The Association Advocates for Updates to Accountability Requirements

Informal draft guidelines have been released to address ambiguities about new accountability requirements for transit agencies to access state budget funds for operations and capital project funds. The Association is ensuring that membership needs are met when final guidelines are released in September.  

On August 19, the California State Transportation Agency (CalSTA) released informal draft guidelines for the General Fund-supported Transit and Intercity Rail Capital Program and new Zero-Emission Transit Capital Program, authorized in the 2023-24 State Budget. The guidelines, when adopted by CalSTA on September 30, will govern access to this critical funding, which may be used to address operations funding challenges and capital improvement needs. The guidelines will also advance key accountability requirements furthered by the Governor and Legislature in the transportation budget trailer bill SB 125, with feedback from the Association. SB 125 and the guidelines build on the accountability framework initially developed by the Association during the 2023-24 State Budget negotiations. 

“When we initially developed our framework, we wanted to make sure that Association members could provide legislators and the Governor’s Administration relevant information they wanted. At the same time, we were careful to ensure our members wouldn’t be overburdened with resource-intensive, difficult-to-fulfill new requirements,” said Sharon Cooney, CEO of the San Diego Metropolitan Transit System, Vice Chair of the Association's Executive Committee and Chair of the Association’s Transit Operations Funding Subcommittee. “These informal draft guidelines confirm that ultimately – and with ongoing active engagement from the Association during the comment process – eligible agencies within our membership will be able to access those critical funds and stay responsive to riders.”

During the 2023-24 budget negotiations, the Association submitted to the Legislature a reasonable framework intended to reassure policymakers that the $5.1 billion in funds they were allocating would be used transparently.  At the same time, the framework aimed to protect Association membership from onerous requirements and helped ensure that transit agencies would be able to continue to serve their communities without dramatic cuts to routes, services, or staff. The accountability requirements, signed into law in SB 125, are significantly more favorable to agencies than initial suggestions.

In advance of the release of these informal draft guidelines, Association members raised questions about ambiguities that had remained in the budget bill language as passed by the Legislature and signed into law by the Governor – and CalSTA has been responsive.  

“We’re so appreciative that CalSTA has worked actively and sincerely with the Association in developing these informal draft guidelines. The guidelines reflect our initial feedback, and they offer important clarity on how transit agencies can comply with the accountability requirements from the start. The Association will continue to voice the needs of our members during the comment period while CalSTA finalizes the guidelines,” said Michael Pimentel, Executive Director of the Association. “Once the guidelines are finalized, we urge the Legislature to codify the clarifications to SB 125 that are being made during the drafting process.”

Now that these informal draft guidelines have been released, here’s what transit agencies need to know.

What’s in the updated draft framework?

SB 125 guides the distribution of $4 billion in General Fund money through the existing Transit and Intercity Rail Capital Program (TIRCP), which agencies will have flexibility to use for transit operations or capital improvements; the measure also includes $1.1 billion in the newly created Zero-Emission Transit Capital Program (ZETCP). In addition, the measure created the new Transit Transformation Task Force to look beyond the end of the “fiscal cliff” crisis and make longer-term policy recommendations for ridership, rider experience, and transit operations.  

SB 125 governs access to the funds through its newly created accountability program. Because it was signed into law with some ambiguities surrounding the review and approval process, key definitions, potential transit agency expenses, and other issues, the draft guidelines are being issued to provide clarity to agencies who wish to become eligible for the funds, as well as other stakeholders.  

The Association identified several main priorities for CalSTA to address in the guidelines to be adopted.  As a result of the Association’s targeted communications with CalSTA, the agency addressed two of these major issues in the informal draft guidelines: First, the guidelines confirmed that CalSTA’s review and approval of mandated short-and long-term financial plans will be limited to a review of responsiveness to SB 125 requirements and project eligibility; and second, they clarified the definition of “transit operator” for the purposes of operations funding eligibility and scope of plans, with a specific reference to State Transit Assistance (STA)-eligible operators (as established in the Public Utilities Code). 

For TIRCP, the informal draft guidelines provide additional information about project eligibility and data collection. Project eligibility will be tied to the eligibility in the previous cycle, including existing and new projects, as well as project development. Eligible projects must demonstrate greenhouse gas (GHG) emissions reductions, although there is no minimum threshold for these reductions. Finally, the state will collect data on investments in Disadvantaged Communities (DAC); again, there is no minimum threshold for these investments.

Similar to those of TIRCP, the informal draft guidelines for the new ZETCP require a demonstration of investments in GHG emissions reductions and the state will collect DAC investment data, and there is no minimum threshold for investment in either. Of note, Zero-Emissions Vehicles and Zero Emissions infrastructure projects are eligible across modes of transit.

Finally, eligible transit operations are expected to maintain or grow service relative to what would be possible in the absence of funding.

What is the timeline, short and long-term?

CalSTA released the informal draft guidelines on August 19. The release of informal draft guidelines prior to the release of formal draft guidelines is a departure from the norm; typically, draft guidelines are released just once prior to their adoption. Fortunately, this public release of informal draft guidelines has provided two weeks of advance notice to stakeholders of CalSTA’s plans for SB 125 requirement clarifications.  

The Association has already communicated initial priorities to CalSTA and key legislative committees, and it has responded with a comment letter.

On August 31, CalSTA will release the official, “formal” draft guidelines covering TIRCP and ZETCP. The formal guidelines are expected largely to reflect the informal draft guidelines; however, the Association will follow up and continue to engage with CalSTA with additional discussions, public comments, and direct lobbying.  

On September 30, CalSTA will adopt the formal draft guidelines, which eligible Association members will follow as they develop allocation packages to access the funds.

On December 31, the initial allocation package submittal for agencies is due to CalSTA, as is regionally compiled transit operator data. Requested funding will be allocated to approved agencies no later than April 30, 2024.

Looking further ahead, transit agencies that wish to be eligible to receive TIRCP grants in 2026-27 or beyond must submit a long-term financial plan to CalSTA by June 26, 2026.

A detailed timeline can be found on CalSTA’s SB 125 website.

What is next?

Between the release of the formal draft guidelines on August 31 and their adoption guidelines on September 30, the Association is engaging with CalSTA through public comments and direct lobbying to ensure that Association priorities remain clearly reflected in the finalized guidelines.  

While the informal draft guidelines have provided an Association-supported interpretation of SB 125 on many points, a key near-term outstanding question remains on whether or not the guidelines establish a reasonable set-aside for administrative expenses related to Regional Transportation Planning Agencies (RTPAs) development of short- and long-term financial plans.  The Association continues to advocate for this much-needed update.

Beyond the adoption of the guidelines, the Association is taking the lead to emphasize the need for clarifying “clean-up” legislation.  Such legislation is introduced by a legislator as one or more bills, but will likely be introduced in the second year of session beginning in December 2023. To be supported by the Association, such legislation would need to codify the clarifications established by the draft guidelines.

In addition to advocating for the codification of the guidelines in statute, the Association will work to move clean-up legislation that would include the decoupling of SB 125 requirements from base TIRCP funds, and to make small but significant technical amendments for dates and code section cross-references.

What can Association members do to support these efforts?

Association members can lend support to the draft guidelines by coordinating comments with the Association to ensure a strong, unified message to CalSTA, the Legislature, and the Governor’s Administration.  When clean-up legislation is announced, members can work with the Association to lend formal support to the measure.  Be sure to watch for updates and calls for action in Association communications.

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