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Blogging from TRB: Performance-Based Funding Systems in the United States
 Will re-authorization of the U.S. federal aid program for surface transportation be performance-based? Photo by Michael McDonough.

Will re-authorization of the U.S. federal aid program for surface transportation be performance-based? Photo by Michael McDonough.

A highlight of yesterday’s TRB sessions was a panel discussion on the performance-based funding system that is widely expected to be included in reauthorization of the federal transportation bill. There is a growing consensus that in order to justify higher levels of transportation funding to Congress and American citizens, the funding allocation system must move from process- to performance-based. Four groups presented their visions for this system, which is yet to be designed, though an early version exists in the House Transportation and Infrastructure Bill. The session was recorded and will be available on the TRB Web site after the meeting.

Jeffrey Paniati, the executive director of the Federal Highway Administration, presented the USDOT’s perspective on a performance-based system. Its major goal would be to improver performance in key areas of national interest, including:

  • Safety
  • Pavement and bridge condition
  • Congestion
  • Freight
  • Environment/climate change
  • Livability

Paniati pointed out that some of these areas are currently more suited to a performance-based system than others. For instance, “livability,” though agreed upon as a priority, is still in the definitional stage, while safety metrics are well developed.

For each of these areas, performance measure criteria would be selected. These criteria must be directly related to investment, outcome-oriented and understood by the public.

As for who sets national goals and targets, Paniati recommended that this be done by the USDOT in consultation with the states. Consequences for missing those targets would be reduction in funding flexibility and changing levels of oversight.

Paniati stressed that an evolutionary approach is necessary, where we begin with the best measures and data we have now and continuously refine our approach as we learn. More advanced states could begin with pilot programs.

Pete Rahn described AASHTO’s take on a performance-based system. In their version, national transportation performance goals would revolve around the following focus areas:

  • Safety
  • Preservation
  • Congestion
  • Operations
  • Freight
  • Environment

Three or four performance measures would be identified for each area. AASHTO, in consultation with APTA, the MPOs and USDOT would develop these measures.

AASHTO favors a state-driven approach, with each state setting its own targets for each performance measure. As a guide, USDOT would also establish overarching national performance targets in coordination with the state DOTs. Each state would develop its own process to track and report on their results. Those states meeting their targets would receive regulatory relief and funding flexibility.

Rahn noted the many challenges ahead, including the opposition of some states, the difficulty of identifying national goals, and the complexity of defining federal, state and metropolitan roles.

Finally, JayEtta Hecker presented the Bipartisan Policy Center’s framework for a performance-based funding system. It is guided by the following principles:

  • Clear federal role
  • Promote performance
  • Mode neutrality (focus on outcomes, regardless of mode)
  • Link to energy and environment

This vision is organized around five focus areas:

  • Economic growth
  • National connectivity
  • Metropolitan access
  • Safety
  • Energy and environment

The group proposed metrics for each category. No national targets will be set – the federal government’s role is to establish the overarching vision of the program. The states would be charged with creating strategies to address national goals.

Under this scheme, 75% of funding would be distributed through formula programs. These programs would allocate funding using formulas, and the performance measures would determine a bonus dollar amount. The other 25% of funding would be distributed through competitive programs, determined entirely by performance measures. Read our previous post on TheCityFix about the Bipartisan Policy Center’s proposal, known as the National Transportation Policy Project.

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