program for operating or capital projects designed to encourage creative solutions. This program would be open to entities beyond the Service Boards.
5. Performance-Based Allocation: Again, the bulk of funds would be allocated according to formulas used in Scenario 2, but some funds would be awarded based on achieving key performance goals (customer satisfaction, efficiency and safety). Another bonus pool would support new efforts, such as expanded service or technology improvements.
6. Flexible Sub-Area Equity: Funds (other than certain federal and state capital monies) would be allocated in two steps: first among the counties (including suburban Cook) in proportion to where taxes were paid and second RTA would allocate funds among the Service Boards that serve these counties in ways that support the region’s strategic long-range transit plan.
7. Asset Management Focus: Asset management describes a group of analytic techniques that can help improve the rate of return on investment, control costs, manage safety, improve customer satisfaction and assist organizational readiness. This approach has been advocated by the Federal Transit Administration and incorporates good business practices.
8. Combination of Scenarios: This concept would combine the competitive focus of Scenario 4 and the performance focus of Scenario 5.

Overall, the report advocates for change in order to tackle the tough challenges facing Northeastern Illinois. The report favors Scenario 5 (performance-based allocation); Scenario 4 (based on competitive grants) or a combination of these two scenarios. Other than the first three scenarios, each scenario needs a change in governance structure in order to be effective. An integrated structure that builds on experience in New York or Philadelphia appears most attractive. 

Press Contact

With three transit systems and more than two million riders a day, there is always something interesting going on at the RTA. Get the latest scoop on everything all in one place. For all media inquiries, please contact Susan Massel, Director of Communications and Public Affairs, at 312-913-3256 or at communications@rtachicago.org.