An Examination of the Commonwealth's Funding Structure for Regional Transit Authorities

This is a state audit of how Massachusetts funds regional transit authorities for the period from July 1, 2011 through June 30, 2013.

“This report details the audit objectives, scope, methodology, findings, and recommendations for the audit period, July 1, 2011 through June 30, 2013.”

The audit followed an earlier audit of the Martha’s Vineyard Regional Transit Authority that found problems with the way local assessment funding was used to reimburse transit authorities.

“This audit was undertaken in response to the Office of the State Auditor’s report on the Martha’s Vineyard Regional Transit Authority (No. 2012-1277-6A) that identified problems with the process the Commonwealth had established to use local assessment (LA) funding1 received by the communities served by the RTAs to partly reimburse each RTA for its costs of providing transportation services.”

Late payments made transit authorities borrow money to keep running, adding unnecessary interest costs.

“Consequently, while waiting for these reimbursements, RTAs must fund their operations by borrowing money using revenue anticipation notes (RANs),2 thereby incurring thousands of dollars in unnecessary interest expenses on these borrowed funds.”

If you live in one of the communities served by these authorities, this affects local bus and transit services that people rely on for millions of trips each year.

“These agencies serve a total of 262 urbanized areas, suburban municipalities, and rural communities outside the greater Boston area and provide over 29 million trips each year using buses and minibuses operated by private transit service companies.”

MassDOT followed the law, but the funding process itself was inefficient and caused avoidable borrowing costs and planning problems.

“Our audit indicated that MassDOT, through the RTD, was administering the state’s funding for RTAs in compliance with applicable laws and regulations.”

The auditor recommended that MassDOT work with the transit authorities and seek legislative funding and process changes so the money arrives sooner.

“MassDOT should confer with the RTAs to determine the current total amount of unpaid LA funds owed and seek funding from the Legislature for this amount for payment to the RTAs.”

The audit estimated that delayed local assessment payments may have added as much as $700,000 in extra interest costs over the period reviewed.

“We determined that as much as $700,000 in additional interest costs was incurred during this period.”

“Local assessments” are local funding amounts connected to city and town budgets; in this report, late local assessment payments were a key cause of borrowing by transit authorities.

“Local assessments are money that flows from the state budget to city and town budgets, helping them fund vital local services such as schools, police and fire protection, parks, and public works.”