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Rail News: Federal Legislation & Regulation

Inspector General: FTA should improve federal grant oversight policies

The Federal Transit Administration (FTA) lacks strong policies and guidance for monitoring how certain U.S. transit agencies spend their federal grant dollars, according to a new audit report by the U.S. Department of Transportation's Office of Inspector General (OIG).

The audit examined how the FTA was monitoring agencies with restricted access to federal funds. More than 2,000 transit operators receive FTA grant funds. If the the administration determines that a grantee has "significant internal control weakness" or does not comply with federal requirements, it can restrict the agencies' access to those federal dollars, according to the audit report, which was made public last week.

From October 2010 through March 2014, the FTA restricted 35 grantees' access to federal funds for various reasons. The OIG audit examined how the FTA monitored three of those restricted agencies: Chicago's Metra, Miami-Dade Transit and the Washington Metropolitan Area Transit Authority (WMATA). In those cases, the the administration's regional offices took steps to protect federal funds and monitored the agencies' efforts to make corrections.

However, the OIG audit uncovered differences in the FTA regional offices' approaches that, in some cases, led to inefficient monitoring and unclear documentation of the transit agencies' corrective actions. The OIG determined that was because the administration lacks policies and guidance specifically geared toward transit agencies with restricted access — a situation that makes it difficult for FTA headquarters to make sure that agencies are using federal money appropriately, the report stated.

As a result, the OIG recommended that the FTA develop new policies and guidance for overseeing transit agencies with restricted access to federal grant funds. At a minimum, the new measures should address: reviewing grantee invoices; tracking grantees' corrective actions; and improving documentation of the grantees' corrective actions and the administration's oversight.

In a response to the OIG, the FTA concurred with the recommendation and said it would complete all actions by Dec. 31.

The report also outlined the circumstances that led to the three agencies' restrictions on grant funds:
• WMATA's access to federal funding was restricted in March 2014 after an FTA review found "significant internal control weaknesses" in areas including budget controls, reporting of federal expenditures and procurement controls. As a consequence, WMATA didn't properly execute grant certifications and assurances, a pre-condition of new FTA grant awards. WMATA is addressing those problems, according to the report.

• Miami-Dade Transit's access to federal funds was restricted in November 2010 after the FTA found that the agency did not comply with federal grant requirements such as the Buy America Act. The restriction was lifted in April 2015.

• Metra's access to federal funds was restricted in May 2010 when allegations surfaced in the news media that a high-ranking Metra official had committed fraud. A federal investigation confirmed the improper use of agency funds. Although federal funds were not misused, the FTA was concerned that the fraud indicated other problems and restricted the agency's access to federal dollars. The FTA lifted Metra's restriction in May 2011.

Contact Progressive Railroading editorial staff.

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